Coptic Hospital Business Plan

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CopticHospital Business Plan

BusinessPlan: Coptic Hospital, Austin, Texas


Theproposed hospital in Austin, Texas will generate average yearlyrevenue of $27, 757,132 during its first five years of operation. Thehospital net cash flows will average $535,761 after salaries andwages costs, operating costs and capital expenditure. The hospitalwill require investment equity worth $3,314,365 that will berecoverable within five years of operations. The business willmaintain a positive credit status. The business will be subjected tocorporate income tax of 37%. The hospital will maintain a lowoverhead in all sections while optimizing the number of clienteleseen every hour. The hospital will cultivate capital andtechnology-oriented approaches to ensure that it remains profitableover the course of its business as well as offer quality service topatients. The company will incorporate management and financialaccounting aspects in its financial systems to ensure proper auditsand cost structures. Moreover, the company will make regular changesto its labor structures as well as amortize costs regularly to checkcosts and align all operations to the available assets or structures.


OpticHospital will be a privately owned enterprise offering bothoutpatient and inpatient services. The hospital will be located atThe West lake hills, in Austin, Texas. The hospital will operate 24-7service with 3 shifts. The pricing of services and product will bebased on local competitive rates and consistent with pertinent laws.The main products and services to be offered include ambulatory andemergency Unit, ENT, General Medicine, Dental, Children’s clinic.The hospital will also offer consultant clinics and in-house servicessuch as obstetrics, pediatrics, cardiology, gastroenterology,nephrology, surgery and urology. However, the cardiology andpediatric services will be offered in a separate department. Thehospital, headed by a board of directors, will offer the services ina conducive environment. Moreover, the hospital will be dedicated tothe management and provision of health services through innovativetechnological and human systems thus, guaranteeing the trust andsecurity of the patients. On the other hand, the management willcomprise of the BOD, CEO, Managing Director, Director for ClinicalServices, Vice-president, Chief Medical Officer, Director forBusiness Development, and Marketing Director.

Accordingto Devine &amp O`Clock (2015), the United States has awell-developed healthcare structure supported by the private sector,federal, state, and local governments. In this regards, the hospitalwill collaborate with these authorities to offer competitiveservices. Austin has over 130 competitive hospitals and healthclinics offering innovative biotechnology and life science research(Longley, Adams, Moore, &amp Fort, 2015). Texas is ranked the fourthstrongest state in the industry supported by a strong technologyinfrastructure, research facilities and commercial companies’presence in the market (Vitalari, n.d.). Coptic Hospital directcompetition will include existing hospitals and clinics andpharmaceutical companies. The hospital will, however, enjoy a localadvantage over existing hospitals and clinics due to its proximitylocation near the highly populated residential area. Theestablishment of the hospital will address patient management,patient needs, health financing, and provision of quality services,mostly justified by the gap that exists. It is worth noting thatalthough Austin boasts of effective management of patient care, itdoes not meet the needs of patients effectively thus, the need forthe hospital.


Thehospital capital will be founded by two directing partners eachcontributing 250,000 and 350,000 respectively. One of the partnerswill contribute the land where the hospital will be built. It shouldbe noted that the land in question has two buildings suitable forhospital operations thus, much of the capital will go intopurchasing machines and equipment. The hospital will attract fiveinvestors each contributing a staggering amount of capital of therequired initial stock value of $2.6 million. This will amount toshares worth $7.125 million that will be required to start thebusiness. The stock value of the shares will be valued at $0.195 atthe start of the business to increase the post money shares from theinitial pre-money capitalization of $7.125 million to a post, moneycapitalization totaling $11.542 million. It is worth noting that thecapital will not be enough to offer all the services at once, so thehospital will develop the units as they become necessary.

Employeeswho include nurses, the administration staff and doctors will becompensated through salaries and commissions. Doctors offeringspecialty consultation services in various clinics will be paidthrough commissions and bonuses together with their basic salaries.The hospital will pay licensing fees, administrative charges,insurance premiums, and taxes, which will affect its operations.Moreover, the company will expand when it becomes necessary and whenit access capital. In the course of its operations, the hospital willapproach numerous firms in a bid to improve services as well ascollaborate in the provision of some services that will bechallenging for the hospital to offer alone.

Thefounders, partners and shareholders contributions will be as followsas indicated in the Capitalization tables below


PreCapitalization Table


NewUp Round Pricing Model Summary

Descriptionof financing

Thehospital proforma financial statement are based on the assumptionsthat

  • The hospital will have an annual revenue growth rate of 8.5 per year.

  • The founders and investors will contribute $5,125,000 to develop the hospital.

  • The hospital will also take a loan of $2,000,000 from a local bank with a 10 years repayment term at 9% interest rate.

Sourceof Funds

Themain capital contributors shall include two founders, five investorsand a loan from the bank at an interest rate of 9% per year.



ForecastIncome Statement


Pro-formaProfit and Loss Income Statement

Cashflow Analysis


Pro-formaCash Flow Analysis

ForecastBalance sheet






Coptichospital Business Ratio Analysis


Thehealthcare service industry in Texas is mainly dominated by federaland state-owned hospitals and large corporation owned health carefacilities making it difficult to get the actual statistics ofsmall-scale hospitals in the region (Cutler &amp Morton, 2013). Thisposes a high risk of misinterpreting the market performance of thehealthcare industry in the state, which may not translate to everytype of business. The hospital entirely depends on the leadership ofa competent and reliable management team right from the start. Anyfault or incompetence can severely affect the hospital performanceand growth.

Thehealthcare market in Texas is concentrated in both federal and localgovernment institutions NGO’s owned institutions and large privatecorporations owned hospitals and health care centers (Longley et al.,2015). This leaves a narrow window for small-scale businesses in theindustry. Such competition with institutions funded by government isa disadvantage to private hospitals that do not enjoy governmentsubsidies. Contracts with insurance firms largely affect theperformance of hospitals in the state. Setting up the hospitalfacility to be able to attract customers and insurance companiesentirely depends on the management team strategy.

Incase the hospital fails to achieve its minimum threshold in revenue,it may result in diverting cash flow to repaying the principal andinterest of the bank loan. The interest loan offered by the bank isnot fixed, hence, may shift from time to time affecting the businesscash flow and expenditure control. Defaults in paying the loan mayalso attract additional charges. The market dynamics are subject tochanges in the economic and socio-political environment of theregion. This may adversely affect the hospital performance. Theindustry has strict regulations in Medicare practices and servicedelivery such as different licenses and legal obligations that canattract additional costs.

Thehospital may find it challenging to develop sustainability approachesgiven the high level of bankruptcy among hospitals in the US. Devineand O`Clock (2015) assert that change in information, legalinvestigations, quality problems, and poor management have causedroughly 30 hospitals to file for bankruptcy between 2005 and 2008.Quality is a key risk factor that may influence the operations thehospital. Failure to strengthen the dependability of clinicalprocesses and implement evidence-based strategies will inhibit theenhancement of outcomes and physician contracting, which will affectthe operations of the hospital greatly. Competition within Austin andthe development of technologies means that the firm will have tooffer high-quality services. However, the already establishedhospitals may inhibit the hospital’s pursuance of physicianintegration and arrangements, which ensure quality management.


Cutler,M.D. &amp Morton, S.F. (2013). Hospitals, Market Share, andConsolidation. JAMA,310(18), 1964-1970.

Devine,K., &amp O`Clock, P. (2015). An Analysis of the Benefits ofTechnology Implementation in the Healthcare Industry.&nbspJournalof Health Care Finance,41(3),1-24.

Longley,B., Adams, C. D., Moore, J., &amp Fort, J. (2015). Texasmunicipal league economic development handbook.Retrieved 28 March 2016 from:

Vitalari,N. P. (n.d). Aprospective analysis of the future of the U.S. healthcare industry.Retrieved 28 March 2016 from: