Financial Management

Part-I (Section A)

Calculations of Patient Revenue

 

Payer

Program

Volume by

Net

Net

 

Mix

Volume

Payer

Price

Revenue

 

(A)

(B)

(C = A B)

(D)

(E = C D)

Oncology

 

 

 

 

 

Private Insurance

30%

120

36

$50,000

$1,800,000

Medicaid/Medicare

50%

120

60

40,000

2,400,000

Self-Pay

10%

120

12

50,000

600,000

Charity

10%

120

12

0

0

Cardiac

 

 

 

 

 

Private Insurance

20%

80

16

40,000

640,000

Medicaid/Medicare

60%

80

48

30,000

1,440,000

Self-Pay

10%

80

8

40,000

320,000

Charity

10%

80

8

0

0

Rhinoplasty

 

 

 

 

 

Private Insurance

10%

40

4

25,000

100,000

Medicaid/Medicare

20%

40

8

10,000

80,000

Self-Pay

60%

40

24

25,000

600,000

Charity

10%

40

4

0

               0

 

 

 

Total Patient Revenue

$7,980,000

Endowment Revenue

 

Investment

Rate

Income

U.S. Bond

$500,000

6%

$30,000

AT&T Div

250,000

8%

20,000

Growth Stock

   250,000

0%

            0

 

$1,000,000

 

$50,000

Revenue Budget

Denison Specialty Hospital

Revenue Budget

for Next Year

Net Patient Revenue

$7,980,000

Gift Shop Revenue

120,000

Endowment Income

      50,000

Total Budgeted Revenue

$8,150,000

Part-I (Section B)

Expected Bad Debts

 

 

Bad Debt

 

 

Revenue

Rate

Bad Debt

Oncology Self-Pay

$600,000

25%

$150,000

Cardiac Self-Pay

320,000

25%

80,000

Rhinoplasty Self-Pay

600,000

25%

  150,000

Budgeted Bad Debts

 

 

$380,000

Annual Impact of Capital Budget

Denison Specialty Hospital

Expense Budget

for Next Year

Salaries

$6,900,000

Supplies

540,000

Bad Debts

380,000

Rent

300,000

Depreciation Expense

     100,000

Total Budgeted Expense

$8,220,000

Operating Budget

Denison Specialty Hospital

Operating Budget

For Year Ending Last Day of Next Year

Revenues

 

 

Net Patient Revenue

$7,980,000

 

Gift Shop

120,000

 

Endowment

       50,000

 

Total Budgeted Revenue

 

$8,150,000

Expenses

 

 

Salaries

$6,900,000

 

Supplies

540,000

 

Bad Debts

380,000

 

Rent

300,000

 

Depreciation

     100,000

 

Total Budgeted Expense

 

8,220,000

Budgeted Excess of Revenues over Expenses

 

($70,000)

Part-II (Section C)

Departmental Expense Budget

Department

Salary

Supplies

Bad Debts

Rent

Depreciation

Total

Radiology

$2,000,000

$360,000

 

 

 

$2,360,000

Nursing

4,400,000

160,000

 

 

 

4,560,000

Admin.

500,000

20,000

 

 

 

520,000

General

              0

            0

$380,000

$300,000

$100,000

     780,000

Total

$6,900,000

$540,000

$380,000

$300,000

$100,000

$8,220,000

Denison Specialty Hospital

 

Expense Budget

 

for Next Year

 

Radiology

$2,360,000

Nursing

4,560,000

Administration

520,000

General-Rent and Bad Debts

    780,000

Total

$8,220,000

Expense Budget by Program

 

Radiology

Nursing

Admin.

Oncology

80%

50%

50%

Cardiac

15%

40%

35%

Rhinoplasty

5%

10%

15%

Denison Specialty Hospital

 

Expense Budget

 

for Next Year

 

Oncology*

$4,528,000

Cardiac

2,360,000

Rhinoplasty

652,000

General-Rent and Bad Debts

  680,000

Total

$8,220,000

Part-II (Section D)

Flexible Budget

Denison Specialty Hospital

Flexible Budget Activity Statement

for Year Ending Last Day of Next Year

 

Patient Volume Level

 

20% Below

10% Below

Budgeted

10% Above

20% Above

Revenues

 

 

 

 

 

Net Patient Revenue

$6,384,000

$7,182,000

$7,980,000

$8,778,000

$9,576,000

Gift Shop Revenue

96,000

108,000

120,000

132,000

144,000

Endowment Income

     50,000

     50,000

     50,000

    50,000

     50,000

Total Budgeted Revenue

$6,480,000

$7,290,000

$8,150,000

$8,910,000

$9,720,000

Expenses

 

 

 

 

 

Salaries

 

 

 

 

 

Fixed

$800,000

$800,000

$800,000

$800,000

$800,000

Variable

4,880,000

5,490,000

6,100,000

6,710,000

7,320,000

Supplies

432,000

486,000

540,000

594,000

648,000

Bad debts

304,000

342,000

380,000

418,000

456,000

Rent

300,000

300,000

300,000

300,000

300,000

Depreciation Expense

    100,000

    100,000

    100,000

    100,000

    100,000

Total Budgeted Expenses

$6,816,000

$7,518,000

$8,220,000

$8,922,000

$9,624,000

Budgeted Surplus/(Deficit)

($336,000)

($228,000)

($70,000)

($12,000)

$96,000

Case Study: The Division of Motor Vehicles (DMV)

See the Excel file (attached) for the monthly operating budget of Division of Motor Vehicles (DMV).

Due to the changes in the operating cost and personnel cost of DMV will contribute to change the net revenue in terms of deficit or surplus that will contribute towards the overall deficit for DMV.

When the inspections of vehicles are changed from 15% to 30%, this will affect the net revenue due to which the revenue will be increased for Division ...