One of the most profitable aspects of the healthcare industry has become dialysis centers. In any economic climate people are going to require nephrology services, and for many kidney disorders dialysis is the only treatment that is available. The centers are able to generate highly recurring streams of revenue once they establish their patient base. Additionally, given that this is a healthcare related business – almost every financial institution is willing to provide a substantial amount of capital for the acquisition of dialysis machines and related equipment. This is even more true if the owner is going to be a physician that is going to render nephrology and kidney related treatments on site. The startup cost associated with a new dialysis center are very high, and once they are established the usually face very little competition moving forward. Even in major metropolitan market, the demand for dialysis treatment is substantial and even though there are numerous competitors in these markets – there is usually an overload of demand in regards to outpacing supply.
As it relates to strengths, dialysis centers are always able to remain profitable and cash flow positive even during times of economic recession. These businesses are able to generate a substantial amount of the revenues not only from private insurance and patient payments, but also from publicly funded healthcare systems like Medicare and Medicaid. While the ongoing expenses relating to these businesses typically is high, the reimbursement schedules for dialysis services is very high as well. These businesses tend to become profitable within their first year of operation. These businesses also benefit from the very high barriers to entry associated with the establishment of a new dialysis center.
For weaknesses, as with all healthcare businesses issues pertaining to malpractice are always a concern. However, the entrepreneur can easily acquire a large malpractice insurance policy in order to mitigate these risks. Additionally, staff nephrologists and related nurses with a specialization in kidney issues are also a substantial payroll expense. However, the billings generated from providing the services always out ways these underlying costs.
For opportunities, one of the ways that most dialysis centers typically expand their operations is simply by expanding the number of facility sees that they own and operate. Again, given that this is a healthcare business almost all financial institutions will provide a business loan or line of credit secured by the equipment and receivables of the business for expansion purposes. Additionally, given the very high return on investment associated with these types of companies – there are numerous private investors that would be willing to put up any of the capital necessary in order to expand and launch operations. This is especially true for an established company that is producing a substantial amount of revenue.
For threats, there’s very little that is going to impact the way that these businesses conduct their operations. People are always going to require specialized kidney care and as such these businesses will remain in demand at all times. The biggest challenge faced by any healthcare business, including dialysis centers, is the fact that these businesses may have issues regarding the revenues if there is a major change to the reimbursement schedules from publicly funded healthcare systems.
Dialysis centers will continue to remain one of the main stay sub-industries within the greater healthcare field. For an owner operator that has extensive experience in healthcare management or a physician owner that is seeking to expand their revenues – dialysis centers can be extremely lucrative businesses.