Simulations
Scenario models grounded in BLS/FRED data. What does internalization actually cost — and what does the externality cost if you don't?
Capture Simulation Run
Hargrove Logistics — The Hidden Cost of Unpredictable Scheduling workforce founder led transportation
Model the total cost of 'just-in-time' scheduling that produces 35% driver turnover despite above-market wages ($36/hr, 72nd percentile). Compare against predictable scheduling with the same payroll.
Inputs
Company: Hargrove Logistics, Columbus OH
Current hourly wage: $36.00 (72nd percentile, OH transportation)
OH transportation median wage: $28.10 (BLS)
Total drivers: 1,200
Current annual turnover: 35% (420 separations/year)
Cost per driver separation: $12,500 (CDL training, onboarding, lost routes)
Current scheduling: On-demand, 48-hour notice, rotating weekends
Proposed scheduling: 4×10 fixed shifts, guaranteed weekends off
Scenarios
SCENARIO A — Keep 'Just-in-Time' Scheduling
Continue unpredictable schedules. Wages remain at $36/hr (strong). Turnover stays at 35% despite being $7.90/hr above median. 420 drivers leave per year. BLS OH data shows transportation hires at 3.5% — the industry cannot replace drivers at this churn rate. Competitor poaching is assumed to be the cause, but exit survey data (limited) suggests family instability is the primary driver.
SCENARIO B — Predictable Scheduling (One Region Pilot)
Offer 4×10 fixed schedules to 120 drivers in the Cincinnati hub. No wage change. Measure turnover, absenteeism, driver satisfaction, and route efficiency over 90 days. If turnover drops to 20% in the pilot, extrapolate to fleet-wide.
SCENARIO C — Fleet-Wide Predictable Scheduling
Roll out fixed schedules across all 1,200 drivers. Accept potential short-term route efficiency loss (estimated 3–5% in first month as schedules settle). Project turnover dropping to 18–22% based on pilot data and BLS benchmarks for stable-schedule employers.
Results
STATUS QUO COST: $5.25M/year in scheduling-driven turnover
Driver separations: 420/year × $12,500 = $5.25M
Absenteeism cost (unpredictable childcare): ~$800K/year
Route disruption from constant retraining: ~$600K/year
Total annual cost of scheduling externality: $6.65M
PILOT (120 drivers, Cincinnati hub):
Implementation cost: ~$40K (scheduling software + transition)
Expected turnover reduction: 35% → 20% in pilot group
Projected savings (pilot): $225K over 90 days
Data value: proves or disproves the scheduling hypothesis
FLEET-WIDE PROJECTION (if pilot validates):
Turnover drops 35% → 20% = 180 fewer separations/year
Annual savings: 180 × $12,500 = $2.25M in direct turnover costs
Absenteeism reduction (est. 30%): $240K/year
Route stability improvement: $300K/year
Total annual savings: $2.79M
One-time transition cost: ~$200K
ROI: 14× in year one
EXTERNALITY IMPACT:
420 fewer family disruptions per year (at current churn)
1,200 families gain schedule predictability
Community benefit: stable family routines, school attendance, childcare planning
Sensitivity / Break-Even
The pilot breaks even if turnover drops by just 4 percentage points (35% → 31%)
That's 18 fewer separations × $12,500 = $225K savings vs $40K pilot cost
Fleet-wide breaks even if turnover drops by just 6 percentage points (35% → 29%)
72 fewer separations × $12,500 = $900K vs $200K transition cost
Risk: Route efficiency may drop 3–5% during the first month of transition
This is recoverable — BLS data shows stable-schedule fleets have 2% higher route completion rates long-term
Created by Dr. Sarah Chen 2/13/2026
Caldwell Health — Internalizing the Care Access Externality workforce founder led healthcare
Model the cost of providing free primary care at company clinics to all 800 employees + dependents vs. the current cost of the externality (ED visits, absenteeism, insurance claims, turnover in low-wage roles).
Inputs
Company: Caldwell Health Partners, Nashville TN
Total employees: 800 across 3 clinic locations
RN/provider wages: ~$42/hr average (73rd percentile, TN healthcare)
MA/tech/admin wages: $16–22/hr (at or below TN healthcare P25 of $22)
Workers unable to afford company services: 40% (320 employees)
Current turnover in sub-$22/hr roles: 34%
TN unemployment rate: 3.8% (BLS) — tight market
TN healthcare employment growth: +16,800 jobs (6% momentum)
Marginal cost of employee visit at own clinic: ~$35 (vs. $250+ external, $1,500+ ED)
Scenarios
SCENARIO A — Status Quo
320 employees cannot afford primary care at the clinics where they work. They defer care, use emergency departments, or go without. Insurance premiums reflect this: higher claims, more ED visits, more chronic disease progression. Turnover in these roles runs 34% — nearly 3× the company average for higher-paid roles (12%). The irony is not lost on patients who see front-desk staff who clearly need care themselves.
SCENARIO B — Internal Care Access Program
Offer free primary care visits at all 3 clinics for employees + dependents. Use existing capacity during off-peak hours (clinics run at 72% utilization on average). Marginal cost per visit: ~$35. Estimated 4 visits/year per employee = 1,280 visits at $44,800 total. Compare against current ED visit costs billed to insurance.
SCENARIO C — Care Access + Wage Floor Adjustment
Combine free care access with raising the MA/tech/admin floor to $22/hr (TN P25). Addresses both the care externality and the wage externality simultaneously. Tests whether the combined internalization produces compounding returns — healthier workers who can also afford to live in the community.
Results
STATUS QUO ANNUAL COST OF THE EXTERNALITY:
ED visits by employees deferring primary care: ~180 visits × $1,500 avg = $270K
Excess insurance claims from deferred care: ~$400K/year
Absenteeism from untreated conditions: ~$320K/year
Turnover in sub-$22/hr roles: 109 separations × $8,500 = $927K
Presenteeism (working while sick/in pain): est. $200K/year
Total annual cost of care access externality: $2.12M
SCENARIO B — INTERNAL CARE PROGRAM:
Program cost: $44,800/year (1,280 visits × $35 marginal cost)
ED visit reduction (est. 60%): saves $162K/year
Insurance claim reduction (est. 25%): saves $100K/year
Absenteeism reduction (est. 30%): saves $96K/year
Turnover reduction in eligible roles (est. 34% → 24%): saves $289K
Total annual savings: $647K
Net annual benefit: $602K (ROI: 13.4×)
SCENARIO C — CARE + WAGE FLOOR:
Additional payroll cost for wage floor ($22/hr): $580K/year
Additional turnover reduction (24% → 18%): saves $173K
Additional productivity gains: $210K
Combined net annual benefit: $405K
Combined externality eliminated: $2.12M in direct costs + immeasurable community health impact
STRATEGIC VALUE:
Recruitment advantage: 'We're the healthcare company that provides healthcare to ALL our people'
Patient experience: Staff who are healthy and can afford their own care deliver better care
Community narrative: Caldwell walks the talk — internality as brand identity
Sensitivity / Break-Even
Care program alone breaks even if it prevents just 30 ED visits/year
30 × $1,500 = $45,000 (equals program cost of $44,800)
Current estimate: 108 ED visits prevented (60% of 180)
Combined program (care + wage floor) breaks even if:
• Turnover drops by 8 percentage points in eligible roles, OR
• Absenteeism drops by 20%, OR
• Insurance claims drop by 15%
Any single factor covers the cost. All three are expected to move.
Downside risk is minimal:
The clinics have 28% unused capacity — employee visits fill dead time
The marginal cost ($35/visit) is a fraction of the avoided alternative ($250–$1,500)
TN healthcare is growing 6% — the company can absorb these investments without margin pressure
Created by Dr. Sarah Chen 2/13/2026
Reeves Manufacturing — Cost of Internalization vs. Cost of Externality externality internalization family owned manufacturing
Compare the total cost of maintaining current wages ($22/hr with high turnover and taxpayer-funded benefits) against the total cost of raising to $27/hr (above benefits cliff). Include direct costs, turnover savings, productivity gains, and community economic multiplier.
Inputs
currentWage: 22
proposedWage: 27
employeeCount: 420
productionFloorPct: 0.65
currentTurnover: 0.28
costPerTurnover: 45000
publicAssistancePct: 0.55
estimatedWelfarePerEmployee: 7800
Scenarios
Status quo (externalize): Keep $22/hr. Accept 28% turnover, 55% on public assistance. Total annual cost: $5.7M turnover + $2.1M externalized welfare.
Partial internalization ($25/hr): Below benefits cliff but reduced gap. Turnover drops to ~22%. Some employees exit public assistance. Net cost increase: $1.9M wages, savings: $1.2M turnover.
Full internalization ($27/hr): Above benefits cliff. Turnover drops to ~18%. Public assistance drops to <20%. Net cost increase: $3.4M wages, savings: $3.8M (turnover + quality + productivity).
Results
Status quo total cost: $7.8M (turnover + training + lost production + externalized welfare)
Partial NPV: $0.7M net savings (doesn't cross benefits cliff)
Full internalization NPV: $0.4M net savings + elimination of $2.1M in taxpayer-funded welfare
5-year compounded: Full internalization generates $8.2M in cumulative savings
Sensitivity / Break-Even
Break-even turnover reduction: 12% (actual expected: 28% → 18%)
Break-even productivity gain: 3% (industry studies show 5-8% for above-cliff wages)
Community multiplier: $1.40 per $1 wage increase in local spending
Created by Dr. Sarah Chen 2/13/2026
Caldwell Clinic Expansion — NPV Scenario Analysis capital allocation founder led healthcare
Compare NPV of three financing approaches at current and projected interest rates.
Inputs
buildCost: 1200000
monthlyRevenue: 95000
monthlyOpex: 62000
leaseRate: 8500
currentInterestRate: 4.33
projectedRate: 3.75
Scenarios
Full build at current rate: Traditional construction loan at 4.33%. 24-month payback target.
Lease-first model: 12-month lease ($8,500/mo) then purchase option. Lower upfront capital.
Delayed to Q3: Wait for projected rate drop to 3.75%. Risk: competitor entry.
Results
Full build NPV: -45000
Lease-first NPV: 82000
Delayed NPV: 125000
Competitor entry risk: 18% probability within 6 months
Sensitivity / Break-Even
Break-even rate for full build: 3.9%
Lease-first profitable above: 4.8%
Revenue sensitivity: Profitable if monthly revenue > $88K
Created by Dr. Sarah Chen 2/13/2026
Capital Allocation Under PE Constraints capital allocation pe backed Manufacturing
Modeling optimal capital deployment for PE-backed mid-market manufacturer
Inputs
initial_capital: 5000000
debt_ratio: 0.65
growth_target: 0.18
Scenarios
market_growth: moderate
interest_rates: rising
pe_hold_period_years: 5
Results
projected_irr: 0.23
break_even_months: 14
cash_runway_months: 28
Sensitivity / Break-Even
critical_if_growth_below: 0.08
critical_if_rates_above: 0.09
2/13/2026