The document discusses the business side of running a clinical research center. It outlines key costs to consider like principal investigator (PI) payments, coordinator payments, rent, overhead costs, and staff costs. It also notes hidden costs like insurance, utilities, taxes, and fees. The document emphasizes maintaining a positive cash flow by negotiating monthly payments from sponsors instead of quarterly. It provides metrics for calculating profit per employee, profit per study, and ideal profit margins of 50% for the research center or 70% if the owner is also the PI. The conclusion states that a research center must be run like a business to be successful.

1. The Business Side of Clinical Research:
Profit Margins and Cash Flow

2. Introduction
People who run their own research centers or people who are
interested in opening one in the future will usually be interested in the
business side of conducting a research.
Although clinical research is an important factor when it comes to the
general advancement of medicine, it’s crucial to understand and see it
as a business, because essentially, it is a business that has to be
profitable in order to be successful.
For this reason, we’ve prepared for you a short presentation that will
give you the necessary knowledge of the business aspect of a clinical
research center.
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3. Costs
Costs of Running a Research Center
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PI
CoordinatorRent
Overhead Staff
A clinical research site that conducts studies
has many different costs that have to be
considered in order to calculate your profits.
Such costs are:
- PI payment - anywhere from 10 to 35%;
- Coordinator payment - 25% or below;
- Rent for the space you’re using;
- Overhead (indirect costs)
- Staff (employees);

4. Hidden Costs to Consider
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When you’re preparing your calculations and budget, don’t forget
to include the following items that many sites tend to ignore:
- Insurance;
- Computer hardware and software;
- Utilities at the site (water, electricity, phone);
- Taxes;
- Professional services (attorneys, accountants, HR staff,
consultants, etc.);
- Membership fees in different organizations;
- Training costs;
- Patient transportation costs;
- IRB fees;
- Storage fees;

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Maintain a Positive Cash Flow
When negotiating the budget and contract
with the sponsor, you might notice that
almost all of them prefer to keep their
quarterly terms of payment. However, it’s
really common that these payments arrive
months later than agreed. When the
payments are quarterly and late for a few
months, then the site’s cash flow will
become weak and compromised.
Considering the fact that most sites have to
send payments to vendors within 30 days
of receiving an invoice, cash flow (or the
lack of it) can become a serious problem.
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In order to avoid this problem, try to
establish monthly payments from your
sponsor. Even if the budget and
contract are already concluded, explain
him/her your position as a site and all
the current expenses of the site, and
try to get to an understanding. Another
important practice is to follow-up on all
unpaid invoices and regularly remind
your sponsor. Doing this will help you
maintain a positive cash flow at all
times.

6. Profit per Employee
Profit per Study
www.trialjoin.com Calculation Metrics
A method which is not so practical to use because it might be
unfair to coordinators. If you’re familiar with the way things work
in clinical research you probably know that coordinators do not
choose which study they want but are awarded studies, so it
isn’t their fault if they’re assigned on a bad study.
A good method to use in order to figure out which study is
more profitable for your site. In this way, you’ll know on which
study to focus more and which study is only causing stress for
you. Focusing your attention on profitable studies is extremely
important if you wish to succeed as a business. 6

7. PI Payment Explained In-Depth
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10 to 20%
if you don’t use their space
but have your own
30 to 35% max.
if you use their space for
conducting the study
PI
PAYMENT
One of the larger costs (if not the largest) that you’re going to have is the payment for the PI. In some
cases, the person who owns that research center is the PI, so if this is you - no worries! However, most
of the time research sites need to find a PI to lead their studies. Your PI will probably not be an
employee but an independent contractor. This means that you will have to pay him or her a
percentage of your gross profits.

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Ideal Profit Margins
After all of the above
costs and calculations
(PI, coordinator, rent,
staff, overhead), you
should aim to net 50%
of the profits for
yourself!
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However, if you’re also
the PI of a certain study
conducted in your
research center, then
your profit for that study
should be 70%. This is
why we mentioned that
it’s better to make this
calculation with the
method ‘’profit per study’’
instead of ‘’profit per
employee’’.
50%
PROFIT
OR
70%
PROFIT

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CONCLUSION
In conclusion, everyone who owns a research site has to understand that this is a business and treat it as such.
This is the only way in which you’ll be able to keep your research center running.
We hope that this information has given you a glimpse of the things you need to watch out for.
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