IOP break-even calculator

The short answer, with the example numbers: a program costing $50,083 a month, collecting 85% of $400 a day for PHP and $225 a day for IOP, with 40% of clients in PHP, breaks even at 11.3 clients on an average day, so 12 in practice. Change any input below and the result explains itself.

How the calculator works

1. Blended rates. Each plan group's PHP and IOP daily rates are weighted by its share of client-days. Shares that don't add to 100 are treated as proportions.
2. Billed per client, per month = for each level, the share of clients at that level × days a week × 4.33 weeks × the blended daily rate, added together.
3. Collected per client = billed × your collection rate: the share of billed charges you actually collect after denials, write-offs and the client's share that never comes in.
4. Monthly costs = staff pay ÷ 12 × (1 + payroll taxes and benefits) + rent + other fixed costs.
5. Break-even census = monthly costs ÷ collected per client. It's an average daily census, not admissions.
6. Cash needed: month by month for 3 years, census grows evenly to your planned census over the months you enter, each month's billing is collected the number of months later you enter, and the running total starts at minus your startup costs. The deepest point is the cash you need; the first month that stays in the black is when cash flow turns positive.

Those are the formulas in our projection model, so the numbers here match what's in what it costs to start an IOP and the IOP business plan guide.

What it assumes, and what it leaves out

• Costs are fixed. Staff, rent and other costs don't change with census. In a real program you add a counselor as groups fill; if your break-even census is near what your staff can serve, add the next hire and run it again.
• No owner pay, loan payments or income taxes unless you add them to "other fixed costs". Add them if you want break-even to mean the owner gets paid too.
• Every client-day is billable and approved. Plans authorize a number of days and then review; days they deny lower your real collection rate. Our prior authorization guide covers keeping authorizations current.
• Contracts are effective from opening. If they aren't, your first months are self-pay and single case agreements; set the months until paid higher, or the ramp longer, to see the effect. Even with a contract, Texas gives state-regulated PPO plans 30 days to pay a clean electronic claim (Insurance Code chapter 1301), and self-funded employer plans aren't covered by that rule.
• Rates are yours to supply. The example rates are placeholders. Each plan sets its own rates and codes (commonly S0201 for PHP, H0015 for SUD IOP, S9480 for mental health IOP), so use contracted rates once you have them.
• Payroll taxes default to 10%. The employer's share of Social Security and Medicare alone is 7.65% (IRS Publication 15), and Texas unemployment tax for a new employer in 2026 is at least 2.7% on the first $9,000 of each person's wages (Bloomberg Tax on TWC's 2026 rates). Raise the percentage if you'll offer health insurance.

Break-even at other rates and collection rates

Rates and collections move break-even more than anything else. With the example's costs and schedule:

Rates (PHP / IOP per day)	75% collected	85% collected	95% collected
$320 / $180	16 clients	14.1 clients	12.6 clients
$400 / $225 (the model)	12.8 clients	11.3 clients	10.1 clients
$480 / $270	10.7 clients	9.4 clients	8.4 clients

Average daily census needed to cover $50,083 a month of costs, with 40% of clients in PHP 5 days a week and 60% in IOP 3 days a week.

What to do with the result

• Break-even above your planned census: the plan doesn't work as written. Cut fixed costs, open IOP before PHP, or find better-paying contracts before you sign a lease.
• Break-even close to your planned census: one slow month or one denied authorization wipes out the margin. A lender will see the same thing.
• Cash needed higher than you have: line up funding first. Our IOP startup budget shows where the money goes, line by line.
• Ready to take it to a bank: put it into a business plan with a 3-year projection. Ours is $1,250, and it's part of the IOP / PHP Program Launch.

Questions

How many clients does an IOP need to break even?

It depends on your costs and rates. In our model's example it's 11.3 clients on an average day, with $50,083 a month of costs. With rates 20% lower and 75% collected, the grid above shows it rising to about 16.

Is break-even census the same as admissions?

No. It's the average number of clients attending on a program day. With a typical length of stay of several weeks, the admissions you need each month depend on how long clients stay at each level.

What collection rate should I use?

The model's example uses 85%. Use your own history if you have it. A new program without authorizations and clean claims in place should test a lower rate too.

Does it work for a mental health IOP?

Yes. The math is the same; use your mental health IOP rates and schedule. Licensing differs: a Texas mental-health-only program falls under different rules from an SUD program, so check with HHSC and your attorney. SUD programs are licensed under 26 TAC chapter 564.

Sources

• IRS, Publication 15 (Circular E), Employer's Tax Guide; Bloomberg Tax, Texas publishes 2026 unemployment insurance tax rates
• Texas Legislature, Insurance Code chapter 1301; Texas Administrative Code, 26 TAC chapter 564
• Formulas and example inputs: Cima Consulting's program projection model (Texas, 2026)