Hospital Break-Even Analysis: $849K Monthly Revenue Target

Fixed costs $683.3K/mo Year 1 base

Contribution margin 80.5% After variable costs

Break-even revenue $849.2K/mo Needed per month

Break-even timing Month 1 Launch month

Break-even calculator

See how monthly revenue, variable expenses, and fixed costs set the break-even point for a hospital.

Lean Base Full

Monthly revenue Revenue sets the pool that can cover variable costs and then fixed costs. $ Lower sales Higher sales Variable expenses These are direct costs that rise as treatment volume rises. $ Tighter costs Heavier costs

Money available to cover fixed costs $682,730 $821,585 revenue - $138,855 variable expenses

Margin ratio

83%

Covers fixed costs

$44,353 short

Fixed monthly costs This is the monthly overhead the hospital must cover before profit starts. $ Lean overhead More staffing

Break-even chart Revenue Total costs

Which hospital expenses are fixed, and which move with patient volume?

Cost classification

Break-even is useful only when fixed overhead is separated from patient-driven spending. In Month 1, the model breaks even, so misclassifying $208K/month of leadership wages or supply percentages can make the margin look safer than it is.

Expense	Cost	Break-Even Treatment	Common Mistake
Facility Lease	Fixed	Carry $250,000/month from Month 1 through Month 60 as base overhead before patient volume.	Spreading rent only across occupied beds and hiding the true monthly hurdle.
Utilities	Fixed	Model $50,000/month as planned monthly overhead for the relevant break-even range.	Treating the full utility bill as patient-driven when the facility must stay running.
EHR/EMR System Licenses & Support	Fixed	Treat the $30,000/month electronic health record and medical record platform spend as operating overhead.	Moving license support into variable clinical spend and understating fixed overhead.
Insurance Premiums	Fixed	Include $75,000/month as committed monthly coverage expense in the break-even base.	Excluding insurance until volume ramps, even though coverage is needed before visits arrive.
Administrative Leadership Wages	Semi-fixed	Use the first-year base of about $208,000/month, then step up roles such as Department Heads and Head Nurses by year.	Treating all clinical and leadership payroll as variable when management payroll is committed before volume arrives.
Medical Supplies & Disposables	Variable	Apply the 70% patient-driven rate to treatment activity, so supplies rise with care volume.	Budgeting supplies as one flat monthly number and missing volume pressure.
Pharmaceuticals & Medications	Variable	Apply the 80% usage rate to patient care activity in the contribution margin calculation.	Blending medications into overhead and overstating margin on each treatment.
Medical Waste Management and Specialized Disposal	Semi-variable	Model the $15,000/month waste contract as a base charge plus 10% specialized disposal tied to activity.	Classifying the whole waste line as fixed or variable instead of splitting base and usage.

How does break-even shift from a lean hospital setup to a full-scale one?

Scenario table

The lean case is close to break-even because fixed staffing and facility costs stay heavy while revenue is still ramping. By the full case, revenue grows faster than fixed costs, so the cushion gets much wider.

Scenario figures are planning assumptions, not guarantees, and real results can move with volume, staffing, and mix.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean case, Year 1 opening scale	$860K	$168K	$683K	80.5%	$9K	Revenue sits just above break-even, so the cushion is thin.
Base case, Year 3 operating scale	$1.66M	$296K	$722K	82.2%	$644K	Revenue clears break-even with room, but cost drift still matters.
Full case, Year 5 mature scale	$2.67M	$430K	$749K	83.9%	$1.49M	Revenue is well above break-even, so the margin buffer is strongest.

What breaks the hospital break-even plan?

Stress test

The current plan clears break-even by about $7.75M a month, so it has room. But a 10% revenue drop, $100k of extra overhead, or a 1-point jump in variable costs can shrink that cushion fast.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$849k	$7.75M cushion	Healthy cushion, but it depends on steady reimbursement and throughput.
Revenue shortfall	Modeled revenue falls 10% in the first operating year.	$849k	$6.89M cushion	A smaller top line still covers break-even, but the cushion thins fast.
Fixed-cost pressure	Monthly overhead increases by $100k.	$974k	$7.62M cushion	Extra lease, staffing, or support costs raise the bar right away.
Margin pressure	Variable expense load rises by 1 percentage point.	$860k	$7.74M cushion	A 1-point cost jump trims contribution by about $86k a month.
Combined pressure	Revenue falls 10%, monthly overhead adds $100k, and variable expense load rises 1 point.	$986k	$6.75M cushion	This is where lower volume, overhead, and margin squeeze start to matter.

Can this hospital cover the lease, staff, and equipment before the opening commitment?

Founder checklist

Test the opening plan against break-even before you lock the big fixed costs. The model shows $475K a month of facility and operating overhead, about $2.5M in Year 1 leadership wages, and $6.7M in capex, so demand, staffing, and cash all have to line up first.

1Lease demand$250K/mo

Confirm expected admissions and payer mix can support the $250K monthly facility lease before you commit, because this is the first fixed cost that can break the model.

2Staffing load$2.5M/yr

Prove you can staff the opening team without hiring ahead of volume, since Year 1 leadership wages total about $2.5M.

3Compliance pathPre-open

Verify state licensure, CMS enrollment, accreditation planning, and payer contracting are on track before opening, or revenue can lag while fixed costs keep running.

4Capex stack$6.7M

Keep the $6.7M equipment and build-out spend separate from operating break-even, because those purchases do not pay the monthly bills.

5Billing flowMonth 1

Validate billing and coding coverage from Month 1, since weak claim handling slows cash and one billing and coding manager is already in the model.

6Cash cushion$1.64M

Stress-test Month 1 cash against ramp delays, because the model needs a $1.64M minimum cash cushion even before late collections show up.