About a 7-minute read.
Margin per schedule hour: the figure revenue does not show
The team works at full occupancy, the schedule is booked weeks in advance and patients come back. Even so, the monthly result is the same as three years ago, although the clinic now treats more patients.
The usual response is to look for more patients through marketing, longer opening hours or a new hire, and it works when each schedule hour leaves a high margin. When the margin per hour is low, adding hours multiplies that low margin, and the workload along with it.
Since 1999 we have worked exclusively with clinics and beauty centers: 1,017 clinics advised and more than 1,050 projects. In this specific situation, with a full schedule and a flat result, the cause rarely lies in demand. It lies in not knowing what margin each schedule hour leaves, a figure that is different from revenue and only appears when you calculate it.
The analysis asks three questions, and total revenue answers none of them: which treatments those hours go to, how many of them are actually paid for, and at what price.
A clinic with a full schedule starts from a strong position to correct this, because it already has what is hardest to get: demand. The work consists of identifying which part of that demand leaves the least margin per hour and how many schedule hours it takes up each month.
Two seemingly equivalent treatments: what each hour brings in
Take two treatments from your portfolio. A is priced at €120 and B at €90, and the first comparison is made on price.
With only that information, the logical choice is A, which is priced a third higher.
The second variable is direct cost: product and consumables, plus the practitioner's time valued at its cost per hour. A consumes €78 and B €26, so A leaves €42 of margin and B €64. The comparison is reversed. Even so, the analysis is incomplete.
The decisive variable is still missing: schedule time. A takes one hour and B half an hour, so per hour A leaves €42 and B €128.
Example of margin per schedule hour for three treatments
| Treatment | Actual price | Direct cost | Margin | Minutes | Margin/hour |
|---|---|---|---|---|---|
| A | €120 | €78 | €42 | 60 | €42 |
| B | €90 | €26 | €64 | 30 | €128 |
| C | €240 | €150 | €90 | 90 | €60 |
The figures in the example are assumptions chosen to make the comparison easy to read. They are not market prices, sector averages or data from any clinic. What applies to your clinic is the structure of the table, not the amounts.
Treatment C would be the intuitive choice, because it is priced at twice A and almost three times B. Yet per schedule hour it leaves less than half of what B does.
That is the whole mechanism. The schedule is the only resource you cannot expand with a purchase, so the useful comparison between treatments is made per hour. In addition, the schedule fills by inertia with what is most in demand, which is also what is most promoted and what the team offers most easily. That is how the clinic's direction changes without management having decided it.
Two cases carry more weight than they appear to. Packages are sold for the total amount and delivered session by session over months: if the discount was calculated on the price list and not on the margin, each session leaves very little and takes up a full hour. Included touch-ups and follow-up visits consume schedule time and consumables, and should be charged to the treatment they belong to.
Real occupancy: four schedule gaps you can correct
A schedule that is 100% full on paper bills less than it appears to. The difference is spread across four gaps, and each one is corrected in a different way.
No-shows and late cancellations. A booked hour the patient does not attend is an hour that can no longer be billed. The useful figure is not the overall percentage, but the time slots and treatments where no-shows concentrate. No-shows are not spread at random, and at those points a confirmation or deposit policy changes the figure.
Badly allocated times. The minutes each treatment has reserved in the schedule were set on opening day, with the treatment portfolio of that time. If fifteen minutes per appointment are left over, they are given away unpaid; if time is short, the schedule falls behind during the day and ends up losing the last appointment. The fix is to time ten real cases, and it costs nothing.
Non-clinical work. Quotes, follow-ups and administrative work are necessary and permanent tasks. When they are done during the hours of someone who bills by the hour, they take up billable slots. The relevant decision is who takes on those tasks and in which time slot.
Idle rooms and equipment. Occupancy is measured per practitioner, and there is a second occupancy, that of rooms and equipment, which is also worth measuring. A device below its threshold consumes cash every month; the detailed calculation is in how to calculate when a piece of equipment pays for itself.
Price review: the lever that acts on margin
A clinic's prices tend to stay unchanged for years, while the costs behind them move. Product, maintenance, salaries and rent rise continuously. Every year without a price review, the margin narrows without anyone having done anything wrong.
This lever carries so much weight because its effect falls on margin, not only on price. In treatment A, €120 with €78 of cost leaves €42 of margin. At €132, 10% more, the margin rises to €54. 10% on price equals 29% more margin, with the same schedule, the same patients and the same work.
Three objections come up again and again, and each one has an answer. “Patients will leave” is a testable hypothesis: review a small group of treatments, wait a quarter and analyze the volume. “The competition charges less” is a legitimate position when the cost structure is designed to sustain it. If it is not, it forces you to fill the schedule with volume, which is exactly the problem this article analyzes. And “now is not the time” is solved with a small annual review, less noticeable than a large increase every five years.
Conversely, cutting prices to fill a schedule that is already full increases the workload and reduces the margin of each hour.
First steps: six actions to order your schedule by margin
The correction can start before the analysis is complete. We recommend following this order:
- Select the ten treatments that take up the most schedule time, not the ones that bill the most. Those ten take up most of the hours and concentrate the problem.
- Fill in four columns for each one: actual price (with discounts and prepaid packages prorated), direct cost, margin and margin per hour.
- Measure the real times. Time ten cases of each treatment. It is the figure most often out of line, and the one that corrects the decisive column.
- Sort the list by margin per hour and calculate what share of the schedule the bottom half takes up. That percentage measures the scope of the problem.
- Act on time first and on price second. Adjusting a badly allocated time requires no sales conversation and raises the margin per hour from day one.
- Redirect the portfolio instead of cutting it. A low-margin treatment is the entry point for patients who later book other treatments. The decision is how much schedule time it gets and in which slots.
A clinic is managed by the margin each hour leaves, more than by its revenue or its occupancy. With the margin per hour of your ten main treatments, management decides on solid grounds what to promote, which prices to review and where to bring in a new practitioner. Without that figure, the schedule fills with what is most in demand and the result is left to inertia.
Your schedule, ordered by margin: the plan implemented inside your clinic
Calculating the margin per hour of each treatment is the first step. Changing the schedule, prices and protocols without losing patients takes a plan and follow-up.
In our Growth service, our team of consultants analyzes pricing, schedule, equipment and team with your figures, and implements the plan inside your clinic. We then measure its effect.
It is the method we have applied in more than 1,050 projects since 1999, with full confidentiality on every one.