ExplainerPractice Growth
The second location: coverage maths before real estate
A satellite office is usually sold as market expansion and paid for as a staffing problem. What to model before you sign.
8 min readGrowUrology editorial
In short
- A second site multiplies fixed cost immediately and revenue gradually.
- Physician travel time is a real cost — count the sessions lost in transit, not just the sessions gained.
- Decide which services the satellite actually delivers; a room without the equipment or staff to do procedures is a referral desk.
- Model the site as its own P&L with honest overhead allocation, or you will never know whether it works.
What this explainer covers · 3 parts
A satellite location is the most reversible-looking decision in practice growth that is, in practice, very hard to reverse. Leases, staff and patient expectations all outlive the enthusiasm.
The four numbers
- Incremental fixed cost per month. Rent, utilities, connectivity, the EHR seats, the front-desk FTE who exists whether or not the schedule is full, and the clinical staff required for the minimum viable session.
- Sessions actually available. Not sessions on paper. Subtract travel: a half-day at a site forty minutes away is not a half-day of clinic.
- Realistic fill curve. A new site starts empty. Estimate months to a defensible fill rate from your own experience opening panels, not from the pro-forma the broker supplied.
- Service scope. What can be done there? A location that can see patients but not perform procedures generates consults it then has to send elsewhere — which may still be strategically correct, but should be modelled as a feeder, not a profit centre.
The question behind the question
Most satellite decisions are really referral-protection decisions: a competitor or a health system is opening in a market you draw from, and the site is defensive. That can be a perfectly good reason. It should just be stated as one, so the site is evaluated against the referral volume it protects rather than against a growth target it was never going to hit.
Run it as its own P&L
From month one, report the location separately with a stated overhead allocation method. Practices that fold satellite performance into the group total lose the ability to tell whether the site is subsidising or being subsidised — and by the time it becomes obvious, three years of lease remain.
Sources & further reading
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