Are Ketamine Clinics Profitable? Part 2: Exploring Expenses

In part two of this blog series, we're going to continue answering the common question we get asked, “How profitable are ketamine clinics?” In this second half, we are going to focus on the expenses which can affect a clinic’s profitability. The common misconception when it comes to earning from your business is that the bigger the revenue, the bigger the profit. However, that may not always be the case as when your business grows, so could your expenses. 

If you haven’t already read the first part, Are Ketamine Clinics Profitable? Part 1: Exploring Revenue, we recommend you check it out. Reading both blogs together will give you a much clearer picture as to what factors affect how much money you could make opening your own ketamine clinic.

As your clinic grows and you start seeing more patients, not only will your revenue increase, but chances are your expenses will too.

Ketamine’s Clinic Profitability Equals Revenue Minus Expenses: A Review

When it comes to determining whether you can expect significant profit from opening a ketamine clinic, we honestly can’t answer this for your own experience. However, we’ll start by telling you that there are several factors you need to be aware of to help you take the right actions. 

Sure, based on this simple equation below, it only makes sense that the more patients you see and the higher you charge, the bigger your revenue, right? 

Profit = Revenue - Expenses

The equation states the lower you keep your expenses, the more money you get to take home. It may seem wise to keep your expenses as low as possible, but remember that reinvesting back into your business to maintain or increase your quality should be the goal. Expenses don’t always have to be a bad thing! In the next few sections, we’ll cover the factors that affect your ketamine clinic’s expenses, and what you can do about them. 

To increase the chances of profitability for your ketamine clinic, it is important to understand the different types of expenses you will incur as a business owner.

Factors Affecting A Ketamine Clinic’s Expenses

There are two types of expenses. First type includes all expenses related to providing ketamine infusions: cost of medical supplies and labor i.e. paying staff. This is opposed to the second type of expense, which is any expense related to running a ketamine practice or of doing business such as rent, utilities, etc.

If we keep our expenses low and ideally have a lot of revenue, you can become very profitable. So to fully understand this, let’s dive deeper into the two types of expenses in relation to opening and running a ketamine clinic.

Deciding how little you want to spend on ketamine infusion-related expenses means that you may decide to do everything yourself first in the beginning. As the clinic grows, you can then start hiring more staff.

Ketamine Infusion-Related Expenses

Think of this type of expense as how much it costs you to provide only ketamine infusions, i.e. purely medically-related.This would include:

• Medications

• Medical supplies

• Medical instruments/equipment - like the infusion pump 

• Labor costs - physician, medical staff

Recalling the profit equation, you can be more profitable if you lower your expenses. Businesses that keep their operational expenses low have a competitive advantage over businesses that spend a lot. Medications, supplies, and equipment are fairly fixed expenses. Meaning there isn’t too much variability. There may be a little difference in cost of an infusion pump from company to company. So you would want to look at other areas to lower your expenses. 

An area you could potentially look to lower costs is labor costs, i.e. staffing. Let’s look at an example, if you are a doctor and you are willing to do everything, your labor cost is only you. Now if you wanted to have a nurse or medical assistant or a CRNA, that would increase your labor costs. So, if you keep a lean, one person operation – like doing everything yourself – you can keep your labor costs very low. 

Let's say you don’t want or feel comfortable starting I.V.’s or don’t want to monitor the patient yourself. If that’s the case, you’ll need to hire someone, and expect costs to rise. When we started out, it was a two person operation, Sam and a medical assistant. Over time we grew our team, and as our revenue increased, our expenses did too.

The business-related expenses of your clinic can definitely be minimized if you DIY a lot of it yourself; however, remember that it could eat up too much of your time.

Cost of Doing A Ketamine Business

The second type of expense is related to opening and running a ketamine clinic, but not directly related to providing the medical care, i.e infusions. This includes, but is not limited, to the following:

• Rent

• Utilities

• Marketing

• Accounting services

• Legal expertise

• Office supplies

• Administrative staff

• Office Expenses, etc.

When you open a ketamine clinic, you need a place to do the ketamine infusions, have people know about you, and meet all licensing and regulatory requirements. These types of expenses are related to allowing you to do business. It’s all the admin-related costs. 

In our experience, this type of expense was where you could really lower your expenses and increase your profitability. Finding a location with low rent or subletting a room to a larger medical group can be a way to keep this expense down. 

For other aspects such as marketing, creating your website, cleaning your own toilets, etc, you can definitely DIY these to keep your expenses lower. But remember, although DIY is “cheaper,” it’ll cost you your time!

While it’s perfectly fine starting out to do a lot on your own, like putting furniture together (we’ve been there) or answering the phone, some things should be outsourced like legal and accounting expertise. Don’t go cheap here either. Allocate budget to a business attorney familiar with opening a medical clinic in your state plus get a good accountant!

No matter how great your pricing or amazing your product is, no one will know about your business without effective marketing.

Marketing: A Huge Factor In Your Ketamine Clinic’s Profitability

No doubt marketing has a large effect on both revenue and expense. Marketing is an obvious and necessary expense and most of you will hire someone to do this for you. A few of you will DIY. Neither way is right or wrong, what’s important is that it’s successful. 

The success of your marketing will drive your revenue. Great marketing is going to get you more patients who will remain loyal to your brand. On the business side, you could even catch the attention of people who will want to work for you, with you, or even buy you out like venture capital. We’ve experienced it all thanks to our consistent branding and marketing.

Many medical professionals see a ketamine clinic as an “easy” pivot from their ER job, busy family medicine practice, or anesthesia practice. Sure, providing ketamine infusions can be much simpler than your current job, but managing the business is an entirely different ball game. The business side has a huge learning curve, but the straightforward easy answer to that is for you to partner with someone to help you with that. 

And yes, the operations side is highly important, but often what is forgotten at first is the marketing side. You may have a successful launch, but 3-6 months down the line, you’ll be wondering why nobody is coming to your clinic. You can be the best clinic, the cheapest clinic, and even the clinic with an amazing success rate. BUT if nobody knows about you, you might as well not exist! A great business is nothing without strong marketing. 

Learn about what you should NOT do when marketing your ketamine clinic in our blog “3 Ketamine Infusion Marketing Mistakes To Avoid

As your clinic grows, your expenses will grow too. Sure, you can keep your expenses as low as possible. But to be able to serve more customers while still maintaining your quality, you will need to reinvest back in the business. 

It takes Money To Make Money at your Ketamine Clinic 

Your expenses will grow as you need to market more, especially if you have a lot of competition or little demand for your services. When we started out, we did everything: answer phones, build furniture, clean toilets, you name it and we did it. Our first clinic was small with a ridiculously low rent, which worked out for us for the first four years. We outgrew our first clinic then moved into a clinic 2.5x the size of our first one. This increased our expenses, but we understood it was necessary to grow the business. 

We are all for a lean process with minimal expenses but this increase was necessary to meet the growing demand for our ketamine infusions. There is no perfect algorithm for keeping expenses low, but aiming to keep expenses low in a way that is aligned with your personal and professional goals and values has helped guide us.

To run a successful ketamine clinic, you need more than just profit to motivate you. There are so many other non-financial benefits to opening a clinic that will keep you fulfilled and inspired.

Final Thoughts About A Ketamine Clinic’s Profitability

Now that you’ve read about all the factors that a ketamine clinic’s revenue and expenses, you can easily see that there is a lot to consider when starting a ketamine clinic. Many people who talk to us want to know if it is financially worthwhile. We’ve heard the question “will opening a ketamine clinic equal or surpass my salaried hospital job?” more times than we can count. Talking further with these individuals, we often find they are actually trying to figure out if a ketamine clinic is the right pivot for them. If you are using profitability to be a driving factor in starting a ketamine clinic, we suggest you try something else and better yet ask yourself, “What do I really want?”

Running a ketamine clinic is no easy venture, especially when you are used to a salary. Starting out, your clinic can consume your life. It can feel like you are going from an 8 to 5 job, to creating a 24 hour a day job as you build your practice.

We talk about our clinic all the time and sometimes that means late nights, weekends, and holidays. But it’s ours. We are profoundly proud of what we do and are honored we get to transform patients with ketamine. There are so many non-financial benefits of being a ketamine clinic owner that we would never have had if we remained salaried physicians. For us, our ketamine infusion clinic is worth more than just profit. 

Are you ready to begin exploring the possibility of opening and managing your own ketamine clinic? Join our email list and be notified about the next free webinar and open registration for Ketamine StartUp.

Related Questions:

• What is the highest expense(s) in running a ketamine clinic?

  Depends on how big your ketamine clinic operation is. Traditionally your workforce (staff both medical and non-medical) is going to be our largest expense. Even if you are a solopreneur, i.e. you do everything (perform infusions, customer service, clean toilets, etc.) this falls under the workforce expense too, but you would only be paying yourself. After that, often it will be your lease and other business operations expenses.

• How much does it cost to start a ketamine clinic? 

  Start up costs depend on how much you are willing to do yourself versus outsource plus other factors like if you already have an established private practice, and your location. We believe it’s prudent to have $75-150K to start. We go in depth on this topic in our blog, How Much Money Do You Need To Start A Ketamine Clinic?

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Is opening a ketamine clinic going to financially reward you as much or more than your hospital job? In the second part of this two-part blog series, we are going to answer this question plus the factors that affect how big your clinic’s expenses will be.