Net Revenue Scenario Name First Name Last Name Question The
Net Revenue Scenarionamefirst Namelast Namequestion The Profile Of Yo
The profile of your patients is such that the average collection rate is 75%. Assuming you have 100 visits of each type each month, what amount of new revenue will you generate in the next 12 months? Your clinic provides four kinds of services:
• Comprehensive initial medical consultation is priced at $250
• Established patient limited visit is priced at $75
• Established patient intermediate visit is priced at $125
• Established patient comprehensive visit is priced at $250
Net RevenueScenario Type of Service Price Each Annual Volume Gross Revenue per year
Comprehensive initial medical consultation
Established patient limited visit
Established patient intermediate visit
Established patient comprehensive visit
Total Gross Revenue
Average Collection Rate
Total Net Revenue
Fixed/Variable Cost Scenario You have performed a cost analysis of your health service organization and have determined the following: based on the latest three years of information, your annual cost of operations is $1,600,000 with annual volume of 10,000 procedures.
You have determined that certain of your supply items are fixed in nature (those marked with an F) while others are variable (marked with a V). Supply Items F/V Average Annual Amount
Supply item 1 F $220,000
Supply item 2 F $180,000
Supply item 3 F $75,000
Supply item 4 F $50,000
Supply item 5 F $25,000
Supply item 6 F $50,000
Supply item 7 V $500,000
Supply item 8 V $300,000
Supply item 9 V $200,000
Annual Cost of Operations $1,600,000
Question: An insurance company that is considering directing its 1,000 units per year of procedure business to your organization has approached you. Your board has mandated that you make $5 of profit from each of the procedures. You obviously want the highest possible price, but as you enter the negotiations, what is the lowest possible price you would be willing to accept from this payer?
Hint: Calculate the variable cost. Fixed/Variable Cost Scenario Variable Fixed Total Supply item 1 Supply item 2 Supply item 3 Supply item 4 Supply item 5 Supply item 6 Supply item 7 Supply item 8 Supply item 9 Total Cost Annual Volume
Variable Cost per Unit
Profit Target
Total (lowest possible price)
Cash Flow Cash Flow Scenario Your new business venture will begin operation on July 1, 20X2. You will hire staff effective January 1, 20X2 with a cost of $40,000 per month. You know from experience that collections lag billing by 3 months (in other words, once you bill for a service, you must wait 90 days for the payment to be received. Your business volume is projected to be as follows:
Month Volume Billing
July, 20X2 1,000 $100,000
August 1,000 $100,000
September 1,000 $100,000
October 1,000 $100,000
November 1,000 $100,000
December 1,000 $100,000
January, 20X3 1,000 $100,000
February 1,000 $100,000
March 1,000 $100,000
April 1,000 $100,000
May 1,000 $100,000
June 1,000 $100,000
Question: If you have $380,000 of cash on hand January 1, 20X2, how much cash will you have at the end of June 20X3?
Assume a 100% collection rate. Ending Cash Balance January 20X2
Opening Cash Balance = $380,000
Monthly Expense
Monthly Billing
Monthly Collections
Month Cash Balance
January 20X2 $380,000.00
February
March
April
May
June
July August September October * November December January 20X3 February March April May June 20X3
Total Cash on Hand June 20X3
*Open for Business
** 90 Billing Cycle
Volume Budget Scenario You manage lab services in a large hospital. You have the following data on both the hospital’s budgeted patient days and visits for budget year 20XX along with the ratio of lab tests to patient days or visits.
RAW DATA 2 North Bldg 2 South Bldg ICU OPD
Patient Days/Visits
Budget Chemistry 3.6 4.3 2.9 4
Hematology 1.2 2.1 1.4 3.5
Bacteriology 3.2 5.6 3.6 5.5
Cost per test $20.00
Tests per FTE 200,000
Question: Based on this raw data provided, how many lab tests would you anticipate for the coming budget year? If each test is priced at $20.00, how much gross revenue would you budget? Assuming each full-time lab technician (FTE) can perform 200,000 tests each year, how many full-time lab technicians would you plan for?
TEST COUNT BUDGET
2 North Bldg 2 South Bldg ICU OPD
Total Chemistry
Hematology
Bacteriology
Total
GROSS REVENUE BUDGET
2 North Bldg 2 South Bldg ICU OPD
Total
Staffing FTE Budget
Preliminary Final
Chemistry
Hematology
Bacteriology
Total
Staffing and Supply Budget
Staffing and Supply Budget Scenario Calculate the supplies budget necessary to operate your unit for the fiscal year beginning January 1, 20X8. It is your expectation that you will perform 24,820 procedures in the budget year.
The following spending data is available for the period January 1 to March 31, 20X7 during which time procedure volume amounted to 3,240. Items marked (F) are considered fixed, those marked (V) are considered variable. Inflation is planned at 4%. Expense Item Amount Billing Supplies (F) $24,400.00 IV Solutions (V) $288,108.00 Med/Surg Supplies (V) $411,480.00 Miscellaneous (F) $18,400.00 Office Supplies (F) $42,650.00 Stock Drugs (V) $570,240.00 In reviewing performance to date, you note that in January, you purchased $150,000 of D5W fluid replacement charged to IV solutions, which represents an entire year’s supply. In addition, you returned $2,800 of office supplies for credit from the vendor in February. These supplies were purchased in a previous fiscal year. Expense Account Orig. Base Period Amt Adjustments Adjusted Base Period Amt Base Period Units (Vol or Time) Amount/Unit Budget Period Units Base Amt. Budget Inflation Rate Inflation Amt Final Budget Amt
Billing Supplies (F) 4%
IV Solutions (V) -$ 112,500.%
Med/Surg Supplies (V) %
Misc. (F) %
Office Supplies (F) $ 2,800.%
Stock Drugs (V) %
Total $ (109,700.00)
Total: $ - 0
You also need to prepare the salary budget for the same fiscal year. You have determined that staff needs are for 6.5 FTEs.
The following are the current staff with FTE values and hourly rates of pay as of January 1, 20X8: Position/Incumbent FTE Value Pay Rate Hardy 1.0 $16.30 Rosetti 0.5 $16.80 Chang 0.5 $16.50 Martinez 1.0 $16.00 Jones 0.5 $16.75 A pay raise will be given to all staff on October 1st of each year at a rate of 8 percent. In making your calculations, always round to the nearest whole dollar for annual salary amounts, but keep pennies in the hourly pay rates. New staff begins the new fiscal year at $16.00 per hour. Incumbent FTE Value Pay Rate: Jan 1 20X8 Base Budget Amt Salary Increase% Months of Increase Increase Amt Salary Budget Hardy Rosetti Chang Martinez Jones Vacant Total
As a financial advisor, you are assigned a new client who is considering investing in one of two stocks, A or B.
The table below shows information about the performance of stocks A and B last year. Return Standard Deviation
Stock A 15 % 8.3%
Stock B 14% 2.1%
1. As a financial advisor, are there factors other than return and risk that should be considered in making this decision?
2. Based on these factors, what stock would you recommend to the client?
3. What reasons will you convey to your client to justify your decision in recommending this stock?
4. How will this recommendation impact the client?
Your analysis of the scenario must be submitted as a 1- to 2-page Microsoft Word document with double spacing and 12-point Times New Roman font references cited in APA format.
Paper For Above instruction
The series of financial and operational scenarios presented require a comprehensive analysis of revenue generation, cost management, cash flow forecasting, staffing, and investment decision-making within a healthcare context. This paper will address each scenario in detail, providing calculations, strategic insights, and recommendations grounded in financial principles and healthcare management practices.
Revenue Projections and Service Pricing
In the first scenario, the focus is on estimating the additional revenue generated over the next year based on patient visits and service prices. With 100 visits per patient type each month and an average collection rate of 75%, the total gross revenue depends on the number of visits, service prices, and the collection efficiency. Calculating the monthly gross revenue for each service involves multiplying monthly visits by the respective price, then annualizing the figures. For instance, the comprehensive initial medical consultation, priced at $250, with 100 visits per month, yields a monthly gross revenue of $25,000, translating to $300,000 annually. Similar calculations for other services produce annual gross revenues of $9,000, $15,000, and $30,000 for limited, intermediate, and comprehensive visits respectively, summing to a total gross revenue of approximately $375,000. Considering the 75% collection rate, net revenue would be about $281,250 over the year.
Cost Analysis and Pricing Strategy
The second scenario delves into cost analysis, focusing on fixed and variable costs. The total annual operational cost is $1,600,000, derived from summing fixed supply costs and variable expenditures based on total procedures. To determine the minimum acceptable price for procedures that an insurance company might pay, the variable costs are calculated by summing the variable expense items. Dividing the total variable costs by the total procedures (10,000 annually) yields a per-unit variable cost. Adding the desired profit margin of $5 per procedure to this variable cost gives the lowest acceptable price. For example, with variable costs totaling approximately $500,000, the per-procedure variable cost is $50, and adding $5 profit results in a minimum price of $55 per procedure.
Cash Flow Forecasting
The third scenario concerns cash flow management for a new healthcare venture starting mid-year. With an initial cash reserve of $380,000, monthly expenses of $40,000, and collection delays of three months, the cash flow forecast projects the ending cash balance month by month. This involves calculating collections based on billing, subtracting monthly expenses, and updating the cash balance. Over the 18-month horizon, the model estimates that by June of the following year, the business will maintain a positive cash balance, with detailed month-by-month calculations indicating the sufficiency of initial capital and the impact of delayed collections.
Laboratory Testing and Staffing Planning
The fourth scenario focuses on estimating lab testing demand and staffing needs based on patient flow data. Using the provided ratios of tests per patient day or visit and the cost per test, the expected test volume and gross revenue are calculated. For example, if the average number of tests per patient or visit is known, multiplying by projected patient volume yields the total tests expected for the upcoming year. Dividing total tests by the testing capacity per FTE determines the required number of full-time staff. This approach ensures aligned staffing with testing demand, optimizing costs and operational efficiency.
Supplies and Salary Budgeting
The fifth scenario involves preparing a supplies and salary budget, accounting for inflation, previous purchases, and staffing requirements. Adjustments for inflation at 4%, returns on supplies, and the introduction of new staff at specific pay rates, including raises, are incorporated into the forecast. Calculations involve prorating expenses based on historical data, adjusting for inflation, and computing total personnel costs. Proper budgeting ensures resource availability for operations and financial sustainability.
Investment Evaluation
Finally, the investment analysis compares stocks A and B based on historical return and volatility. Factors beyond return and risk, such as liquidity, company fundamentals, market conditions, and macroeconomic trends, are vital considerations. Recommending Stock B, with a significantly lower standard deviation, offers less volatility, making it more suitable for conservative investors. I would justify this recommendation by emphasizing the importance of risk mitigation and the avoidance of potential large losses, especially for clients with lower risk tolerance. This decision aligns with prudent financial planning, safeguarding the client's assets while achieving reasonable returns. The overall impact for the client would be a more stable investment experience, reducing stress and potential financial volatility.
Conclusion
These scenarios demonstrate the necessity of integrating financial analytics, strategic planning, and risk management to ensure operational success and sound investment choices in healthcare and finance. Accurate calculations, informed judgments, and clear communication are essential for decision-makers to optimize outcomes and achieve financial objectives.
References
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