When you’re thinking about opening a new urgent care business, it’s easy to get sucked in by the medical side. Hiring great providers, stocking exam rooms, and delivering high-quality care all deserve your attention.
However, beneath the surface of any successful urgent care center lie the far less glamorous basic economic principles. In urgent care, you don’t have the power to control both sides of the volume and rate equation. You can only turn up the “volume” dial to increase revenue for your clinic.
Understanding the financial mechanics of your clinic and how to use them to your advantage is key to a profitable, efficient business.
The “Volume x Rate” Equation
Let’s start with the basics. In any business, revenue equals volume multiplied by rate. This is true whether you’re selling handbags, hotel rooms, or medical services.
In traditional retail, companies pick one of two strategies:
- High volume, low margin (like Walmart)
- Low volume, high margin (like Saks Fifth Avenue)
Walmart makes thin profits. The retail giant pulls in just 3% margins on food and 7% on general merchandise, but its scale is massive, leading to $1.6 billion in revenue every day. Saks sells far fewer items, but at much higher margins.
Urgent care doesn’t get to choose its margin. Your rates are largely determined by third-party payers (insurance companies and Medicare). About 36-39% of reimbursement contracts are fixed case rates, and insurance fee schedules dictate the rest. You can’t increase your prices to make more money. So, the only way to grow your urgent care center’s revenue is to increase patient volume.
That makes your business more like Walmart than Saks—a high-volume, low-margin operation. But there’s a twist in the urgent care industry. Once you cover your fixed costs, your margins skyrocket.
Urgent Care is a Perishable Service
Here’s another important concept: urgent care is a perishable service.
It’s not like a produce item or fresh baked bread. Rather, think of it like a hotel room or an airline seat. If no one books that room tonight or that seat before the plane leaves, you can’t sell it tomorrow. The opportunity to generate revenue is gone forever. That’s why hotels and airlines obsess over occupancy. Every empty room or empty seat represents lost revenue.
Urgent care is no different. Your providers and staff are paid to be there no matter whether they see 15 patients in a day or 50. The second your clinic’s doors open, you incur a day’s worth of labor costs. If your team can see four patients per hour but only sees two, those missed opportunities can never be recaptured. Once an hour passes, its potential revenue is gone.
That’s why underutilized capacity is the single biggest loss item in urgent care. Sadly, it’s more common than you’d think. Underutilization isn’t just inefficient. It’s an expensive problem new urgent care businesses simply cannot afford.
The Real Cost of Slow Days
Much like your margins are often fixed, urgent care is a high fixed-cost business. Your rent, technology, equipment, and labor are all constant. Once you’ve paid to open your doors for the day, every patient you see gets you closer to the “break-even” point where your costs are covered.
Say the average visit brings in $135. Of your overall costs, 85% goes to labor. After that, the incremental cost per patient (supplies, paper, billing fees, labs, x-ray, etc.) is only $15.
If your clinic’s break-even point (when your labor costs for the day are fully covered) is 24 visits in a day, the numbers look something like this:
- Each patient you see from the 25th on brings in $135 in revenue
- It only costs you $15 (incremental costs) to treat them
- Your center enjoys $120 in profit—an 85% margin
Now imagine you see 35 patients that day. You’ve covered your costs and seen 10 patients generating $120 in profit each. Each additional visit beyond your break-even point amounts to exponential profitability thanks to the fixed costs you’ve already covered.
Throughput is the Most Important Metric
There’s a reason high-performing urgent care businesses prioritize efficiency. It’s not only good for patients (decreased wait times, faster care), but it’s also essential to becoming profitable.
Every minute wasted in the exam room, every delay in check-in, and every unnecessary wait adds up to fewer patients seen per hour. Those delays mean your center has fewer chances in the day to turn fixed costs into high-margin revenue.
In urgent care, patients per hour per provider is the golden key performance indicator (KPI). Boosting that number doesn’t mean rushing care or cutting corners. Rather, it improves by building an operation designed to optimize the flow of patients through your clinic.
Look for opportunities to:
- Cross-train your staff to handle additional duties when they would otherwise be idle in their primary role.
- Empower providers and staff to handle simple tasks quickly.
- Streamline intake, registration, and discharge.
- Use technology to remove friction at every touchpoint when possible.
More Patients + Less Waste = Higher Profits
If there’s one takeaway from all this, it’s that financial success for an urgent care business comes down to increasing your volume and efficiency. Your prices are largely out of your control, and your costs are fixed. The only path to sustainable profits is to maximize your throughput and minimize unused capacity.
Every hour of the day counts. Every patient interaction counts. Every operational decision you make—from location to staffing to registration flow—can help you unlock more revenue from the same resources.
Need help building an urgent care business with a strong financial foundation? At Urgent Care Consultants, we help physician entrepreneurs like you turn clinical expertise into profitable, high-performing businesses. From staffing strategy to site selection to lean operations, our team is here to help you maximize your volume and your margins. Schedule a no-risk consultation today and learn how we can help position your urgent care for long-term success.