There are many ways to increase your Revenue per Visit, not just by cancelling and signing contracts.
And if you are looking for investors, an exit, or getting a loan, the impact of increasing your Revenue per Visit is not just improved cash flow or profit margin but also the valuation of your business.
In the Physical Therapist Private Practice world, business valuations range from 3 to 6 times profit. There are a number factors that influence these multipliers like history, systems in place, brand awareness, referral relationships, and many others.
For this calculation we will use a valuation calculation of 4 times profit.
If you have an annual profit of $100k, then your business valuation would be $400,000. That’s how much your business might be worth for a good buyer.
If your $100k profit is on a $1M business and your current Revenue per Visit is $103, then you saw around 9,709 visits over the course of the year, or just over 800 visits per month.
Let’s say you are able to increase your Revenue per Visit by $3. That may not sound like a big change. And maybe it isn’t a priority for you. (Yet.) But what effect would this increase have on your profit and your business’s valuation?
A $3 increase on 9,709 visits would yield $29,127. If you did not spend any additional money to get that increase, then that $29,127 is all profit, meaning your profit would have gone from $100k to over $129k. That’s a 29% increase to your profit and profit margin.
Your new business valuation at this $129,127 profit at a multiplier of 4 would be $516,508, again an increase of 29% to your business’s value.
So to recap, for a business with $1M in annual revenue, a $3 per visit increase, could change your profit from $100k to >$129k, and your business’s value from $400k to $516k.
Have a business with $2M in annual revenue and double the number of visits? Multiply all by 2. For a $500k business, half it. You get the point. What’s the payoff for your business?
Let’s talk about how I can help you with this and with implementing other positive changes in your business. Schedule a time to talk with me here.