Park Square Family Medicine

5/25/2018 Park Square Family Medicine

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Table of Contents

1.0 Executive Summary.............................................................................................................................1Chart: Highlights......................................................................................................................2

1.1 Objectives...................................................................................................................................21.2 Mission........................................................................................................................................21.3 Keys to Success........................................................................................................................3

2.0 Company Summary.............................................................................................................................32.1 Company Ownership.................................................................................................................42.2 Start-up Summary......................................................................................................................4

Table: Start-up.........................................................................................................................4Chart: Start-up.........................................................................................................................5

3.0 Services................................................................................................................................................53.1 Information Management and Technology..............................................................................6

3.1.1 Hardware........................................................................................................................63.1.2 Billing..............................................................................................................................73.1.3 EMR (Electronic Medical Records).............................................................................7

4.0 Market Analysis Summary..................................................................................................................8

4.1 Market Segmentation................................................................................................................8Table: Market Analysis...........................................................................................................8Chart: Market Analysis (Pie)..................................................................................................9

4.2 Target Market Segment Strategy.............................................................................................94.3 Service Business Analysis........................................................................................................9

4.3.1 Competition and Buying Patterns.............................................................................105.0 Strategy and Implementation Summary..........................................................................................10

5.1 Competitive Edge....................................................................................................................10

5.2 Marketing Strategy..................................................................................................................105.2.1 Marketing Expenses...................................................................................................12

Chart: Market Analysis (Bar)......................................................................................135 3 Sales Strategy 13


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Table of Contents8.3 Projected Profit and Loss.......................................................................................................21

Chart: Profit Yearly................................................................................................................22Chart: Gross Margin Yearly..................................................................................................23Table: Profit and Loss..........................................................................................................24Chart: Profit Monthly.............................................................................................................25Chart: Gross Margin Monthly...............................................................................................25

8.4 Projected Cash Flow...............................................................................................................25Table: Cash Flow..................................................................................................................26Chart: Cash...........................................................................................................................27

8.5 Projected Balance Sheet........................................................................................................27Table: Balance Sheet...........................................................................................................28

8.6 Business Ratios.......................................................................................................................28Table: Ratios.........................................................................................................................29

Table: Personnel........................................................................................................................................1Table: Profit and Loss...............................................................................................................................2Table: Cash Flow.......................................................................................................................................3Table: Balance Sheet................................................................................................................................4Table: General Assumptions....................................................................................................................5Table: Sales Forecast...............................................................................................................................6


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Park Square Family Medicine

1.0 Executive Summary

As part of its ongoing efforts to improve access to health care in rural areas, General Medical

Center is subsidizing the start-up and first year of operations of a new family medicinepractice, Park Square Family Medicine. The business will be owned and managed by Dr. NathanDetroit, MD as a sole proprietorship. He will be responsible for ensuring the general health of his

patients and creating a viable and profitable business medical practice. Throughout the firstyear, Dr. Detroit will work closely with advisers from General Medical to get the clinic on a

sound financial and operational footing, using this medical clinic business plan as a guidingmanagement tool.

Dr. Detroit will focus on diagnosing and treating conditions of all ages while emphasizingpreventative medicine and the overall health and wellness of his patients. The clinic will utilize

new equipment and a trained staff that will be able to optimize the care of each patient. Heunderstands that there are many factors that can affect health, including exercise, diet,

environment and heredity. Park Square Family Medicine will try to provide the mostcomprehensive medical care possible in order to opt imize the care and well-being of each

patient.

Dr. Detroit will also carry out minor procedures in his office, but only after both risks and benefitshave been explained and understood and written consent has been obtained from the patient.Dr. Detroit will refer patients, when appropriate, to specialists and/or to hospitals for tests,

further treatment and therapy.

Dr. Detroit will be assisted by two employees: a medical assistant and a receptionist. Ongoingtraining and support for these employees will be provided by General Medical Center throughout

the first year.

The marketing strategy involves a combination of print media advertising, website

development, networking, and promotional events, all aimed at residents living within 35 miles


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1.1 Objectives

The objectives for the first years of operation include:

To create a medical practice that will exceed patients' expectations To provide high-quality health care to residents of the area

To create a medical practice that helps serve the community's needs To form a health care practice that is able to survive off its own cash flow in 10


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1.3 Keys to Success

Patients

Focus on patient care

Educate patients on the importance of preventative care

Educate patients as to the importance of yearly check-ups Implement an aggressive and accurate recall system in which to remind patients to have

regular check ups

Staff and Office Organization

Recognize that the office staff is as crucial, if not more crucial, than the physician(s) in

the success of the business Create incentives by allowing the office staff to benefit from increased profits

generated by the office Create a streamlined office system to minimize patients' waiting time

Finances

Keep a low overhead Optimize the number of patients we can see in a hour while providing quality medical care

Use the latest in electronic billing and/or utilize an outside billing company

Use this medical clinic business plan to review and guide management decisions

Marketing and Sales

Aggressively market and create a presence in the community by giving high schooltalks, ER calls, hospital talks and doing volunteer work, business soc iety meetings, andmuch more

Network to obtain referrals from other professionals, such ER doctors, Specialists,


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Park Square Family Medicineconvenience.

2.1 Company Ownership

Park Square Family Medicine will be created as a sole proprietorship owned and operated by Dr.Nathan Detroit, MD.

2.2 Start-up Summary

It is estimated that start-up expenses will near $23,000. This amount of money will be used topurchase office equipment, medical supplies, furniture, stationary, and other start-up

expenses. We will also need approximately $10,000 for cash on hand at start-up. Expenses andinitial cash requirements will be funded by General Medical Center.

Our long-term assets of $225,000 represent the purchase price of the building described

above. Dr. Detroit will finance this purchase with a 15-year loan, guaranteed by his personalassets.

Table: Start-up

Start-up

Requirements

Start-up Expenses

Legal & Accounting $500

Insurance $1,000

Marketing $2 000


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3.0 Services

In general, Park Square Family Medicine will provide general care for all ages, as well as providing

multiple procedures to create a complete health care solution. Park Square Family Practice willprovide procedures including but not limited to mole removals, biopsies, and trigger pointinjections, and much more. We will also incorporate multiple modalities, such as cryotherapy,

hyfrecator, shaving, and excisional removal of lesions and biopsies. The costs will depend uponth t i l d th h i i ' ti d th t d i t d f h d


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PAP Tests

Annual Well Women Exam

Family Planning Acute Gyn Problems

Pediatrics:

Newborn Care Infant Care

Annual Physicals Routine Services

Possible Immunizations

Dermatology:

Removal of minor lesions, skin tags, moles and warts

Biopsies of suspicious dermatological lesions and/or referral

Allergy Testing and shots

Tetanus

Pneumovax Immunizations

Minor Surgery:

Laceration Repair Lesion Removals

Hyfrecation for Lesions and Blemishes


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Park Square Family MedicineInternet connections, in order to optimize the potential EMR and PMS systems software as well

as in other software and network system utilized resulting in faster verification, efficient patientinformation transfer, reduction in administrative costs, computer breakdown or malfunction, as

wells as allowing outside access for the physician in order to access important patientinformation for hospital admissions and in other important situation where information is needed

about the patient in optimizing the care of the patient.

3.1.2 Billing

Park Square Family Medicine will utilize an outside elec tronic medical billing company. This will

allow the medical practice to focus primarily on patient care satisfaction. The electronicmedical billing company will use electronic claim billing and filing, which in turn will allow us tofully utilize the benefits of elec tronics c laim filing (i.e. faster payment for processing insurance

claims) while at the same time allowing us to maximize valuable clinic time and man power. Thebilling company charges 7% of the total expenses collected.

3.1.3 EMR (Electronic Medical Records)

Park Square Family Practice is strongly considering EMR, in order to secure the success andefficiency of the office. Below are a few of the benefits and features we may expect to gain

from utilizing the EMR system. This technology is expected to increase the systematicapproach for each patient, while at the same time decreasing risk while maximizing profits. We

feel that all of these technological enhancements will increase our chances of success.

BENEFITS:

Increases Revenue by allowing more patient to be seen without working harder or longer,

improves collections through management of referral and eligibility data, tracks managed care


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Document Generation

Workflow Management

Image Management Electronic Superbill and Billing System Interface

Coding Optimization Referral Management

Eligibility Verification

Contract Management Outcomes Analysis

Lab Order Entry/ Lab Result Reporting Follow-up/Recall Tracking

Patient Instructions Fax Capability

Prescription Generation

Graphing Voice Recognition Option

Advanced Security Electronic Data Interchange (EDI)

Mobile Solutions Scheduling Option

4.0 Market Analysis Summary

According to the 2005 local area "Economic and Demographic Profile Report," there is anincreasing demand for cost-effective health care in the nation and in our region. Specifically, the

local population (within 35 miles) is predicted to grow approximately 3.5% per year and has apopulation roughly around 160,000 people as of 2004.


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4.2 Target Market Segment Strategy

Park Square Family Medicine will locate and focus its efforts on the entire local population (within

35 miles). Our segmentation strategy is geographic for a number of reasons:

The rural and semi-rural patients of this area will not, and often cannot, travel more

than 30 miles to see a doctor. They would rather "wait it out" on all but urgent matters. Our clinic is a general family practice and will treat patients of all ages incomes physical


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4.3.1 Competition and Buying Patterns

In general, competition among fellow family practitioners our town and the surrounding area is

small. The growing population base and the limited number of doctors c reates a great potentialfor meeting our patient load goals.

When choosing a family doctor, most patients look for someone knowledgeable and skilled whowill listen carefully to their health concerns. They are more likely to return to a doctor

whose location and hours are convenient and accessible, who have short waiting times forgett ing appointments and sitting in the waiting room, whose staff is friendly and helpful, and who

work effectively with their insurance provider.

The relative importance of each of these factors will vary by patients' age range, medical needs,

and level of sophistication in managing their own health.

5.0 Strategy and Implementation Summary

Our strategy for a successful start is based on quickly creating a high profile and namerecognition within the community through public speaking, networking, promotional events, andprint advertising. These marketing tools will be followed up with a sales strategy that relies on

a pleasant and accessible location, well-trained, highly motivated employees, and acommitment to provide the best care and patient experience possible in every interaction. The

advantage of this strategy is that every element of it is within our control.

With few local doctors for this community, competition will be less of a concern than willeducation of potential patients about the benefits of seeing any doctor at all, and encouragingpreventive health care.


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Park Square Family Medicineservices we can offer.

We feel that the most important way to become established is create a presence among the

community. The best way to create this is through a combination of the strategies outlinedbelow, in order to accomplish greater visibility to prospective patients and institutions.

Marketing Materials

All written materials used to promote the medical office will share a professional and polished lookand feel. Our office will carry our own leaflets, to be made available to all patients, containing

factual information about the services provided. This leaflet will also contain some biographicalinformation, location, photos and other promotional material. This leaflet will be used to help

promote Park Square Family Medicine both as handouts for patients within the clinic, as well aspotential patients outside the clinic.

The clinic will provide multiple education brochures from the AAFP. We will have an areawhere health information will be displayed and dispersed in the form of packets and brochures. In

addition, patient information handouts will also be available via the EMR system and the website.

There will be a number of patient-friendly brochures, videos, mailings, and other materials usedto promote the medical office. We will have multiple ads in magazines and newspapers, as well as

a commercial to announce the opening of Park Square Family Practice.

Park Square Family Medicine will employ commercials, mail-outs that may include new patient

discounts, yellow pages, magazines, newspapers, and other forms of advertising.

Promotional Events

We will set up an open house for surrounding businesses and potential patients to let them seeour new clinic. During these open houses, we will provide HTN readings, glucose testing, andmuch more. We will consider having a blood drive in coordination with the local hospitals and Red

Cross.


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Park Square Family MedicineAccessibility

Park Square Family Medicine will adopt several strategies to ensure patient satisfaction and word

of mouth advertising. First our hours will include after after-hours care and allow patients tocome into clinic after they get off work. We will also be open on Saturdays. This means there will

be several days that we will be open till 7:00 P.M. and that we will also be open on Saturdays.

5.2.1 Marketing Expenses

Print Distribution:

Newspaper A: A newspaper that serves the local region. A weekly circulation reachingapproximately 40,000 homes and apartments. Additional papers circulated to businesses for

handout distribution. Estimated ad space for an 8 inch color ad: $445.00 per circulation.Requests for placement 25% surcharge. Discounts given for frequency.

Magazine B: a monthly magazine that is mailed to approximately 40,000 residents within our

area. Quarter Page Ad: $656.00 / Ad with 3 month contract, $627.00/ Ad with 6 monthcontract, $568.00/Ad with 12 month contract.

Professional Directory C: They will have advertising opportunities in their Professional Directorythat is published in the Fall. I do not have pricing details guaranteed. Estimate a Quarter Page

Ad: $1,100.00/Year

Commercial Advertising:

Effective campaign would include 100-150 spots per month. Several cable channels to target. 30second spots range between: $50-75.00/ Spot. Primetime sett ing is $65.00- $100.00/Spot.

Direct Mail Marketing:


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5.3 Sales Strategy

The sales process begins when a patient calls us, comes in for an appointment, or

accompanies a family member to an appointment. In every interaction, we must be accessible,courteous, knowledgeable, and helpful.

Location:Th li i ill b l t d i th h t f t P ti t ill il b bl t fi d th li i Si


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Park Square Family Medicinehelp explain the most common conditions. During the consultation the doctor will have a white

coat and tie and will conduct himself in a professional and courteous manner. After theconsultation, the doctor or the nurse will escort the patient to the front where all further

arrangements will be made. A courtesy reminder card will be filled our for patients' convenience.

Pricing Strategy:The pricing for consultations and visits, as well as any procedures will be billed according toindustry standards. We will be consistent with our competitors and the national averages.

Most pricing will be dependent upon agreements with the five largest insurers in the area.

Sales Literature:

The clinic will provide multiple education brochures from the AAFP. We will have an area whereinformation will be displayed and dispersed in the form of packets and brochures. In addition,information handouts will also be available via the EMR system and website.

5.3.1 Sales Forecast

The first month prior to opening will be used to get the new office in order, set up

appointments and begin marketing activities. The following months Park Square Medical Clinic willcontinue advertising and will use less and less assistance from General Medical Center until thesecond year, when the subsidy will cease. The following tables basically represent the amount of

money that the practice expects to be making.

Note that we list no direct cost of sales. This is standard for the medical office industry, since allmedical supplies and waste disposal (needles, gauze, etc .) are handled as monthly supply orders,

not inventory. These expenses can be found in the projected Profit and Loss statement.

Table: Sales Forecast


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Park Square Family Medicinefirst year of operations commences.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Desi gn and pl ace fi rst ads 9/1/2005 11/1/2005 $2,000 Dr. Detroi t & Jack PSFM & GMC

Close on Building 10/1/2005 10/2/2005 $225,000 Dr. Detroit PSFM

Redecorate and Furnish Clinic 10/1/2005 11/15/2005 $13,000 Dr. Detroit PSFM

Instal l and T est EM R system 11/1 /200 5 12/15/2 005 $4,000 Dr. Detroi t & Jan PSFM & GM C

Sign contract for medical bi ll ing 11/1/2005 11/1/2005 $0 Dr. Detroit PSFM

Employee training 12/1/2005 12/31/2005 $3,950 Dr. Detroit & Liz PSFM & GMC

Fi ni sh Pri nted M ateri al s 12/1/2005 12/31/2005 $3,500 Dr. Detroi t & Jack PSFM & GMC

Monthly Financial Review with

GMC

1/2/2006 12/31/2006 $0 Dr. Detroi t, Liz, &

John

PSFM & GMC

Monthly Operational Review

with GMC

1/2/2006 12/31/2006 $0 Dr. Detroi t & Liz PSFM & GMC

Hold Open Houses 1/2/2006 1/31/2006 $500 Dr. Detroit PSFM

Begin first appointments 2/1/2006 2/10/2006 $0 Dr. Detroit PSFM

Track Patient Load, first threemonths

2/1/2006 5/1/2006 $0 Dr. Detroit PSFM

Totals $251,950


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Park Square Family Medicinehealth issues facing the local area.

6.1 Website Marketing Strategy

The website marketing strategy will be focused on increasing placement in search engines. Thepractice and website will focus on the local population. We will develop strategies to create links

from local websites in the community to our business. Information about the website will be onthe office brochure, cards and future advertisements.

6.2 Development Requirements

The website will be created by two companies, one to design the "front-end" and anotherwhich will implement it as a working site. The user interface will consist of a clean and simple

design in which to comfortably navigate. The major content of the site will be informationabout the practice, hours, location, general medical information, insurance accepted and

hospitals covered. The "front-end" design will be created in Fireworks MX software and theback-end design will be created in MYSQL and PHP. The website will be hosted on a dedicated

server. Future development may include a registration database for new patients and aquestion and answer forum.

7.0 Management Summary

Park Square Family Medicine will initially have two employees: a receptionist and a medicalassistant. They will both be paid hourly wages and have health and dental benefits. As thepractice grows, we will add additional personnel to help with referrals and additional

responsibilities that will be needed at that time.


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Park Square Family Medicinefails to correct the problem that employee will be dismissed. All write-ups will occur in the

presence of a witness and will be recorded.

7.1 Personnel Plan

Employees will enjoy full medical and dental benefits. They will have a good salary that

corresponds to their level of skill and total contribution to the medical practice. As ourbusiness grows and become stronger, we will offer a 401k plan. We may first start with a

Simple IRA plan. The final goal is to create a profit-sharing opportunity in which to foster loyalty,longevity and contentment in the workplace.

Table: Personnel

Personnel Plan

Year 1 Year 2 Year 3 Year 4 Year 5

Physician salary $0 $110,000 $110,000 $110,000 $110,000

Receptionist $18,000 $20,000 $22,000 $23,000 $24,000Medical Assistant $21,600 $21,600 $21,600 $23,000 $24,000

Health Insurance $2,000 $2,000 $2,000 $2,000 $2,000

Dental Insurance $2,000 $2,000 $2,000 $2,000 $2,000

Vision Insurance $2,000 $2,000 $2,000 $2,000 $2,000

Workman's Comp $1,800 $1,800 $1,800 $1,800 $1,800

Total People 3 3 3 3 3

Total Payroll $47,400 $159,400 $161,400 $163,800 $165,800

8.0 Financial Plan

It is est imated that start-up expenses will be $22,732. This amount of money will be used to


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Park Square Family Medicineincluded in this overall financial plan.

2. The $32,732 in start-up subsidies, and the $288,000 in first-year subsidies is forgiven and

not subject to reimbursement unless Park Square family medicine fails...which will nothappen. "Failure" is defined in the grant agreement as inability to achieve patient load

goals for five months in a row during the first year.


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8.1 Start-up Funding

The start-up requirements, with the exception of the building loan, are to be financed by General

Medical Center. This is in addition to the $288,000 they will be providing over a 12 monthperiod as expense subsidies in the first year, and the physician's salary for the first year.

The purchase of the building will be financed by the owner, Dr. Detroit, with a 15-yearmortgage (listed under Long-term Liabilities). This loan will be repaid from the clinic's cash

flows and guaranteed with his personal assets.

Table: Start-up Funding

Start-up Funding

Start-up Expenses to Fund $22,732

Start-up Assets to Fund $235,000

Total Funding Required $257,732

Assets

Non-cash Assets from Start-up $225,000

Cash Requirements from Start-up $10,000

Addit ional Cash Raised $0

Cash Balance on Starting Date $10,000

Total Assets $235,000

Liabilities and Capital

Liabilities

Current Borrowing $0

Long-term Liabili ties $225,000

Accounts Payab le (Outstanding Bi ll s) $0


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8.2 Break-even Analysis

The Break-even Analysis shows that in the first year (with no physician salary), we need bring in

$11,605 in revenue per month to break even. We will pass this mark by the sixth month.

However, in the second and third year, with increased expenses including the physician's

salary, and increased patient load, we will need to bring in roughly $21,400 per month to breakeven. We do not anticipate reaching this level of patient care payment until the middle of the

fourth year, which will end with a modest profit.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $11,013

Assumpti ons:

Average Percent Variabl e Cost 0%

Estimated Monthly Fixed Cost $11,013


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Park Square Family Medicineowner's salary, as well as related payroll taxes. This increase, combined with small increases in

operating expenses due to increased patient load, will keep us operating at a loss in thesecond and third year, but we expect to begin turning a small profit in the middle of the fourth

year. Again, these losses will not cause us to go into a negative cash position at any point.

Without the physician/owner's compensation, we would show a profit of $85,000 in the secondyear, and $114,000 in the third year. Should patient load not meet expectations in theseyears, the owner will reduce his own salary to keep the business on track.


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Table: Profit and Loss

Pro Forma Profit and Loss


Sales $148,000 $220,000 $250,000 $270,000 $290,000

Direct Cost of Sales $0 $0 $0 $0 $0

Other Costs of Sales $0 $0 $0 $0 $0

Total Cost of Sales $0 $0 $0 $0 $0

Gross Margin $148,000 $220,000 $250,000 $270,000 $290,000

Gross Margin % 100.00% 100.00% 100.00% 100.00% 100.00%

Expenses

Payroll $47,400 $159,400 $161,400 $163,800 $165,800

Marketing/Promotion $36,000 $10,000 $10,000 $10,000 $10,000

Depreciation $0 $0 $0 $0 $0

Payroll Taxes $0 $0 $0 $0 $0

Medical Supplies $6,750 $8,000 $9,000 $9,500 $10,000

Office Supplies $4,500 $5,000 $5,500 $6,000 $6,200

Printing $2,000 $2,000 $2,000 $2,000 $2,000

Other Professional Services $1,000 $1,000 $1,000 $1,000 $1,000

Answering Service $3,000 $3,000 $3,000 $3,000 $3,000

Telephone $2,000 $1,500 $1,500 $1,500 $1,500

Medical Waste $2,000 $2,100 $2,200 $2,300 $2,400

Repairs and Maintenance $1,500 $1,500 $1,500 $1,500 $1,500

Janitorial Service $1,500 $1,500 $1,500 $1,500 $1,500

Dues Books and Subscriptions $1,000 $1,000 $1,000 $1,000 $1,000

Medical Bil ling $20,000 $20,000 $20,000 $20,000 $20,000

Commercial Insurance $3,500 $3,500 $3,500 $3,500 $3,500

Total Operating Expenses $132,150 $219,500 $223,100 $226,600 $229,400

Profit Before Interest and Taxes $15,850 $500 $26,900 $43,400 $60,600


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Park Square Family Medicinefor the first year, which will be paid directly from General Medical to Dr. Detroit.

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $14,800 $22,000 $25,000 $27,000 $29,000

Cash from Receivables $71,730 $168,096 $212,540 $234,693 $252,693

Subtotal Cash from Operations $86,530 $190,096 $237,540 $261,693 $281,693

Addit ional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0 $0 $0

New Current Borrowing $0 $0 $0 $0 $0

New Other Liabil ities (interest-free) $0 $0 $0 $0 $0

New Long-term Liabil ities $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0

New Investment Received $288,000 $0 $0 $0 $0

Subtotal Cash Received $374,530 $190,096 $237,540 $261,693 $281,693

Expenditures Year 1 Year 2 Year 3 Year 4 Year 5

Expenditures from Operations

Cash Spending $47,400 $159,400 $161,400 $163,800 $165,800

Bill Payments $96,925 $80,381 $76,815 $76,333 $77,034

Subtotal Spent on Operations $144,325 $239,781 $238,215 $240,133 $242,834

Addit ional Cash Spen t

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0 $0 $0

Other Liabil ities Principal Repayment $0 $0 $0 $0 $0


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8.5 Projected Balance Sheet

The Balance Sheet shows our liabilities and assets, including the cumulative Cash Balance from

the previous table. The Paid-in Capital of $320,732 represents subsidies from General MedicalCenter during the Start-up period and the first year of operations. This is a grant, and doesnot have to be repaid unless the clinic fails - defined in the grant agreement as failure to

achieve patient load goals for five months in a row.


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Table: Balance SheetPro Forma Bal ance Sheet


Assets

Current Assets

Cash $210,205 $130,520 $99,845 $121,405 $160,264

Accounts Receivabl e $61,470 $91 ,374 $103,834 $112,141 $120,448

Other Current Assets $0 $0 $0 $0 $0

Total Current Assets $271,675 $221,894 $203,679 $233,546 $280,712

Long-term Assets

Long-term Assets $225,000 $225,000 $225,000 $225,000 $225,000

Accumulated Deprecia tion $0 $0 $0 $0 $0

Total Long-term Assets $225,000 $225,000 $225,000 $225,000 $225,000

Total Assets $496,675 $446,894 $428,679 $458,546 $505,712

Liabili ties and Capital Year 1 Year 2 Year 3 Year 4 Year 5

Current LiabilitiesAccounts Payab le $8,700 $6,419 $6,304 $6,271 $6,337

Current Borrowing $0 $0 $0 $0 $0

Other Current Liabili ties $0 $0 $0 $0 $0

Subtotal Current Liabil ities $8,700 $6,419 $6,304 $6,271 $6,337

Long-term Liabili ties $195,000 $165,000 $135,000 $135,000 $135,000

Total Liabili ties $203,700 $171,419 $141,304 $141,271 $141,337

Paid-in Capital $320,732 $320,732 $320,732 $320,732 $320,732

Retained Earnings ($22,732) ($27,757) ($45,257) ($33,357) ($3,457)Earnings ($5,025) ($17,500) $11,900 $29,900 $47,100

Total Capital $292,975 $275,475 $287,375 $317,275 $364,375

Total Liabili ties and Capital $496,675 $446,894 $428,679 $458,546 $505,712


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Table: RatiosRatio Anal ysis

Year 1 Year 2 Year 3 Year 4 Year 5 Industry Profi le

Sales Growth n.a. 48.65% 13.64% 8.00% 7.41% 5.64%

Percent of Total Assets

Accounts Receivabl e 12.38% 20.45% 24.22% 24.46% 23.82% 13.11%

Other Current Assets 0.00% 0.00% 0.00% 0.00% 0.00% 54.55%

Total Current Assets 54.70% 49.65% 47.51% 50.93% 55.51% 68.11%

Long-term Assets 45.30% 50.35% 52.49% 49.07% 44.49% 31.89%Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Current Liabil i ties 1.75% 1.44% 1.47% 1.37% 1.25% 21.29%

Long-term Liabili ties 39.26% 36.92% 31.49% 29.44% 26.70% 21.02%

Total Liabili ties 41.01% 38.36% 32.96% 30.81% 27.95% 42.31%

Net Worth 58.99% 61.64% 67.04% 69.19% 72.05% 57.69%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Gross Margin 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%Sel li ng, General & Adm ini strati ve Expenses 103.40% 107.95% 95.24% 88.93% 83.76% 52.19%

Advertising Expenses 0.00 % 0.00% 0.00% 0.00% 0.00% 0.31%

Profit Before Interest and Taxes 10.71% 0.23% 10.76% 16.07% 20.90% 3.12%

Main Ratios

Current 31.23 34.57 32.31 37.24 44.30 1.72

Quick 31.23 34.57 32.31 37.24 44.30 1.36

Total Debt to Total Assets 41.01% 38.36% 32.96% 30.81% 27.95% 49.35%

Pre-tax Return on Net Worth -1.72% -6.35% 4.14% 9.42% 12.93% 18.06%

Pre-tax Return on Assets -1.01% -3.92% 2.78% 6.52% 9.31% 35.67%

Addit ional Ratios Year 1 Year 2 Year 3 Year 4 Year 5

Net Profit Margin -3.40% -7.95% 4.76% 11.07% 16.24% n.a


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Appendix

Page 1

Table: Personnel

Personnel Plan

Mon th 1 Mo nth 2 Mo nth 3 Month 4 Month 5 Mon th 6 Mon th 7 Mon th 8 Mon th 9 Month 10 Month 11 Month 12

Physician salary 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Receptionist 0% $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500

Medical Assistant 0% $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800

Health Insurance 0% $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167

Dental Insurance 0% $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167

Vision Insurance 0% $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167

Workman's Comp 0% $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150

Total People 3 3 3 3 3 3 3 3 3 3 3 3

Total Payroll $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950


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Appendix

Page 2

Table: Profit and Loss

Pro Forma Profit and Loss

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Sales $0 $0 $4,000 $6,000 $9,000 $ 12,000 $14,000 $ 16,000 $18,000 $21,000 $24,000 $24,000

Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Gross Margin $0 $0 $4,000 $6,000 $9,000 $12,000 $14,000 $16,000 $18,000 $21,000 $24,000 $24,000

Gross Margin % 0.00% 0.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Expenses

Payroll $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950

Marketing/Promotion $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Payroll Taxes 15% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Medical Supplies $0 $0 $0 $750 $750 $750 $750 $750 $750 $750 $750 $750

Office Supplies $0 $0 $0 $500 $500 $500 $500 $500 $500 $500 $500 $500

Printing $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167

Other Professional Services $83 $83 $83 $83 $83 $83 $83 $83 $83 $83 $83 $83

Answering Service $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250

Telephone $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167

Medical Waste $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167

Repairs and Maintenance $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125

Janitorial Service $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125

Dues Books and Subscriptions $83 $83 $83 $83 $83 $83 $83 $83 $83 $83 $83 $83

Medical Billing 15% $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667

Commercial Insurance $292 $292 $292 $292 $292 $292 $292 $292 $292 $292 $292 $292

Total Operating Expenses $10,075 $10,075 $10,075 $11,325 $11,325 $11,325 $11,325 $11,325 $11,325 $11,325 $11,325 $11,325

Profit Before Interest and Taxes ($10,075) ($10,075) ($6,075) ($5,325) ($2,325) $675 $2,675 $4,675 $6,675 $9,675 $12,675 $12,675

EBITDA ($10,075) ($10,075) ($6,075) ($5,325) ($2,325) $675 $2,675 $4,675 $6,675 $9,675 $12,675 $12,675

Interest Expense $1,854 $1,833 $1,813 $1,792 $1,771 $1,750 $1,729 $1,708 $1,688 $1,667 $1,646 $1,625

Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($11,929) ($11,908) ($7,888) ($7,117) ($4,096) ($1,075) $946 $2,967 $4,987 $8,008 $11,029 $11,050

Net Profit/Sales 0.00% 0.00% -197.19% -118.61% -45.51% -8.96% 6.76% 18.54% 27.71% 38.13% 45.95% 46.04%


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Appendix

Page 3

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $0 $0 $400 $600 $900 $1,200 $1,400 $1,600 $1,800 $2,100 $2,400 $2,400

Cash from Receivables $0 $0 $0 $0 $120 $3,660 $5,490 $8,190 $10,860 $12,660 $14,460 $16,290

Subtotal Cash from Operations $0 $0 $400 $600 $1,020 $4,860 $6,890 $9,790 $12,660 $14,760 $16,860 $18,690

Additional Cash Received

Sales Tax , VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Investment Received $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000

Subtotal Cash Received $24,000 $24,000 $24,400 $24,600 $25,020 $28,860 $30,890 $33,790 $36,660 $38,760 $40,860 $42,690

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Expenditures from Operations

Cash Spending $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950 $3,950

Bill Payments $266 $7,978 $7,958 $7,978 $9,166 $9,145 $9,124 $9,103 $9,083 $9,062 $9,041 $9,020

Subtotal Spent on Operations $4,216 $11,928 $11,908 $11,928 $13,116 $13,095 $13,074 $13,053 $13,033 $13,012 $12,991 $12,970

Additional Cash Spent

Sales Tax , VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-term Liabilities Principal Repayment $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Spent $6,716 $14,428 $14,408 $14,428 $15,616 $15,595 $15,574 $15,553 $15,533 $15,512 $15,491 $15,470

Net Cash Flow $17,284 $9,572 $9,992 $10,172 $9,404 $13,265 $15,316 $18,237 $21,127 $23,248 $25,369 $27,220

Cash Balance $27,284 $36,856 $46,848 $57,019 $66,423 $79,688 $95,004 $113,241 $134,368 $157,616 $182,985 $210,205


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Appendix

Page 4

Table: Balance Sheet

Pro Forma Balance Sheet

Mon th 1 Mo nth 2 Mo nth 3 Month 4 Month 5 Mon th 6 Mon th 7 Mon th 8 Mon th 9 Month 10 Month 11 Month 12

Assets Starting Balances

Curren t Assets

Cash $10,000 $27,284 $36,856 $46,848 $57,019 $66,423 $79,688 $95,004 $113,241 $134,368 $157,616 $182,985 $210,205

Accounts Receivable $0 $0 $0 $3,600 $9,000 $16,98 0 $24,120 $31,230 $37,440 $42,780 $49,020 $56,160 $61,470

Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Current Assets $10,000 $27,284 $36,856 $50,448 $66,019 $83,403 $103,808 $126,234 $150,681 $177,148 $206,636 $239,145 $271,675

Long -term Assets

Long-term Assets $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000

Accumulated Depr eciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Lo ng-term Assets $ 225 ,0 00 $22 5,000 $2 25,00 0 $2 25,00 0 $2 25 ,00 0 $2 25,00 0 $ 225 ,0 00 $ 225 ,0 00 $22 5,000 $22 5,000 $22 5,0 00 $22 5,0 00 $ 22 5,0 00

Total Assets $235,000 $252,284 $261,856 $275,448 $291,019 $308,403 $328,808 $351,234 $375,681 $402,148 $431,636 $464,145 $496,675

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Current Liabilities

Accounts Payable $0 $7,713 $7,693 $7,673 $8,861 $8,841 $8,821 $8,801 $8,781 $8,760 $8,740 $8,720 $8,700

Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Current Liabilities $0 $7,713 $7,693 $7,673 $8,861 $8,841 $8,821 $8,801 $8,781 $8,760 $8,740 $8,720 $8,700

L ong -term L ia bilitie s $ 225 ,0 00 $22 2,500 $2 20,00 0 $2 17,50 0 $2 15 ,00 0 $2 12,50 0 $ 210 ,0 00 $ 207 ,5 00 $20 5,000 $20 2,500 $20 0,0 00 $19 7,5 00 $ 19 5,0 00

Total Liabilities $225,000 $230,213 $227,693 $225,173 $223,861 $221,341 $218,821 $216,301 $213,781 $211,260 $208,740 $206,220 $203,700

Paid-in Capital $32,732 $56,732 $80,732 $104,732 $128,732 $152,732 $176,732 $200,732 $224,732 $248,732 $272,732 $296,732 $320,732

Retain ed Earnin gs ($2 2,732 ) ($2 2,732 ) ($ 22,73 2) ($ 22,73 2) ($22 ,7 32) ($22 ,7 32) ($2 2,732 ) ($2 2,732) ($2 2,732 ) ($2 2,732 ) ($2 2,732 ) ($2 2,732 ) ($2 2,732 )

Earnings $0 ($11,929) ($23,838) ($31,725) ($38,842) ( $42,938) ($44,013) ($43,067) ($40,100) ($35,113) ($27,104) ($16,075) ($5,025)

Total Capital $10,000 $22,071 $34,162 $50,275 $67,158 $87,062 $109,987 $134,933 $161,900 $190,887 $222,896 $257,925 $292,975

Total Lia bil itie s a nd Ca pital $ 235 ,0 00 $25 2,284 $2 61,85 6 $2 75,44 8 $2 91 ,01 9 $3 08,40 3 $ 328 ,8 08 $ 351 ,2 34 $37 5,681 $40 2,148 $43 1,6 36 $46 4,1 45 $ 49 6,6 75

Net Worth $10,000 $22,071 $34,162 $50,275 $67,158 $87,062 $109,987 $134,933 $161,900 $190,887 $222,896 $257,925 $292,975


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Appendix

Page 5

Table: General Assumptions

General Assumptions


Plan Month 1 2 3 4 5 6 7 8 9 10 11 12

Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%

Other 0 0 0 0 0 0 0 0 0 0 0 0


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Appendix

Page 6

Table: Sales Forecast

Sales Forecast


Sales

Patient Care 0% $0 $0 $4,000 $6,000 $9,000 $12,000 $14,000 $16,000 $18,000 $21,000 $24,000 $24,000

Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Sales $0 $0 $4,000 $6,000 $9,000 $ 12,000 $14,000 $ 16,000 $18,000 $21,000 $24,000 $24,000

Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Not applicable - see expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other $0 $ 0 $0 $ 0 $0 $ 0 $0 $ 0 $0 $0 $0 $0

Subtotal Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

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