Healthcare Finance

Executive Summary
The increased aging population, coupled with increased rates of diabetes and obesity, have enhanced the need for wound care centers globally. Wound infection presents a major safety concern for patients and healthcare professional thus making effective wound care a priority for the involved stakeholders. Additionally, chronic and non-responsive wounds present an economic burden to both the patients and the health care system stakeholders. As such, better wound management should be a priority in the health care sector. This business plan proposes a Wound Care and Hyperbaric Center that will provide advanced wound care and hyperbaric oxygen therapy to patients on-site, as well as an outsourced mobile nursing dispatch to serve patients in other facilities such as hospitals and long-term care homes. The mission of the center will be to increase the capacity of all facilities and professionals in the healthcare industry (within a reasonable distance) to the heal wounds of their patients, thereby providing for patient and system wellness. As a profoundly committed health care provider, the center is dedicated to the specialization of wound care as a means of supporting patients, other providers and the health care system itself. The ultimate goal is to provide wound care management as a modular and functional part of healthcare.
The location of the proposed center will be in Pittsburg, Pennsylvania. However, the services will be mobile to most of the city, and possibly even rural parts of the state on contract. The target market includes established facilities providing patient care, including hospitals, in-patient facilities, and long-term care homes, as well as patient referrals from primary health care providers. The center will cater for both chronic and non-chronic wounds and will cover all wound care patients regardless of their age, sex, or area code. The expected patient population include diabetic individuals with non-healing foot ulcers, radiation and burn victims and post-surgical wound infection patients. The primary strategic approach of the Center will entail partnering with health care facilities to provide a targeted outsourced wound care service that results in a value for patients in the healthcare system while saving costs (and liabilities) for hospital and other patient care facilities.
The Center will have 6 permanent employees and will outsource all other services such as cleaning, IT, accounting, and laundry services. In financing, the center will incur a start-up cost of $244,600. To finance this together with the working capital required for the first few months of operation, the center will secure a loan from the federal Small Business Administration 7(a) loans program. The projected cash flows for the first year include $256,060 from wound management and $ 1,141,716 from HBO. If the revenues increase as projected, then the Center will manage to reach the break-even point and realize a sizeable profit by the second year of operation.
 
Business Description
Background Information
Wound infection presents a major safety concern for patients and healthcare professionals centers not only in the United States but also across the globe. Additionally, chronic and non-responsive wounds present an economic burden to both the patients and the health care system stakeholders (Guest, Vowden & Vowden, 2017). The proposed Wound Care and Hyperbaric Center will provide advanced wound care and hyperbaric oxygen therapy to patients on-site, as well as an outsourced mobile nursing dispatch to serve patients in other facilities such as hospitals and long-term care homes. Patients will likely include referrals from physicians, diabetic individuals with nonhealing foot ulcers, radiation and burn victims and post-surgical wound infection. The services will help to reduce the worsening infections by increasing the focus of specialized intervention and treatment.
As a profoundly committed health care provider, the center is dedicated to the specialization of wound care as a means of supporting patients, other providers and the health care system itself. The Center’s mission is, first and foremost, to increase the capacity of all facilities and professionals in the healthcare industry (within a reasonable distance) to the heal wounds of their patients, thereby providing for patient and system wellness.
Business Goals
The business goals are to become a modular and functional part of the health care system. Wound care emerges as an urgent care issue which is compounding a primary care issue, whether it is an underlying condition such as diabetes, recovery from a car accident, or hospital-acquired pressure ulcer. Wounds which are not optimally healing can affect patient wellness, quality of life and the issue is a significant one which is monitored by the Centers for Medicare and Medicaid (CMS), and it can even affect the reimbursement for patient services. The Wound Care and Hyperbaric Center will provide value to patients by best supporting their wellness with evidence-based practice, as well as a benefit to other facilities and professionals in the healthcare system who require this support for their patients.
Industry, Market, and Operations Description
The growing global advanced wound care market and associated products and services were estimated to have a value of about $20 billion in US dollars (D’Angelo & Benassi, 2015). It is a rapidly growing specialty fueled by demand, as well as proprietary patented processes (D’Angelo & Benassi, 2015). Research and development will be left to specialists; however senior staff will always be seeking out the latest research related to wound care and healing.
In terms of operation, the site and all medical equipment will be leased so that the more physical aspects of operations are outsourced. This is a benefit because it assures The Wound Care and Hyperbaric Center of having equipment maintained by the leasing agent, as well as being able to upgrade as new technologies become available. In this way, there will be minimal debt, or non-liquid value tied up in capital assets such as equipment. All employees will receive additional and specific training in the Center’s approach to wound care and required steps, as well as the responsibilities and limits of each role. Professional development and continued education will be a part of all staff performance requirements, with some training and lectures being offered at the Center. Nurses will all work within the limits of their professional competency as well as state regulatory requirements. Physician referral provides necessary diagnostic information, to the extent that some insurers or billing agencies will require an initial demand for services from a primary care provider. In some cases, advanced nurse practitioners can provide this.
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Marketing Plan
Industry Analysis
The increased aging population coupled with increased rates of diabetes and obesity have significantly contributed to the growth of the wound care management industry in the United States and world by extension. The global advance would care market is projected to reach $26.24 billion by 2023, up from $18.22 billion in 2016. The shift represents a Compounded Annual Growth (CAGR) of 5.3% in the forecast period. Products in the industry provide a much sought for relief for individuals suffering from chronic and non-chronic wounds that that are not only expensive to treat but also tend to take a lot of time to heal. As a player in the industry, the center will make wound care services and products easily accessible to the local community and at a reasonable price.
Suppliers and Customers
The center will cater for both chronic and non-chronic wounds. The customers will be established facilities providing patient care, including hospitals, in-patient facilities, and long-term care homes, as well as patient referrals from primary health care providers. All wound care patients visiting the center will be treated regardless of their age, sex, or area code. Patients will likely include referrals from physicians, diabetic individuals with nonhealing foot ulcers, radiation and burn victims and post-surgical wound infection. In addition to treating patients on site, the center will also operate an outsourced mobile nursing dispatch to serve patients in other facilities such as hospitals and long-term care homes. As such, the center will have a wide consumer base.
Suppliers will include the broker or manufacturer that leases the capital equipment needed for wound healing and hyperbaric therapy, as well as the nursing labor force that supplies contractors and employees
Historical Performance and Future Outlook
Past performance of wound care and hyperbaric therapy has been based on a business model with physicians at the center, either in a hospital or healthcare network context or as a physician-directed standalone center. This business model is in fact entirely different since it focuses solely on direct patient care, rather than medical model aspects. To that end, this business expects to take advantage of a market position in this rapidly expanding area with this business model by providing competitive pricing as well as much needed services that are complementary and support existing healthcare structures which are themselves doing very well financially. The future outlook for wound care and hyperbaric oxygen therapy is healthy because of the predicted need as rising numbers of diabetics turn to would care to prevent feet and wound-related problems, but there will continue to be a base of patients with varied wound care needs.

Strategic Opportunities
The primary strategic opportunity is to partner with health care facilities to provide a targeted outsourced wound care service that results in a value for patients in the healthcare system while saving costs (and liabilities) for hospital and other patient care facilities. The on-call mobile services also provide a way to reduce the burden where nurses are under-resourced while ensuring care excellence.
Market Analysis & Sales Forecast Summary
The wound care market can be segmented into various sections. There is the acute wound care market whose value lies at $6 billion. Main activity in this section is wound management dressings and it recorded revenues of $4.3 billion in 2016. This means that the dressings accounted for 55% of the total industry revenues. Revenues from the sector have a projected CAGR of 4.5% and are thus expected to hit $5.9 billion by the end of 2018. Chronic wounds are the largest segment in the wound management market with revenues of $3.9 billion (45% of total market revenues). The acute wounds segment registers revenues of $2.4 (25%) billion while burns account for $2.4 billion (29%). The market for advanced wound care management in the United states is expected to reach $5.03 billion by the end of 2018.
Sales Forecast
The center is designed to serve 35 to 100 patients per day. Revenues will be generated from wound care and HBO services provided either on-site or to outcall patients. The average payment will be $100 for regular wound care, and $400 per hyperbaric oxygen therapy patients. Dispatched services to hospitals, long-term care homes or even to the patient’s location will attract a premium. Hospitals and other healthcare organizations have a need for these services, and it is likely that the new service line will see considerable demand from its first day of operation. It is conservatively estimated that the revenues would be approximately $225,000 per month Based on the industrial/ market outlook, the forecasted sales for the first five years are as follows.
Period Year 1 Year 2 Year 3 Year 4 Year 5 Total
Revenues:
Wound Care $256,060 $ 296,768 $ 359,816 $ 384,084 $ 428,455 $1,725,183
HBO
$ 1,141,716 $ 1,451,334 $1,683,548 $1,915,761 $ 2,181,148 $8,373,508
Total Revenues $ 1,397,776 $ 1,748,102 $2,043,364 $ 2,299,845 $ 2,609,603 $10,098,690

Market Location, Niche, & Target Market
The Center itself will be located in Pittsburg, Pennsylvania. However, the services will be mobile to most of the city, and possibly even rural parts of the state on contract. Various neighborhoods have been highlighted as being preferred for the location of the facility. Servicing a large population that includes the city residents as well as surrounding areas, the healthcare market is booming. An example of the expanding wound care industry in Pittsburgh provides a case study regarding the market and location. UPMC Mercy in Pittsburgh is part of a network of UPMC wound care and hyperbaric centers, of which there nine across the state. The organization, which is staffed and owned by several specialized physicians, focuses on the diagnosis and surgical treatments that include reattaching limbs, and bioengineered skin substitutes. Their products are therefore clearly differentiated from the proposed Wound Care and Hyperbaric Center, and in fact, the UPMC Mercy represents a potential customer.
Competition & SWOT Analysis
There are a number of existing wound care and hyperbaric treatment centers in the Pittsburgh area. A Porter’s five forces analysis provides insight into the nature of competition for this new business. The power of the supplier, in this case, is minimal since there are many potential suppliers who are themselves in competition. The power of the customer is similarly positioned since there are multiple wound care centers, although differentiation provides customers with choices. The power of substitutes, particularly complementary and alternative therapies, is a potential threat to healthcare, although wound care and healing are not a significant proportion of that market. The power of new entrants is, unfortunately, a real possibility, particularly if others mimic the lean startup model that will be used. Competitive rivalry cannot be said to be intensive for two reasons, that being the current referral networks limiting patient market choices, but also because with market expansion due to increased health care coverage, there is simply considerable demand.
SWOT Analysis
Strengths
One of the Center’s strength is its medical team. It will be wide and comprised of professionals with various achievements among them advanced nurse practitioners, registered nurses, and vocational nurses. Other strengths include the center’s specialization, lean approach, and mobility. Because the service aims not only to treat patients but to support other facilities and practices, there is a significant benefit to having competing businesses with a complementary but differentiated product, such as the physician-based UPMC services, which would likely benefit from on-demand specialized nursing support
Weaknesses
Being a new venture, the Center has some weaknesses. For one, clients may be limited especially in the first days of operation. Additionally, by serving other health care providers, there is less control as referrals, rather than direct marketing to customers, creates demand.
Opportunities
The most glaring opportunity is the increased referral sources for the center. Patients will most likely include referrals from physicians, diabetic individuals with nonhealing foot ulcers, radiation and burn victims and post-surgical wound infection. More patient referrals may arise if the current patients get good care and services from the center. A large diabetic population in the city, which, by extension, is at a high risk for chronic wounds also presents a wide market which the Center can leverage. Another opportunity will be in fully marketing the product to the health care providers and facilities in the target niche.
Threats
Although minimal, competition still poses a threat for the Center. This can affect the facility’s ability to penetrate the market and capture referrals. Another threat will be that in-house services are deemed to be more cost-effective, and therefore there is a continued opportunity in collecting the data that provides evidence of the value of services to these potential customers.
Marketing Objectives and Goals
The primary goal of the center is to provide access to residents across the city and in some rural parts of the state. Patients with chronic conditions such as diabetic ulcers will be provided with free transportation if they are within a 25 mile radius of the center. Those who are further will received treatment from their locations through our mobile dispatch team. This will also apply to patients who are homebound due to their condition. The Center believes in a multidimensional approach to wound care management and healing. The marketing plan will focus on highlighting services that are not available in other local would care centers.
Marketing Plan & Strategy
The Center will seek to enhance patient satisfaction by offering personalized, quality care. In doing so, it will seek to surpass the currently set quality benchmark goals for wound healing rates, especially chronic wounds. The utilized marketing plan will target healthcare professionals who might wish to refer patients or to hire mobile services. While social media and similar strategies are planned for operations, initially the marketing plan would involve in-person meetings and visits to potential customers, including larger wound care centers that may have an ongoing need for a temporary increase in support and assistance. This will ensure a lean marketing budget since owner-operators will be contributing their time and networks to pursue the initial marketing strategy. There will, of course, need to be a budget for the meetings costs, which might include dinner or similar hospitality charges.
Marketing Resources, Budget, & Evaluation (Plan beyond 1 yr.)
The Center will utilize referral marketing techniques and social media marketing. Investment in referral marketing will be done in the first year of operation only, after which it will be left to happen through word of mouth. Social media marketing will be a continuing venture. As for the resources, the plan is to close any gap in resource needs using the U.S. Small Business Administration 7a loan guarantee program which provides a bank guarantee that can assist in accessing funding (Acs, Åstebro, Audretsch, & Robinson, 2016). This will provide the initial cash flow that is needed for the costs of in-person meeting costs as well as some communications support for the marketing of the business using social media. The expected marketing costs for the first year are as follows:
Strategy Costs
In person meetings and hospitality (12 targeted meetings)
$3,600
Social media plan and message design $1000
Total $4,600
Operating and Organizational Plan
Location of Service, Customers and Competitors
Location of Service
The location of any business is typically an important factor in success. For a specialized health care facility providing wound care, essential aspects include the ease with which the location can be reached, and the desirability of the neighborhood in terms of factors such as rental rates, safety, and general services available. A facility will be located in Pittsburgh, Pennsylvania. However, the services will be mobile to most of the city, and possibly even rural parts of the state on contract. Various neighborhoods have been highlighted as being preferred for the location of the facility. Ideally, it is easy to get to and offers ample parking as well as other medical services, as well as food and similar services. A mall setting in the core of a residential area would be ideal, and the expansion of location sites would use the same approach. Locating in areas near potential commercial customers, such as hospitals and long-term care facilities would be ideal.
Customers and Competitors
There are no competitors who are offering the same lean approach to providing patient-centered wound care. The businesses providing wound care in the Pittsburgh include a continuum of health care providers, from small private family physician practices to reconstructive surgical specialists in facilities such as UPMC. Every competitor is a potential customer, and for this reason, there needs to be a focus on marketing to these businesses. All such facilities can benefit from outsourcing to a quality, cost-efficient service.
Medicare and Medicaid are likely to be implicated as payors, as customers who are referred, walk-in clients, or being managed under the care of a healthcare facility may be covered under these programs. The Centers for Medicare and Medicaid (CMS) are the regulators of the state Medicare and Medicaid programs which provide health insurance for those Americans that meet state criteria; There is currently a significant focus on ensuring compliance with various goals of the CMS programs, including increased patient safety and continuous improvement of patient outcomes. What is most important to note regarding pressure ulcers, which may form a large part of the practice, is that they are often not covered or reimbursable by Medicare or Medicaid if it is determined that the cause was hospital-acquired.
Operating Procedures
The center is designed to serve 35 to 100 patients per day. In peak times, all facilities will be in use, and nurses will be occupied by either on-site or out-call patients. A ticket system will be used to manage and schedule services. This will use an off the shelf, customizable and affordable scheduling package with a web interface that allows for input and retrieval of data for staff and contractors through an app. This software will serve the function of the administrator. The receptionist will book appointments based on availability, and these will be either assigned, or staff can indicate their preferred assignments. The software will also track and manage payment. Notes, treatments provided, and medical photos will all be submitted and stored through the software, allowing for continuity and communication in case management. It will also make it easy to share information with referring healthcare providers.
Facility and Layout
The facility and layout are considerations that have regulatory and safety requirements, in addition to optimization of the process. Chamber construction is determined by the American Society of Mechanical Engineers (ASME), facility design specifications benefit from adhering to the American Institute of Architects (AIA) and the Undersea and Hyperbaric Medical Society (UHMS) standards, and construction and operations must comply with the National Fire Protection Association (NFPA) requirements (Wood, 2016). The total amperage for the setup of the hyperbaric oxygen chamber area will be an area that also requires oversight to ensure that the compressors, oxygen concentrator, infrared mats, closed loop cooler, and other appliances such as a television and fan have sufficient amperage to function. Retail medical facilities for lease tend to be very specific in highlighting these specifications.
Organizational Plan
The organizational plan has three main areas. The most important is operations, and these will be controlled by processes; the second is operational support, and these will include secondary activities, most of which are outsources such as facility cleaning and maintenance and equipment repair. The third area is the management and corporate strategy. Initially, most employees will belong to the operational area, with the exception being one receptionist position. Contractors are likely to be secondary support services, and the owner-operators will provide for the management and corporate strategy including marketing and human resources. The operational team will consist of two advanced nurse practitioner roles, three registered nurses (RNs), and five vocational nurses (LPNs). The organizational structure will remain, in terms of the Mintzberg organizational categorizations, as one that is very entrepreneurial in nature (Mintzberg, 1980).
Key Jobs and Responsibilities
The key responsibilities begin with a skeleton crew consisting of a directing owner-operator, with the other owner-operator providing financial and corporate oversight and direction. The other employees will be part of the operation team providing direct care to patients.
Area Positions
Management And Corporate Strategy Owner-operations (2)
Operations Nurse practitioners (2)
• answers to Owner-operators.
• will be hired to lead operations.
• The owner-operators will serve in these roles initially.
Registered nurses
Vocational nurses
Operations Support Receptionist (1-2)
Various outsourced contractors (payroll services, laundry services, cleaning and maintenance, software and technical support, bookkeeping and financial management.

Timeline
Year 1
In the first year, the intention is to establish and stabilize operations. This includes hiring the needed staff and ensuring their training and development, as well as building relationships with potential commercial clients and policy knowledge in relation to insurers. This will include working out policy complexities, such as Medicare and Medicaid considerations, and payment considerations when working through a third party who will not be reimbursed (i.e.. due to hospital-acquired injury). This will be a time of the process and operational planning and optimization of operations.
Year 2
By Year 2 it is assumed that any debt from the start-up loans has been repaid and revenue will increase by 50%. If this is not the case, then it will be essential to keep a tight focus on debt repayment, since debt charges do not provide for lean operations. It is also assumed that by the start of the second year, there will be many established commercial customers that provide referrals or contract for outsourced services.
Year 3
By Year 3, it is hoped that the primary focus of strategy will be expansion across the northeastern region, as well as potentially setting up a small satellite office in strategic locations. Some ideas are not just limited to expanding services, but also expanding lifestyle options for owner-operators and possibly for staff. For example, there are various locations in the Caribbean with extremely low-cost facilities and a population that includes retired expatriates as well as people on vacation. By offering expanded services in resort locations, there is the potential to find a niche that has thus far been unexplored, while ensuring that Americans and others can access quality wound care.
 

Financial Plan
Financial requirements
This section describes the amount of the start-up budget ($244,600), the amount of financing (355,000), and cash flow projections regarding when the funding is needed. The financial plan is a critical aspect of any new business, and ensuring that there is sufficient cash flow for early operations, as well as financing for any capital and contractual investments, is an integral part of that. This financial plan describes conservative estimates of revenues, along with prudent plans in relation to expenditures, that provide information regarding how the fund will be managed in this startup operation.
Form of financing
The form of financing is an essential consideration for any business. This can include instruments such as investment through the purchase of shares of a company that has gone public, or the acquisition of ownership in a new company that has a long way to go to earn a place on the stock exchange. Angel investors and others can provide needed capital, but in exchange, they require a share of ownership in the new company. This is a factor for the owners, as they believe that their knowledge, experience, and vision will be instrumental in creating a lean company that is competitive and provides value to internal partners in the industry, as well as external patient clients (Burns, 2016). The presence of other owners could result in a business model that hinders the current vision of the owners, which is modeled on patient-centered care. Direct investment has therefore been rejected in favor of an instrument over which the owners would have more control.
A loan is the preferred financial instrument to bridge the cash flow gap in startup and initial operations because this ensures that the owner-operators retain control of the company. This is especially important because it is this vision of a very lean and efficient would care service and facility that is driving the business design and model which provide the competitive advantage. Ideally, the loan will be at a low-interest rate. A loan guarantee may be sought from the federal Small Business Administration 7(a) loans program (Acs, Åstebro, Audretsch, & Robinson, 2016).
The term of any debt will be as short as possible since debt service charges are not an efficient expenditure over the long run. The financial projections used in order to estimate the term of repayment use conservative revenues for cash flow calculations.
Start Up Budget
The startup budget includes the costs for the first three months. Cash flow is an essential part of revenue, and operations management requires understanding the potential time lag between the delivery of service and the payment for those services. A prudent approach is to assume that revenues cannot be accessed until 90 days after the services are provided. This ensures that any initial troubleshooting regarding billing, payment, and revenue delivery mechanism is clarified, without affecting the requirements of operations in terms of cash.
The facility lease costs include the expenditures that will be needed to complete a contract for lease or rental of a retail medical facility in Pittsburgh. This will likely include a substantial deposit to represent last month leasing cost and damage deposit. Utilities, capital equipment, and operational supplies will consist of the hyperbaric chambers and any equipment needed for their operation, as well as oxygen, furniture, and other requirements. The legal and regulatory fund is more of insurance than anything else, although a due diligence assessment of needs will be requested from a local law firm to ensure a proactive approach. The marketing budget will include the costs of meetings and hospitality to meet with potential large facilities who may become clients, as well as social media advertisements to promote walk-in and direct clientele. These represent the costs that will be required in setting up the business and trying to create the conditions for success.
Refer to Appendix C for a breakdown of the total start-up costs as well as the capital that will be required to run for the first three months.
One to Three Year Income Statement
In order to describe the revenues and expenditures during the one to three years projected income statement, it is essential to define the operations. The goal will be for a staff of 11 (1 receptionist, 3 registered nurses (RNs), 5 vocational nurses (LPNs) and 2 advanced nurse practitioners to serve 35 to 100 patients per day. The average payment of $100 for regular wound care, and $400 per hyperbaric oxygen therapy patient. Dispatched wound care services to hospitals, long-term care homes or even to the patient’s location will attract a premium service charge that will be billed separately. In terms of revenue, it is assumed that they will increase by 50% in the 2nd and 3rd years. Refer to Appendix D for a breakdown of the income statements for the first three years.
Break Even Analysis & Financial Ratios
The Center is expected to incur various Cost of Goods costs. Based on the projections in the income statements, these cost will account for 20% of the total revenue. This means that the center will have a gross profit margin of 80%. For the first year, based on the expenses and revenues, the annual break-even amount will be $1,646,375. The center will require a monthly revenue of $137,197 for it to break even. Refer to Appendix E for a breakdown of the first year’s break-even analysis.
References
Acs, Z., Åstebro, T., Audretsch, D., & Robinson, D. T. (2016). Public policy to promote entrepreneurship: a call to arms. Small Business Economics, 47(1), 35-51.
Burns, P. (2016). Entrepreneurship and small business. Palgrave Macmillan Limited.
D’Angelo, A., & Benassi, M. (2015). Bio3 Research: An Entrepreneurial Process in the Market for Patents. Entrepreneurship Theory and Practice, 39(5), 1247-1264.
Hunter, I., & Saunders, J. (2017). Human resources outsourcing: solutions, suppliers, key processes and the current market. Routledge.
Mintzberg, H. (1980). Structure in 5’s: A Synthesis of the Research on Organization Design. Management science, 26(3), 322-341.
Wood, S. (2010). Clinic Design: Three Big Mistakes To Avoid When Developing a Hyperbaric Facility. Today’s Wound Clinic 4(4).
 
Appendix A
SWOT Analysis
Strengths Weaknesses
Strong team
Lean approach
Specialization
Mobility
Complimentary products from UPMC services Possible limited clientele
Less control of referals
Opportunities Threats
Increased referral sources for the center
Diabetic population
Marketing

Competition

More demand for in-house services

 
Appendix B
Organizational Chart

 
Appendix C
Start-Up Budget for the Wound Care Center
Monthly Expenses Cash Required (3 months capital)
Monthly Costs
Management Salaries $ 20,000.00 $ 60,000.00
Nurse & Clerical Salaries $ 52,000.00 $ 156,000.00
Building Lease $ 5,000.00 $ 15,000.00
Marketing $ 1,000.00 $ 3,000.00
Office Supplies $ 500.00 $ 1,500.00
Utilities $ 3,000.00 $ 9,000.00
Insurance $ 1,500.00 $ 4,500.00
Equipment $ 4,000.00 $ 12,000.00
Legal Services $ 1,000.00 $ 3,000.00
IT Support Services $ 1,000.00 $ 3,000.00
Subtotal $ 89,000.00 $ 267,000.00

One Time Costs
Pre-Opening Salaries and Wages $ 72,000.00
Prepaid Insurance Premiums $ 2,000.00
Inventory $ 7,000.00
Legal and Accounting Fees $ 5,000.00
Utility Deposits $ 3,000.00
Supplies $ 5,000.00
Advertising and Promotions $ 4,600.00
Licenses $ 2,000.00
Other Initial Start-Up Costs $ 5,000.00
Working Capital (Cash On Hand) $ 100,000.00
Leasehold Improvements $ 10,000.00
Equipment $ 25,000.00
Furniture and Fixtures $ 4,000.00
Subtotal $ 244,600.00

 
Appendix D
One to Three Year Income Statement (Projection)
2018 2019 2020
Revenue
Wound Care $ 256,060.00 $ 384,090.00 $ 576,135.00
HBO $ 1,141,716.00 $ 1,712,574.00 $ 2,568,861.00
Total Revenue $ 1,397,776.00 $ 2,096,664.00 $ 3,144,996.00
COGS $ 279,555.20 $ 419,332.80 $ 628,999.20
Gross Profit $ 1,118,220.80 $ 1,677,331.20 $ 2,515,996.80

Total Costs
Salaries $ 864,000.00 $ 907,200.00 $ 952,560.00
Building Lease $ 60,000.00 $ 63,000.00 $ 66,150.00
Marketing $ 12,000.00 $ 12,600.00 $ 13,230.00
Office Supplies $ 6,000.00 $ 6,300.00 $ 6,615.00
Utilities $ 36,000.00 $ 37,800.00 $ 39,690.00
Insurance $ 18,000.00 $ 18,900.00 $ 19,845.00
Equipment $ 48,000.00 $ 50,400.00 $ 52,920.00
Legal Services $ 12,000.00 $ 12,600.00 $ 13,230.00
IT Support Services $ 12,000.00 $ 12,600.00 $ 13,230.00
Repairs & Maintenance $ 3,000.00 $ 3,150.00 $ 3,307.50
Misc $ 1,500.00 $ 1,575.00 $ 1,653.75
Debt (Loan) $ 335,000.00
Total 1 time Start up Costs $ 244,600.00

Total Operating Expenses $ 1,317,100.00 $ 1,461,125.00 $ 1,182,431.25

Net Income $ (198,879.20) $ 216,206.20 $ 1,333,565.55

 
Appendix E
Break-Even Analysis (Year 1)
Gross Margin % of Sales
Gross Margin $ 1,118,220.80
Total Sales $ 1,397,776.00
Gross Margin/Total Sales $ 0.80
Total Fixed Expenses
Payroll $ 864,000.00
Operating Expenses $ 453,100.00
Operating + Payroll $ 1,317,100.00
Breakeven Sales in Dollars (Annual)
Gross Margin % of Sales 80.00%
Total Fixed Expenses $ 1,317,100.00
Yearly Breakeven Amount $ 1,646,375.00
Monthly Breakeven Amount $ 137,197.92