Hospice Care Break-Even Analysis: $57K Monthly Revenue

Fixed costs $15.8K/mo Base overhead

Contribution margin 83% After variable costs

Break-even revenue $19.0K/mo Revenue target

Break-even timing Month 1 Launch month

Break-even calculator

Use this calculator to test monthly hospice revenue against variable expenses and fixed costs to find the break-even point.

Lean Base Full

Monthly revenue Revenue sets how much margin is available to cover fixed costs. $ Low volume High volume Variable expenses These are direct costs that move with care volume and service use. $ Lower costs Higher costs

Money available to cover fixed costs $76,779 $90,972 revenue - $14,193 variable expenses

Margin ratio

84%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base that contribution margin must cover. $ Lean team Larger team

Break-even chart Revenue Total costs

Which expenses stay fixed and which move with patient volume?

Cost classification

Break-even lands in Month 1, but that only holds if fixed overhead stays separate from volume-linked care costs. Treat supplies, transport, usage fees, and census-driven labor correctly so contribution margin isn’t overstated.

Expense	Cost	Break-Even Treatment	Common Mistake
Office Rent	Fixed	Carry $5,000 per month from Month 1 through Month 60 as baseline overhead.	Allocating rent per visit and understating the revenue needed at low census.
Malpractice & Liability Insurance	Fixed	Carry $2,500 per month as required monthly overhead before contribution margin covers profit.	Tying insurance to visit count when the model treats it as stable monthly spend.
Medical Supplies & Drugs	Variable	Deduct 7.0% of first-year revenue, then use the lower forecast percentages in later years.	Modeling drugs and supplies as flat spend despite revenue-based usage assumptions.
Durable Medical Equipment Costs	Variable	Deduct 4.0% of first-year revenue for equipment tied to patient service volume.	Leaving equipment out of contribution margin and overstating break-even cushion.
Vehicle & Transportation Costs	Variable	Deduct 4.0% of first-year revenue for visit-related travel and route activity.	Treating mileage-heavy service days as office overhead instead of volume-linked spend.
Telehealth Platform Usage Fees	Variable	Deduct 2.0% of first-year revenue for usage-based virtual care activity.	Counting only the software base fee and missing session-linked platform charges.
Registered Nurse Workload	Semi-variable	Hold core coverage, then flex labor around visit load, starting from 120 monthly treatments per nurse.	Treating all nursing payroll as fixed when census-driven labor can rise with volume.
Billing Specialist FTE	Semi-fixed	Step staffing from 0.5 FTE in the first year toward 1.5 FTE by the fifth year.	Using one full-time role from launch month or never adding capacity as billing grows.

How does break-even change across lean, base, and full hospice care scenarios?

Scenario table

As monthly revenue grows from Year 1 to Year 5, the fixed-cost base rises slowly, so break-even risk drops and cushion widens. The main check is still admissions volume and reimbursement timing.

Planning-case figures only; admissions, payer timing, and reimbursement can change results.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean Year 1 hospice case	$1.658M	$282K	$477K	83.0%	$899K	Above break-even, but a slower census would squeeze margin fast.
Base Year 3 hospice case	$5.351M	$835K	$600K	84.4%	$3.915M	Clear cushion, so monthly break-even risk is much lower here.
Full Year 5 hospice case	$11.6M	$1.737M	$660K	85.0%	$9.203M	Very strong cushion, assuming admissions and reimbursement stay steady.

What pushes hospice care past break-even?

Stress test

Year 1 revenue of $1,658K sits well above the $575K break-even point, so the base plan has room. The risk is launch drag: slow referrals, early payroll growth, and cost creep can eat that cushion.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$575K	$1,083K cushion	Healthy cushion if referrals and billing stay on plan.
Revenue shortfall	Revenue falls to the $575K break-even level instead of the $1,658K Year 1 plan.	$575K	$0 gap	Slow referrals can erase the launch cushion.
Fixed-cost pressure	Fixed costs rise to $548K as admin payroll grows from $340K to $410K.	$661K	$997K cushion	Hiring before census is stable lifts break-even fast.
Margin pressure	Variable costs rise 1 percentage point at Year 1 revenue.	$582K	$1,076K cushion	Each 1-point cost rise eats roughly $17K of Year 1 revenue.
Combined pressure	Fixed costs rise to $548K and variable costs rise 1 percentage point.	$668K	$990K cushion	Slow referrals plus higher staffing and travel costs push break-even out.

Can you prove referral volume before you lock the lease?

Founder checklist

Don’t lock the office lease or add outreach spend until referral flow, billing setup, and staffing can support Month 1 break-even. The model needs $884K of minimum cash, so the launch gap has to be covered before you commit.

1Referral pipeline430/mo

Verify referral sources can feed about 430 monthly service units before you sign the lease and outreach commitments, because idle staff and rent drain cash fast.

2Fixed load$47.7K/mo

Check that fixed office costs of $13.75K a month plus core admin payroll near $34.0K a month stay manageable before you add more roles.

3Margin mix83% CM

Confirm reimbursement covers the 17% direct cost load from supplies, equipment, transport, and telehealth fees so contribution margin stays near 83%.

4Staffing ramp11 FTE

Stage hiring to the Year 1 plan of 1 physician, 3 registered nurses, 5 certified aides, 1 social worker, and 1 spiritual counselor, because coverage gaps cut revenue before break-even.

5Cash reserve$884K

Hold at least the modeled minimum cash of $884K so the $272K capex stack and slow payer collection do not strain launch.

6Billing launchMonth 1

Test claims, payer setup, and first-bill timing in the opening month, because Month 1 break-even only holds if cash starts coming in right away.