Nursing Home Break-Even Analysis: About $228K Monthly Revenue

Fixed costs $68.8K/mo Monthly base

Contribution margin 79% After variable costs

Break-even revenue $87.1K/mo Monthly target

Break-even timing Month 18 Model break-even

Break-even calculator

Test whether monthly revenue covers direct care costs and fixed overhead.

Lean Base Full

Monthly revenue Revenue from resident fees and ancillary charges drives the margin available for fixed costs. $ Low intake High intake Variable expenses These rise with resident count and care mix, like supplies, food, housekeeping, activities, and variable utilities. $ Lean care Higher care

Money available to cover fixed costs $188,000 $230,000 revenue - $42,000 variable expenses

Margin ratio

82%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead base that contribution margin has to cover. $ Lower overhead Higher overhead

Break-even chart Revenue Total costs

Which nursing home expenses are fixed, and which move with resident revenue?

Cost classification

Break-even gets weak fast if rent, clinical payroll, and resident supplies sit in the wrong buckets. Use fixed overhead for stable facility costs, variable percentages for resident-linked usage, and step logic for staffing that rises with care load.

Expense	Cost	Break-Even Treatment	Common Mistake
Facility Lease/Rent	Fixed	Hold at $45,000 per month from Month 1 through Month 60.	Tying rent to occupancy instead of treating it as facility overhead.
Property Taxes & Insurance	Fixed	Hold at $12,000 per month in the break-even base.	Reducing insurance when resident count drops.
Administrative Software & Licenses	Fixed	Include $2,500 per month before calculating required resident revenue.	Modeling software as a per-resident charge.
Maintenance, Security, Office Supplies, and Professional Services	Fixed	Include the combined $9,300 per month as recurring facility overhead.	Leaving small fixed bills outside the break-even floor.
Executive Director and Director of Nursing	Semi-fixed	Carry $270,000 in annual salaries, or $22,500 per month, until the facility needs another management layer.	Treating leadership payroll as variable with each resident.
Registered Nurse and Certified Nursing Assistant Payroll	Semi-variable	Scale with care load: RN and CNA staffing rises from 11.0 FTE in the first year to 25.0 FTE in the fifth year.	Keeping clinical labor flat while direct care hours rise.
Direct Care Medical Supplies	Variable	Apply 5.0% of revenue in the first year, stepping down to 4.0% by the fifth year.	Using a fixed monthly supply budget despite resident volume changes.
Food, Housekeeping, Activities, and Variable Utilities	Variable	Apply 16.0% of revenue in the first year: 7.0% food plus 9.0% for housekeeping, activities, and variable utilities.	Forgetting that meals, laundry, engagement supplies, and utility usage move with occupancy.

How does break-even shift across lean, base, and full census in this nursing home?

Scenario table

The model crosses break-even when resident mix and service intensity cover the $180,050 monthly fixed load. Lean census stays short, the base case lands at break-even, and a fuller census adds cushion as revenue grows faster than variable cost.

Planning assumptions only; actual results will move with resident mix, staffing intensity, and payer mix.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean census	$222,601	$46,746	$180,050	79.0%	-$4,195	One resident below base leaves a small monthly loss.
Base break-even	$227,911	$47,861	$180,050	79.0%	$0	About 43 residents covers fixed overhead.
Full census	$233,221	$48,976	$180,050	79.0%	$4,195	One extra resident adds cushion before staffing steps.

What breaks the nursing home break-even plan?

Stress test

The plan is tight: break-even sits near $228,000 a month, so slower admissions or higher staffing costs can wipe out the cushion. A 10% revenue miss or a 10% payroll jump is enough to push it into a monthly gap.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$228,000	$0 cushion	The plan sits on the line.
Revenue shortfall	Monthly revenue falls 10% to about $205,000.	$228,000	$18,000 gap	Slower admissions or delayed reimbursement can push cash negative.
Fixed-cost pressure	Year 1 payroll rises 10%, adding about $9,000 a month.	$239,000	$11,000 gap	Wage pressure or agency use widens the break-even line.
Margin pressure	Variable expenses rise 10%, cutting contribution margin to 76.9%.	$234,000	$6,000 gap	Food, supplies, and utilities eat the cushion.
Combined pressure	Monthly revenue falls 10% and Year 1 payroll rises 10%.	$239,000	$27,000 gap	Lower census plus wage pressure can break cash coverage fast.

What should you verify before signing the lease and opening this nursing home?

Founder checklist

Do the break-even math before you sign anything. The model needs about 43 residents, $68,800 a month in fixed facility and admin costs, about $90,417 a month in payroll, and roughly $1.7 million of minimum cash by Month 17.

1Lease gate43 residents

Do not lock the lease until the license path and admissions funnel can support about 43 residents, because that is the census needed to cover the cost base.

2Facility load$68.8K/mo

Verify that rent, taxes, software, services, supplies, security, and maintenance really total $68,800 a month, because that bill starts before the beds fill.

3Resident yield$5,310/mo

Check that Year 1 average revenue per resident is $5,310 and that the direct cost stack leaves about 79% contribution margin to cover payroll.

4Staffing ramp3 RN / 8 CNA

Confirm the team can deliver 40 direct care hours per resident per month while Year 1 staffing ramps to 3 RNs and 8 CNAs.

5Marketing flow$20.8K/mo

Use the $250,000 Year 1 marketing budget as a $20,833 monthly demand engine, and tie it to move-ins, not just inquiries.

6Cash reserve$1.7M

Keep enough cash to fund the $1.625 million opening capex and still absorb the Month 17 trough, since minimum cash bottoms near $1.7 million.