Residential Treatment Center Break-Even: About $218K Monthly Revenue

Fixed costs $70.5K/mo Base overhead

Contribution margin 80% After variable costs

Break-even revenue $88.1K/mo Coverage target

Break-even timing Month 1 Launch month

Break-even calculator

Test how monthly revenue, variable expenses, and fixed monthly costs shape break-even for a live-in treatment center.

Lean Base Full

Monthly revenue Revenue is the pool that covers direct costs and fixed overhead. $ Low intake High intake Variable expenses Direct care, food, supplies, and referral costs rise with revenue. $ Tighter costs Higher costs

Money available to cover fixed costs $327,066 $408,833 revenue - $81,767 variable expenses

Margin ratio

80%

Covers fixed costs

Yes

Fixed monthly costs Lease, insurance, utilities, staff, and upkeep sit here each month. $ Lean overhead Heavier overhead

Break-even chart Revenue Total costs

Which residential treatment center expenses are fixed and which move with occupancy?

Cost classification

Break-even is reliable only when committed costs stay separate from costs that rise with occupancy or revenue. If payroll is modeled as fully variable, Month 1 break-even can look safer than the staffing plan supports.

Expense	Cost	Break-Even Treatment	Common Mistake
Facility Lease	Fixed	Treat the $45,000 monthly lease as a committed hurdle from Month 1 through Month 60.	Spreading rent by occupied room and making low census look cheaper than it is.
Malpractice Insurance	Fixed	Keep the $8,500 monthly premium in fixed overhead for the relevant planning range.	Reducing insurance expense when occupancy is below plan.
Utilities and Security	Fixed	Use the modeled $6,000 monthly amount as a fixed operating requirement.	Treating the whole line as resident-driven without a separate usage assumption.
Food and Beverage Supplies	Variable	Apply 6.0% of revenue in the first year, stepping down to 5.0% from the third year onward.	Using one flat kitchen budget instead of tying meals to census and revenue.
Clinical Medical Supplies	Variable	Model at 3.0% of revenue in the first year, declining to 2.0% from the third year onward.	Burying supplies in fixed clinical overhead and missing per-resident usage.
Marketing and Referral Fees	Variable	Use 8.0% of revenue in the first year, improving to 6.0% by the fifth year.	Holding referral spend flat while admissions growth depends on it.
Housekeeping and Guest Amenities	Variable	Treat as 3.0% of revenue across the forecast because resident volume drives usage.	Classifying amenities as fixed and understating the cost of higher occupancy.
Clinical, Nursing, and Guest Services Payroll	Semi-fixed	Model staffing in steps: therapists move from 3.0 to 6.0 FTE, nurses from 4.0 to 6.0 FTE, and guest services from 4.0 to 8.0 FTE.	Treating all payroll as variable when the opening team is largely committed before census fills.

How does break-even shift across lean, base, and full occupancy?

Scenario table

Break-even moves with occupancy because revenue rises faster than the fixed payroll and facility load. At low use, the center is right at the line; by the base and full cases, it has room to absorb overhead.

Scenario figures are planning assumptions, not guarantees, and the staffing mix is only given for Year 1 and Year 5.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean occupancy case	$2,183k	$437k	$1,747k	80%	$0k	Essentially at break-even, so small dips in occupancy can flip results.
Base Year 1 case	$4,088k	$818k	$1,747k	80%	$1,524k	Strong cushion; the base case covers fixed overhead and leaves room for volatility.
Full Year 5 case	$8,847k	$1,415k	$2,276k	84%	$5,155k	Wide cushion; higher occupancy more than offsets the heavier staffing load.

What breaks the break-even plan for a residential treatment center?

Stress test

Break-even weakens first if census slips, because payroll and overhead do not fall fast. A 20% occupancy case already shows a $294k monthly gap, and a 10% cost bump or thinner margin pushes the plan closer to red.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1,747k	$3,159k cushion	Base Year 1 revenue sits above the fixed-cost floor.
Revenue shortfall	Occupancy falls to 20%.	$1,817k	$294k gap	Census below 4 rooms pushes the plan into a gap.
Fixed-cost pressure	Fixed overhead rises 10%.	$1,921k	$174k gap	Higher lease, payroll, or insurance raises the floor fast.
Margin pressure	Variable load rises from 20% to 25%.	$3,066k	$205k gap	Referral fees above 8% squeeze contribution margin.
Combined pressure	Revenue drops 10%, variable load rises to 25%, and fixed overhead rises 10%.	$4,068k	$838k cushion	The base Year 1 run rate still holds, but hiring ahead of admissions would break it faster.

What should a founder verify before signing the lease for a residential treatment center?

Founder checklist

Before you sign the lease or start opening spend, make sure the opening census, staffing plan, and cash runway can carry a $174.7K monthly fixed base and a $1.18M buildout. EBITDA can look fine and cash can still dip by Month 5.

1Referral flow45% Y1

Verify enough referral volume to hold 45% occupancy in Year 1, because the opening census has to cover fixed costs before the facility has momentum.

2Lease load$174.7K/mo

Check that the $45,000 lease fits inside a $174,667 monthly fixed base that also includes insurance, utilities, IT, maintenance, accreditation, and Year 1 payroll.

3Contribution mix80% CM

Keep variable costs near 20% of revenue, since food, clinical supplies, marketing and referral fees, and guest amenities decide how much cash each occupied bed leaves behind.

4Year 1 staff14 FTE

Confirm you can open with 1 medical director, 3 therapists, 4 registered nurses, 1 executive chef, 1 facility manager, and 4 guest services staff, or service quality and occupancy both slip.

5Cash trough$662K

Hold at least $662,000 of cash through Month 5, because the model’s low point comes before the operating curve fully lifts.

6Buildout fund$1.18M

Fund the full renovation, furnishings, clinical equipment, kitchen, spa, IT, landscaping, and security plan before launch, since that spend hits before recurring revenue can catch up.