Establishing a family practice: a model to determine economic feasibility

The availability of adequate health care is a major concern of urban and rural citizens. Community leaders and hospital administrators attempting to recruit family physicians and health care providers considering a specific community need a method by which they can evaluate a community's potential for supporting a first or additional primary care physician. To develop this method, a detailed survey of family practices geographically dispersed throughout Oklahoma was conducted in 1989. Data collected from family physicians and their administrative staff reflected the volume of ambulatory and hospital visits and the direct and indirect costs of the practice over the previous 12 months. Using the fixed and operating cost data, as well as number of patient visits and patient care revenue, we designed a model to project the economic feasibility of establishing a family practice in a specific community. This model can be used to project the number of visits a community can generate for a prospective family physician, as well as the direct and indirect costs, gross revenue, and net income of the practice.