Golden Age Hospital

Introduction

This MHA599 MOD4 CASE is based on Golden Age Hospital's Finance and Budgeting. Budgeting is a very important aspect of accounting as it provides a financial plan for controlling resources and communicating a plan for managers from centers of different departments. A very important point to consider is that from where the budget should be started to prepare the most accurate and sustainable budget.

Clinical Supplies and Lab Tests

With respect to clinical supplies and lab tests, Golden Age Hospital has an actual average of 3.3 per test whereas it should be 3 per test. Therefore, there is a discrepancy of 0.3 per test. When we look at it in the short term, this is not a significant difference but when we consider the long term implications of this discrepancy, we can see that for every patient, an additional cost of 0.3 will be incurred. Which means that 0.3x (65x3) = 58.5 is being spent extra per case. If we multiply this by the number of patients seen in the month (1580), we shall get a figure of 92430$ extra being spent monthly on tests. If we consider this figure annually, it comes to almost $1109160 annually, which becomes a huge figure. Ideally, the costs that are being budgeted should be overestimated and the actual costs should be lower than the ones that were estimated so that there is an option of capital accumulation and excess cash rather than shortage.



Break Even Analysis

The actual number of patient days can be calculated by dividing total revenue by revenue per patient per day. Therefore the total number of patient days is 20,000 patient days. Statement of income for year 2014 is as follows:

2014

Total

Per Unit

Revenues

$3,000,000

$ 150

Patient per day

150

150

Patient days

20,000

Less: Variable Cost

Catering

450,000 22.50

Laundry

150,000 7.50

Planning

400,000 ...