This paper presents financial projections for a wellness business targeting adults over 50 in Nassau County, New York. It outlines a cost-plus pricing model designed to attract Medicare and private insurance reimbursement, estimates variable and fixed costs, and derives a breakeven point that supports a per-session price of $360. A first-year income statement is provided, projecting modest net income based on a capacity of 240 clients per week. The paper also addresses key financial risks, including slow insurance payment cycles that create cash flow challenges and uncertainty about whether the service qualifies for reimbursement under the Affordable Care Act's preventative care provisions.
The target market for this business is adults over 50 in Nassau County, a population of approximately 485,080. Not all of these adults fall within the serviceable market; many are already fit, and many already subscribe to personal training, wellness, and dietary services that form the core of this offering. Given current capacity levels, the business can service approximately 240 clients per week. Some clients will be repeat visitors. The business model can be scaled up should demand emerge.
Pricing will be set on a cost-plus basis for two reasons. First, this approach makes it easier for the business to achieve profitability. Second, the target market is generally not price sensitive. If this service can be positioned as distinct from the general wellness services already available, the primary payers will be insurance companies and Medicare — payers that typically accept cost-plus as a standard pricing model.
Variable costs, including supplies and staffing, are estimated at approximately $300,000 for the year, or $22,500 per month. This estimate assumes staff salaries of around $35,000 per year for this type of work. Some staff members may receive equity in the business, allowing them to accept lower salaries than would otherwise be standard for their profession. Supplies — including blood tests and basic diagnostic tools — are not expected to be a significant cost factor. Basic kits will be produced to help clients who lack internet access manage their diet and exercise routines.
Government funding will be needed for patients who require transportation. Transportation costs are excluded from the revenue model because provision of transportation is considered the responsibility of other parties and is ancillary to the core business model.
Fixed costs are expected to be approximately $9,000 per month. These include two administrative staff members at $24,000 per year each and approximately $4,000 per month in rent, utilities, and miscellaneous expenses.
The price per session is set with a breakeven point of approximately 220 customers per month in mind. Using this target, the calculation yields a price of $360 for a one-hour session. Given that expected demand is 240 clients, the business should operate above its breakeven threshold from the first year.
Based on the capacity and pricing assumptions described above, the projected first-year income statement is as follows:
Note that the Centers for Medicare & Medicaid Services (CMS) website's search function was found to be non-functional at the time of writing, making it difficult to confirm the exact reimbursement rate for this type of service. This limitation is manageable because reimbursement rates vary by payer — private insurers may offer different rates from Medicare regardless.
"Payer delays and capital requirements"
"Reimbursement risk and preventative care framing"
You’re 58% through this paper. Sign up to read the remaining 2 sections.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.