Financial Plan Presentation

!NOTE! Only bolded below items need to be addressed.

Develop a financial plan for Patton-Fuller Community Hospital for the upcoming year using the 2010 Operating Budget Assumptions memo and the 2009 Operating Budget in the Patton-Fuller Community Hospital Virtual Organization.

Create a 10- to 12-slide Microsoft ® PowerPoint® presentation in which you address the following:

• Identify the GAAP used to create the financial plan.
• Identify the financial statements used to develop the financial plan.
• Describe the payment systems and participants that contribute to the hospital revenue.
• Describe revenue trends that affect the hospital.

Address the following in the speaker notes:

• Explain the relevance of each GAAP to the financial plan.
• Discuss the value of each financial statement identified to your decision-making process in the financial plan.
• Describe the relationship of the financial statements used in the financial plan.
• Describe each payment system and its effect on financial planning.
• item 5 Clarify the financial contribution of each participant and the effect of each as a source of revenue.

 

 

Patton-Fuller Community Hospital

Statement of Revenue and Expense

2009 to 2010 Operating Budget

 

Complete the Operating Budget. Assume the 2009 projections were realized. Use the 2009 budget and the 2010 budget assumptions to calculate expenses and income for 2010. The revenues have been completed for you.

 

 

		2009 (Proj)	2010 Budgeted % Change From 2009 Projection	2010 Budget	2010 Operating Budget Assumptions
Revenue					Based on these 2009 assumptions: a 3% overall deflation rate for prices in 2009—due to the weak economy—will continue into 2010.
	Net patient revenue	459,900	3%	473,697	Patient revenue will continue to increase, but at a decreased rate, with little or no increase in patient volume, due to new managed care contracts.
	Other revenue	3,082	15%	3,544	Marketing’s plan to increase donations by 15%
Total revenue		462,982	3%	477,241

 

 

 

		2009 (Proj)	2010 Budgeted % Change From 2009 Projection	2010 Budget	2010 Operating Budget Assumptions
Expenses
	Salaries and benefits	220,752	1%	222,960	Salaries will hold to a 1% overall increase in cost due to price deflation nationwide, with no increase in labor hours, due to no increase in patient volume. This assumption could be affected by a board decision either to raise nursing wages by $1 per hour or to increase the nursing hour ratio.
	Supplies	74,584	-3%	72,346	Supplies cost will decrease 3% due to the price deflation and our current over-stock purchased last year.
	Physician and professional fees	110,376	3%	113,687	Contracts for fees have a built-in 3% increase.
	Utilities	1,200	5%	1,260	Utilities cost will increase to the rising cost of oil partially offset by the efficiency of the hospital’s new heating and cooling systems.
	Other	1,840	0%	1,840	No net change in the cost or volume of these items.
	Depreciation & amortization (noncash expenses)	36,036	0%	36,036	Some high-cost equipment—air conditioning, telephone system, all patient beds, and headwalls—were replaced in 2009, and depreciation rose sharply. Depreciation will remain at this level in 2010.
	Interest	3,708	30%	4,820	The repayment plan for any monies borrowed in 2009 will come due in 2010, with a sharp increase in interest cost.
	Provision for doubtful accounts	13,797	10%	15,177	The renegotiation of managed care plans has delayed collection and made collections less certain.
Total expenses		462,293	1.3%	468,126	Total expenses will rise _1.3_%.

 

 

 

		2009 (Proj)	2010 Budgeted % Change From 2009 Projection	2010 Budget	2010 Operating Budget Assumptions
Income
	Operating income	689	1,323%	9,115	Operating Income will improve, with the hospital’s loss reduced by 2/3.
Loss (nonoperating income)
	Investment income	(62)	0%	0	The market is down, expected to hold steady; a zero-return is expected, with neither losses nor gains.
Net income		627	1,454%	9,115	The hospital will continue its dramatic turnaround, taking advantage of the stagnation in patient volume, price deflation, the efficiency of new equipment, and the improved arrangements with the managed care companies.

 

 

 

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