Dialysis Center Business Plan

1.0 Executive Summary

The purpose of this business plan is to showcase the development of a dialysis center based in the greater Philadelphia metropolitan area. At this time, the founder is seeking $5 million of equity and debt capital in order to launch operations. The Dialysis Center, LLC (“the Company”) will provide a host of nephrology services to the general public through its expansive center. The service will render standard dialysis care coupled with treatments from board-certified nephrologists. Revenue-generating operations are expected to commence in this year once the requisite capital has been secured.

The Services

As stated above, the dialysis center will be primarily involved with providing the general public with kidney care services. The Company’s staff nephrologists will assist patients with all their dialysis needs coupled with diagnostic services relating to other kidney issues. The business will receive reimbursements from publicly funded health systems including Medicare and Medicaid as well as from private insurance companies. The business will also receive payments directly from patients in the form of co-pays.

The business, at the onset of operations, will have two staff nephrologists error kidney needs. The business will also have five nurses on staff to render services to patients.

The next section of the business plan will further document the services of the dialysis center.

The Financing

At this time the business is seeking $1 million of equity capital and $4 million of debt capital in order to launch operations. The terms of investment are to be determined during negotiation as it relates to the equity capital needed to launch his business. This business plan assumes that the Company will receive a 20 year loan carrying a 6% interest rate in regards to the $4 million in capital needed from a financial institution.

These funds will be primarily used for the establishment of the dialysis center location, dialysis center equipment, and for working capital needs.

The third section of the business plan will further document the usage of funds.

The Future

As time progresses, the dialysis center may integrate new services into its overall service architecture in order to generate larger billable revenues. This includes kidney stone treatments using ultrasonic technology. The Company will continue to hire staff nephrologists in order to boost the billable revenues of the business as it relates to diagnostic care.

Sales Forecast

Profit and Loss Statement
Profit and Loss Statement

2.0 The Dialysis Services

As stated in the executive summary, the principal revenue center for the Company will come from dialysis center services rendered to the general public. The founder is currently in the process of developing ongoing referral relationships with area physicians so that patients can become quickly enrolled in the Company’s dialysis center services. The Company will generate highly recurring streams of revenue from dialysis given that these services are often needed several times per week.

The Company’s staff nephrologists will be able to provide not only assistance as it relates to dialysis, but also for a host of other kidney issues as well. The Company may also hire a staff urologist that will assist people that are having issues with their urinary tracts as the kidneys and urinary tract systems are very closely related. It should be noted that this business plan assumes that a staff urologist will not be hired during the first three years of operation, but rather will be paid as an outside consultant.

The management team is currently in the process of securing all the necessary licensure to operate this business within the Commonwealth of Pennsylvania. The management team is also acquiring all the necessary licensure from Medicare and Medicaid in order to be able to build the federal government for the services.

3.0 The Financing

3.1 Usage of Funds

At this time the Company intends to use the funds that are sought in this business plan as follows:

  • $1,000,000 Equipment
  • $500,000 Location Build Out
  • $1,500,0000 Working Capital
  • $250,000 General FF&E
  • $50,000 Licensure
  • $700,000 Building Acquisition

3.2 Investor Equity

This is to be determined during negotiations

3.3 Management Equity

This is to be determined during negotiations

3.4 Exit Strategies

Healthcare related businesses are some of the most valuable companies in the world given the fact that they are relatively immune from negative changes in the economy, and they are always able to produce a stream of profitable revenue. In the event that management wishes to sell the business, a qualified business broker or mergers and acquisitions investment bank will be hired to manage the sale. Most dialysis centers typically have a sales premium of 7 to 10 times the previous year’s earnings depending on the overall profitability and growth prospects of the business. It should be noted that the founder does not intend to sell the business for at least 10 years.

4.0 Market Analysis

4.1 Industry Analysis

Within the United States there are approximately 13,000 centers that provide dialysis services to the general public. Each year these businesses generate about $25 billion in revenue and provide jobs for about 150,000 people. The growth of this industry is expected to remain strong and robust over the next 20 years as people from the baby boomer generation are starting to reach their later years. This motet necessitates a greater degree of medical clinic care including the usage of dialysis. The expected growth rate moving forward will be 4% to 5% per year for the next decade.

One of the key things that may occur during this time or changes to reimbursement schedules as it relates to Medicare and Medicaid. However, given the strong demand and the affordable care act – the revenues generated by these businesses is expected to remain relatively stable during the next 5 to 10 years.

4.2 Patient Profile

Any person that has kidney issues that necessitates dialysis is a potential user of the Company services. Generally speaking, the average person requires dialysis will be between the ages of 40 and 80 and will have a prescription from their primary care physician or nephrologist to have the services rendered at the Company site. These individuals will either have private insurance, Medicare, or Medicaid to cover the cost of dialysis.

4.3 Competition

Given the strong demand for the services in any major market, there are always going to be a number of other dialysis centers that are going to be in competition with that of the Company. One of the key differentiating factors at the business will have, at the onset of operations, is that a number of staff nephrologists as well as a contracted urologist will be on staff in order to ensure that a host of services beyond dialysis can be rendered to patients. This will allow the business to properly position itself as a full-service provider of care as it relates to kidneys as well as for related organs.

4.4 Economic Analysis

At this time, the current economic climate within the United States a strong. Interest rates have remained relatively low despite substantial increases in asset prices, and unemployment rates are at their all-time lows. In the event of a market recession, the dialysis center will be able to remain profitable at all times given the fact that a majority of the revenues are generated through publicly funded healthcare systems. Additionally, the high gross margin generated coupled with the moderate low-cost operating infrastructure of the Company will further create a strong economic position for the business.

5.0 personnel Plan

The Company will be organized as follows

6.0 Marketing Plan

6.1 Marketing Objectives

Maintain strong relationships with referring nephrologists and primary care physicians in the target market

Develop an expansive online presence so that patients can quickly find the business

Develop and maintain relationships with area hospitals that will refer discharging patients to the dialysis center when needed

6.2 Marketing Strategies 

The most important marketing strategy for the dialysis center will be to develop ongoing relationships with primary care physicians at, nephrologists, and urologists within the target market. These referral relationships will allow patients to be enrolled in the Company services given that a prescription from a service provider is typically required in order to receive dialysis care. Once these relationships are developed, the ongoing marketing relating to the dialysis centers operations will be somewhat limited.

The dialysis center will also maintain an expansive website that showcases its operations, hours of operation, insurances excepted, and biographies of all staff physicians. The website will be mobile friendly and listed among all major search engines. After operations commence, the business will may also develop pages on social media platforms such as FaceBook in order to have individuals place reviews regarding their experience at the Company’s dialysis center. Over a substantial period of time, these reviews can be a strong indicator of the great service provided by the Company and will further drive visibility for the dialysis centers brand-name. It should be noted that posts regarding kidney care and general dialysis services will be included on all social media platforms in order to create a strong degree of communication with potential patients.

Finally, the dialysis center will support local charities in order to further boost the visibility of the business. It should be noted that an aggregate of around 1% of the dialysis centers total revenues will be allocated towards this purpose.

7.0 Financial Plan

7.1 Financial Assumptions

  • The dialysis center will have a growth rate of its revenues at 10% per year.
  • The Company will receive $1 million equity capital and $4 million at that capital to launch these operations.
  • The business will have accounts receivables that will last an average 90 days.

7.2 Sensitivity Analysis

The business is revenues are not sensitive to negative changes in the economy given that patients are going to require dialysis care, kidney care, and related medical services on an ongoing basis. Most importantly, a bulk of the Company’s revenues will come from publicly funded healthcare systems especially Medicare and Medicaid. As such, a major economic recession would not have any impact on the Company’s ability to generate revenues and profits on an ongoing basis.

7.3 Source of Funds

Source of Funds Example

7.4 Profit and Loss Statement

Profit and Loss Statement
Profit and Loss Statement
Profit and Loss Statement Graph
Profit and Loss Statement Graph

7.5 Cash Flow Analysis

Cash Flow Analysis Chart
Cash Flow Analysis Chart
Cash Flow Analysis Graph
Cash Flow Analysis Graph

7.6 Balance Sheet

Balance Sheet
Balance Sheet

7.7 Breakeven Analysis and Business Ratios

Business Ratios
Business Ratios
Breakeven Analysis
Breakeven Analysis

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