How Profitable is a Medical Clinic? Revenue & Profits Analysis

If you want to open a new retail medical clinic in the US, you’ll need to understand what is your breakeven point, and how much profits you can make with this business.

Retail clinics are a huge market in the US: the US market represented $3.49 billion in 2021 and is expected to grow to $4.40 billion by 2028. Yet, with over 3,000 retail medical clinics across the country, the competition is also fierce.

In order for you to know how much money you can make with this business, you’ll need to create financial projections and forecast your revenues and expenses.

In this article we’ll look at public benchmarks as well as our own analysis to look into how profitable medical clinics can be. We’ll also give you an example you can reuse for your own business plan. Let’s dive in!

What is the average turnover of a medical clinic?

As per a recent source, the US retail medical clinic industry was worth $3.49 billion in 2021. Because there are over 3,000 retail medical clinics across the US, it’s safe to assume that the average turnover for a retail medical clinic is around $1,160,000.

Yet, you must understand that not all medical clinics will have the same revenue. Some will earn more than others because of many factors like location, popularity, number of seats, and so on.

When it comes to pay, assuming that you are both the owner and the clinic manager, the average annual salary you can expect is $77,345. 

While the salary definitely depends on your years of experience, certifications, education, etc., it also depends on the location. Glassdoor reports that clinic managers in Chicago earn the highest with an average annual salary of $128,991.

What is the average profit margin of a medical clinic?

According to Bain & Company, the EBITDA margins of retail medical clinics before accounting for corporate overheads can be around 25% with the potential of that increasing to 45%..!

This is also something you found in our own analysis (more on that below). Yet, EBITDA is only part of the answer. Indeed, EBITDA doesn’t include other expenses like depreciation, interest expenses and corporate taxes.

So before we dive into the example of a typical medical clinic, let’s first look at how much it actually costs to run a retail medical clinic in the US.

How much does it cost to run a retail medical clinic?

There are various recurring costs involved in running a retail medical clinic. They include:

• Supplies (COGS, ~10% sales): this include medical supplies such as bandages, drugs, etc. It also includes non-medical supplies (bedding, food & beverage for hospital stays, etc.)
• Salaries (35-40% sales): You must pay salaries to your medical and administrative staff (nurses, doctors, receptionists, etc.)
• Marketing (~5% sales): You will need to constantly promote your medical clinic to attract new patients, and hence, you must spend a certain amount per month on advertisements
• Other (15-20% sales): includes utility bills, rent (if you rent the premises), insurance, bookkeeping, legal and other operating costs

All in all, as per McKinsey’s findings, you should expect to reach on average EBITDA margins of about 25% to 35%. This includes all expenses listed just now.

Now, looking at net profit, it’s a bit different. Indeed, net profit includes corporate taxes, interest expenses (if you took a loan to purchase equipment and/or the real estate) as well as depreciation of your assets.

That’s why net profits (in green in the chart below) is much lower: net profit can reach 10% to 20% for the most successful businesses.

How to increase profits for a retail medical clinic?

There are various strategies you can deploy to increase the profits of your retail medical clinic and they include:

• Build an online presence: Build an online presence and perform SEO to appear in local searches. Register your business with Google My Business
• Start a YouTube channel: Start a YouTube channel to give medical advice, show videos of certain procedures, etc. This can help you to start a second revenue stream by monetizing your YouTube channel
• Virtual visits: Offers after-hour virtual visits to increase your revenues. However, make sure that doctors can maintain a work-life balance
• Increase services: Consider adding more services to attract more patients, which in turn, will increase the revenue for your clinic
• Appointment scheduling software: Use appointment scheduling software to effectively use your time and squeeze in more patients. Also, consider online appointments (virtual visits) because that reduces the waiting time in a physical clinic
• Reduce missed appointments: Cancellations are quite common, but you should consider adding cancellation fees, virtual visits, etc. that can reduce cancellations because of various issues like traffic