Cash economics per patient and per client
Unit economics ask whether one more patient, or one more client, pays for itself and how fast. This build uses an invented care company. Move the collection delay, the device cost, the nurse time and the share of routine contacts handled by software, and watch the payback month.
What this shows
- Month-by-month cash for one patient in each program, with the payback month
- Device cost paid in instalments, plus the labor and software behind each patient
- An automation slider showing payback and 12-month cash with and without it
- The same view for a whole medical group, with its ramp, churn and sales cost
How I use it
- Deciding how much to spend to win a new client
- Seeing which cost line is worth automating first
- Explaining why cash lags profit in a growing service business
Explore the model below. It uses an invented company and invented numbers.
Explore the model
Illustrative model · Synthetic dataWide tables scroll sideways: swipe inside a table to see every column.
Sample build: unit economics of an invented care company
Alder Quay Care is an invented company that runs remote monitoring and chronic care programs for medical groups. The build follows the cash from one patient and then from one medical group, month by month: what is billed, when the money arrives, what the device, the nurses and the software cost, and the month the cash pays back.
Synthetic inputs for illustration. Not data from any employer.
What to try
- Raise the collection delay from 70 to 110 days and watch the payback month move out. Nothing about the care changes, only when the cash arrives.
- Move the monitoring nurse minutes from 20 to 30, then to 40. Ten extra minutes with no new billing step lose money, and the next step arrives at 40.
- Slide routine contacts handled by software up to 100 percent, then open the Automation tab to compare payback with and without it.
- Open One client and raise the share of patients leaving each month. Every patient who leaves has to be replaced, and a replacement costs a device and an intake call.
- Press Costly device and compare the lowest point with the cash after 12 months. Six payments ease the dip, but the dearer device still leaves less cash in the end.
Insurers pay in about 70 days, nine in ten billed dollars are collected, and half of routine contacts are handled by software.
Patient cash payback
Month 9
One monitoring patient. Profit breaks even in month 4
Patient cash at 12 months
$158
Lowest point -$243 in month 3
Client cash payback
Month 17
A group building to 300 active patients
Cash the client needs
$87,184
Lowest point is in month 8
Cash payback
Month 9
First month the running cash total is at or above zero
Profit break-even
Month 4
Profit counts care when it is delivered, not when it is paid for
Lowest point
-$243
Cash to fund per patient, reached in month 3
Steady cash a month
$43.90
Cash added in month 24, after the one-time costs are behind the patient
Cash and profit for one monitoring patient
Profit counts the share of billing that is ever collected in the month the care is delivered, and counts each cost when it is paid. Cash counts billing only when it arrives. The gap between the two lines is money earned and not yet received. The month-by-month table further down carries every point on this chart.
The three programs side by side
| Program | Cash payback | Profit break-even | Lowest point | Cash at 12 months | Cash at 24 months |
|---|---|---|---|---|---|
| Monitoring | Month 9 | Month 4 | -$243 | $158 | $685 |
| Chronic care | Month 16 | Month 5 | -$147 | -$44 | $93 |
| Both | Month 8 | Month 2 | -$297 | $320 | $1,135 |
The highlighted row is the program picked above. Monitoring carries a device. Chronic care carries no device, and its margin depends on nurse minutes. Both shares the intake, outreach and software costs across two revenue streams.
Cash after 12 months
What gets billed
| Billing line | Month 1 | Later months | First 12 months |
|---|---|---|---|
| Setup and patient education, once | $20 | $0 | $20 |
| Device supply, each month | $45 | $45 | $540 |
| Monitoring management, each month | $50 | $50 | $600 |
| Chronic care management, each month | $0 | $0 | $0 |
| All billing | $115 | $95 | $1,160 |
Setup is billed once. Device supply is billed monthly and depends on days of readings. Management is billed monthly and depends on nurse minutes. Illustrative rates, not the fee schedule.
What sits behind one patient
| Cost line | When it is paid | First 12 months | Share |
|---|---|---|---|
| Nurse time | Every month the patient is active | $240.00 | 35% |
| Device, paid in instalments | Equal monthly payments from month 1, owed even if the patient leaves | $120.00 | 17% |
| Monthly data charge | Every month the patient is active | $108.00 | 16% |
| Adherence outreach | Every month the patient is active | $79.20 | 12% |
| Software per patient | Every month the patient is active | $72.00 | 10% |
| Intake labor | Once, in month 1 | $40.00 | 6% |
| Enrollment labor | Once, in month 1 | $15.00 | 2% |
| Shipping the device | Once, in month 1 | $12.00 | 2% |
| All costs | $686.20 |
The device is bought up front and paid for in equal monthly instalments. The instalments are owed even if the patient leaves, so in the client view they do not shrink when patients leave.
Open one month
Click a month in the table below. Lines at zero are left out.
| Line | Amount |
|---|---|
| Device supply, each month | $45.00 |
| Monitoring management, each month | $50.00 |
| Billed in the month | $95.00 |
| Expected to be collected (90%) | $85.50 |
| Line | Amount |
|---|---|
| Monthly data charge | $9.00 |
| Nurse time | $20.00 |
| Adherence outreach | $6.60 |
| Software per patient | $6.00 |
| Paid in the month | $41.60 |
Cash in comes from care billed in month 2 (67% of what is expected to be collected) and month 1 (33% of what is expected to be collected). Cash in is $91.50, cash out is $41.60, so the month adds $49.90 and the running cash total is -$192.90.
Month by month
| Month | Billed | Cash in | Cash out | Cash | Cumulative cash | Cumulative profit |
|---|---|---|---|---|---|---|
| $115 | $0 | $149 | -$149 | -$149 | -$45 | |
| $95 | $0 | $82 | -$82 | -$230 | -$41 | |
| $95 | $69 | $82 | -$13 | -$243 | -$37 | |
| $95 | $92 | $42 | $50 | -$193 | $7 | |
| $95 | $86 | $42 | $44 | -$149 | $51 | |
| $95 | $86 | $42 | $44 | -$105 | $94 | |
| $95 | $86 | $42 | $44 | -$61 | $138 | |
| $95 | $86 | $42 | $44 | -$17 | $182 | |
| $95 | $86 | $42 | $44 | $27 | $226 | |
| $95 | $86 | $42 | $44 | $71 | $270 | |
| $95 | $86 | $42 | $44 | $114 | $314 | |
| $95 | $86 | $42 | $44 | $158 | $358 | |
| $95 | $86 | $42 | $44 | $202 | $402 | |
| $95 | $86 | $42 | $44 | $246 | $446 | |
| $95 | $86 | $42 | $44 | $290 | $489 | |
| $95 | $86 | $42 | $44 | $334 | $533 | |
| $95 | $86 | $42 | $44 | $378 | $577 | |
| $95 | $86 | $42 | $44 | $422 | $621 | |
| $95 | $86 | $42 | $44 | $466 | $665 | |
| $95 | $86 | $42 | $44 | $509 | $709 | |
| $95 | $86 | $42 | $44 | $553 | $753 | |
| $95 | $86 | $42 | $44 | $597 | $797 | |
| $95 | $86 | $42 | $44 | $641 | $841 | |
| $95 | $86 | $42 | $44 | $685 | $885 |
Reading the patient view
Checks on the patient numbers
- Cumulative cash equals the running sum of monthly cashPassesEvery month ties
- Monthly cash equals cash in less cash outPassesEvery month ties
- Cost lines and billing lines add to their totalsPassesEvery month ties
- Totals match the monthsPassesCash in and cash out tie
- Collectible billing equals cash received plus cash still duePassesNo money is lost in the delay
- Profit less cash equals the cash still duePassesThe gap is the money waiting to arrive
- Payback is the first month at or above zeroPassesSearch finds month 9
Routine contacts are reminders to take readings, check-in messages and follow-ups on missed readings. Software can send and handle most of them at a small fraction of the cost of a person. It cannot do the clinical minutes that are billed. Move the slider called routine contacts handled by software in the controls above and watch this tab.
Payback without software
Month 10
Every routine contact done by a person
Payback with software
Month 9
50% of routine contacts done by software
12-month cash without
$94
One patient, running total
12-month cash with
$158
$65 more than without
Payback comes 1 month sooner, and the patient holds $65 more cash after 12 months.
| Measure | Without software | With software at 50% |
|---|---|---|
| Routine contact cost per patient, a month | $12.00 | $6.60 |
| Cash payback | Month 10 | Month 9 |
| Profit break-even | Month 5 | Month 4 |
| Lowest point | -$259 | -$243 |
| Cash after 12 months | $94 | $158 |
| Cash after 24 months | $556 | $685 |
Cash after 12 months by share
The same numbers in a table
| Share by software | Contact cost a month | Cash payback | Cash after 12 months |
|---|---|---|---|
| 0% | $12.00 | Month 10 | $94 |
| 25% | $9.30 | Month 9 | $126 |
| 50% | $6.60 | Month 9 | $158 |
| 75% | $3.90 | Month 8 | $191 |
| 100% | $1.20 | Month 8 | $223 |
Each step of 25 points moves the contact cost by the same amount, because a contact done by software costs a fixed amount less than the same contact done by a person.
Which cost line is worth automating
| Cost line | First 12 months | Share | Can software take it over? |
|---|---|---|---|
| Nurse time | $240.00 | 35% | No, billed minutes need a clinician |
| Device, paid in instalments | $120.00 | 17% | No, it is a purchase |
| Monthly data charge | $108.00 | 16% | No |
| Adherence outreach | $79.20 | 12% | Yes, the slider changes this line |
| Software per patient | $72.00 | 10% | This is the software itself |
| Intake labor | $40.00 | 6% | No, it is a clinical call |
| Enrollment labor | $15.00 | 2% | No, a person signs the patient up |
| Shipping the device | $12.00 | 2% | No |
Reading this tab
Nurse time is both a cost and the thing that unlocks billing. Each amount of time below bills a different amount, and nurse time is paid for every minute. The left over column is what remains per patient in a month after paying the nurse. It rises at each billing step and falls in between, so ten minutes past a step costs money and earns nothing more.
Monitoring management
Bars show what is left per patient in a month, by nurse minutes.
| Nurse time | What bills | Billed | Expected to be collected | Nurse cost | Left over |
|---|---|---|---|---|---|
| No management code | $0 | $0.00 | $0 | $0.00 | |
| First-10-minutes code | $30 | $27.00 | $10 | $17.00 | |
| First-20-minutes code | $50 | $45.00 | $20 | $25.00 | |
| First-20-minutes code | $50 | $45.00 | $30 | $15.00 | |
| First-20-minutes code plus one added block of 20 minutes | $90 | $81.00 | $40 | $41.00 | |
| First-20-minutes code plus one added block of 20 minutes | $90 | $81.00 | $50 | $31.00 | |
| First-20-minutes code plus two added blocks of 20 minutes | $130 | $117.00 | $60 | $57.00 |
How the billing works in this build
- Setup and patient education is billed once for the patient, not every month.
- Device supply is billed once in each 30-day period. The full amount needs readings on at least 16 of the 30 days. Readings on 2 to 15 days bill a lower amount, and fewer than 2 days bill nothing.
- Monitoring management needs at least one live two-way contact with the patient or a caregiver in the month. Twenty minutes bills the main amount, a newer version covers 10 to 19 minutes, and each added full 20 minutes bills again. It has no test on days of readings.
- Only one practitioner can bill remote monitoring for a patient in a 30-day period, and the patient must already be an established patient of the practice.
- Chronic care management bills on 20 minutes of clinical staff time in the month, and again for each added full 20 minutes.
- Monitoring and chronic care can both bill for the same patient in the same month, but a minute of nurse time counts toward one program only.
Rates are rounded and illustrative, not the fee schedule.
A client is a medical group. It builds up to a target number of active patients over the ramp, then enrolls a replacement for each patient who leaves. The account executive is paid up front, before any patient enrolls, and earns a commission on cash collected. The patient numbers come from the controls above the tabs and the Rates and costs tab.
Client cash payback
Month 17
Counting the account executive cost paid before month 1
Profit break-even
Month 12
Profit counts billing when it is earned, so it can come before cash
Cash needed before it turns
$87,184
Lowest point is in month 8
Cash after 12 months
-$55,349
Running total, all costs in
Cash after 36 months
$228,504
Profit over the same months is $288,732
Active patients at the target
300
1,200 eligible, 25% enrolled
Cash and profit for the whole client
Month 0 holds the account executive cost. The full month list further down carries every point on this chart. Counts are expected values, so a month can show a fraction of a patient before rounding.
| Period | New patients | Active at the end | Cash in | Patient costs | Commission and account executive | Cash | Cumulative cash |
|---|---|---|---|---|---|---|---|
| Before launch | 0 | 0 | $0 | $0 | $40,000 | -$40,000 | -$40,000 |
| Year 1, months 1 to 12 | 368 | 300 | $164,412 | $166,608 | $13,153 | -$15,349 | -$55,349 |
| Year 2, months 13 to 24 | 108 | 300 | $309,744 | $167,818 | $0 | $141,926 | $86,577 |
| Year 3, months 25 to 36 | 108 | 300 | $309,744 | $167,818 | $0 | $141,926 | $228,504 |
How much can winning the client cost
| Payback wanted | Most up front |
|---|---|
| By month 12 | None |
| By month 18 | $55,614 |
| By month 24 | $126,577 |
| By month 36 | $268,504 |
This is the highest running cash total, before the account executive cost, reached by that month. None means that even a free account executive would not pay back in time. The commission is already counted.
Up-front pay against payback
| Pay up front | Cash payback | Cash after 12 months |
|---|---|---|
| $0 | Month 14 | -$15,349 |
| $20,000 | Month 15 | -$35,349 |
| $40,000 | Month 17 | -$55,349 |
| $60,000 | Month 19 | -$75,349 |
| $80,000 | Month 21 | -$95,349 |
| $100,000 | Month 22 | -$115,349 |
Why cash lags profit in a growing business
Show every month
| Month | New patients | Active patients | Cash in | Patient costs | Commission | Account executive | Cash | Cumulative cash | Cumulative profit |
|---|---|---|---|---|---|---|---|---|---|
| Month 0 | 0 | 0 | $0 | $0 | $0 | $40,000 | -$40,000 | -$40,000 | -$40,000 |
| Month 1 | 38 | 38 | $0 | $5,280 | $0 | $0 | -$5,280 | -$45,280 | -$41,399 |
| Month 2 | 39 | 75 | $0 | $8,227 | $0 | $0 | -$8,227 | -$53,507 | -$42,518 |
| Month 3 | 40 | 113 | $2,587 | $11,211 | $207 | $0 | -$8,831 | -$62,338 | -$43,602 |
| Month 4 | 41 | 150 | $6,032 | $12,960 | $483 | $0 | -$7,410 | -$69,747 | -$43,483 |
| Month 5 | 42 | 188 | $9,259 | $14,708 | $741 | $0 | -$6,190 | -$75,937 | -$42,144 |
| Month 6 | 43 | 225 | $12,485 | $16,456 | $999 | $0 | -$4,969 | -$80,906 | -$39,585 |
| Month 7 | 44 | 263 | $15,712 | $18,204 | $1,257 | $0 | -$3,749 | -$84,655 | -$35,806 |
| Month 8 | 45 | 300 | $18,938 | $19,952 | $1,515 | $0 | -$2,529 | -$87,184 | -$30,806 |
| Month 9 | 9 | 300 | $22,165 | $16,420 | $1,773 | $0 | $3,972 | -$83,213 | -$23,187 |
| Month 10 | 9 | 300 | $25,391 | $15,222 | $2,031 | $0 | $8,138 | -$75,074 | -$14,628 |
| Month 11 | 9 | 300 | $26,030 | $13,985 | $2,082 | $0 | $9,963 | -$65,111 | -$4,883 |
| Month 12 | 9 | 300 | $25,812 | $13,985 | $2,065 | $0 | $9,762 | -$55,349 | $4,879 |
| Month 13 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | -$43,522 | $16,706 |
| Month 14 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | -$31,695 | $28,533 |
| Month 15 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | -$19,867 | $40,361 |
| Month 16 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | -$8,040 | $52,188 |
| Month 17 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $3,787 | $64,015 |
| Month 18 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $15,614 | $75,842 |
| Month 19 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $27,441 | $87,669 |
| Month 20 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $39,269 | $99,497 |
| Month 21 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $51,096 | $111,324 |
| Month 22 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $62,923 | $123,151 |
| Month 23 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $74,750 | $134,978 |
| Month 24 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $86,577 | $146,805 |
| Month 25 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $98,405 | $158,633 |
| Month 26 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $110,232 | $170,460 |
| Month 27 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $122,059 | $182,287 |
| Month 28 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $133,886 | $194,114 |
| Month 29 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $145,713 | $205,941 |
| Month 30 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $157,541 | $217,769 |
| Month 31 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $169,368 | $229,596 |
| Month 32 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $181,195 | $241,423 |
| Month 33 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $193,022 | $253,250 |
| Month 34 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $204,849 | $265,077 |
| Month 35 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $216,677 | $276,905 |
| Month 36 | 9 | 300 | $25,812 | $13,985 | $0 | $0 | $11,827 | $228,504 | $288,732 |
Checks on the client numbers
- Cumulative cash equals the running sum of monthly cashPassesEvery month ties
- Monthly cash equals cash in less patient costs, commission and the account executivePassesEvery month ties
- Active patients follow the ramp, and new patients replace exactly those who leavePassesEvery month ties
- Client totals equal one patient times the number of patients, line by linePassesEight cost lines and four billing lines tie
- Collectible billing equals cash received plus cash still duePassesNo money is lost in the delay
- Profit less cash equals the cash still duePassesThe gap is the money waiting to arrive
- Payback is the first month at or above zeroPassesSearch finds month 17
- A client with no churn or sales cost shows one patient times the countPassesMatches in every month
These are the inputs behind every other tab. The three most important ones, the collection delay, the device cost and the nurse minutes, sit in the controls above the tabs. The rest are here. Everything is invented for illustration.
Rates the practice bills
| Billing line | Code | Rate |
|---|---|---|
| Setup and patient education, once for the patient | 99453 | $20 |
| Device supply, readings on 16 or more days of 30 | 99454 | $45 |
| Device supply, readings on 2 to 15 days of 30 | 99445 | $30 |
| Monitoring management, first 20 minutes | 99457 | $50 |
| Monitoring management, first 10 minutes version | 99470 | $30 |
| Monitoring management, each added 20 minutes | 99458 | $40 |
| Chronic care management, first 20 minutes of staff time | 99490 | $60 |
| Chronic care management, each added 20 minutes | 99439 | $45 |
Remote monitoring has three parts: setup, device supply and treatment management. Chronic care has the two amounts shown. Only one of the two device supply amounts bills in a 30-day period, and only one of the two monitoring management starting amounts bills in a month.
One monitoring patient pays back in month 9 and its running cash total is $158 after 12 months. Software handling routine contacts brings payback forward by 1 month. A medical group building to 300 active patients pays back in month 17 after needing up to $87,184 of cash.