Operating Budget Projection - University Of Ph ✓ Solved

2010 Operating Budget Projectionhcs577 Version 42university Of Phoeni

Develop an operating budget for Patton-Fuller Community Hospital based on the provided 2009 projections and assumptions for 2010. Use the 2009 budget figures and the specified percentage changes to calculate the projected revenues and expenses for 2010, considering the assumptions outlined for each revenue and expense category.

Revenues and expenses are to be projected for 2010 using the given data, including assumptions such as a 3% price deflation, no increase in patient volume, increases in revenues from patient services and other sources, and specific expense adjustments like wages, supplies, professional fees, utilities, depreciation, interest, and doubtful accounts. The goal is to produce a comprehensive operating budget statement for the year 2010, demonstrating understanding of financial projections and cost management in a healthcare setting.

Sample Paper For Above instruction

Introduction

The projection of an annual operating budget is a critical task for healthcare administrators, providing a financial roadmap that guides hospital operations and strategic planning. In this context, accurately forecasting revenues and expenses based on past data and relevant assumptions ensures that hospitals maintain financial stability while delivering quality care. This paper develops a comprehensive 2010 operating budget for Patton-Fuller Community Hospital, grounded on the 2009 projections and specific economic and operational assumptions supplied for 2010. Through detailed calculations, the analysis aims to illustrate how to effectively translate historical financial data into a realistic future financial plan, considering the dynamic healthcare environment.

Revenues

The projected revenue for 2010 begins with the net patient revenue, which increased slightly from the previous year. Based on the assumption of a 3% deflation in prices and a small increase in revenue, the 2009 net patient revenue of $459,000 is adjusted accordingly. The calculation applies the 3% decrease to account for price deflation, but considers the reported increase in patient revenue at a decreased rate due to managed care contracts.

Similarly, other revenue streams, primarily donations, are projected to increase by 15%, reflecting the hospital’s marketing efforts to boost donations. The total revenue for 2009 was $462,000, and with projected increases, the 2010 total revenue is estimated at approximately $477,241, aligning with the assumptions provided.

Expenses

Expenses are projected individually based on the assumptions laid out for each category:

• Salaries and Benefits: Expected to increase by 1% due to nationwide price deflation, leading to a marginal rise from $220,000 to $222,959.
• Supplies: Decreasing by 3%, reflecting lower costs due to deflation and overstocked inventory, from $74,000 to $72,347.
• Physician and Professional Fees: Increasing by 3%, from $110,000 to $113,687, due to contractual increases.
• Utilities: Slight increase aligned with rising oil costs, from $1,200 to $1,260.
• Other Expenses: Remaining stable at around $1,840.
• Depreciation & Amortization: No change, remaining at $36,036, due to replacement of major equipment in 2009.
• Interest: Projected to increase from 3% to 4.8%, reflecting new borrowing and repayment plans, raising interest expenses to $4,820.
• Doubtful Accounts Provision: Increasing from 13% to 15% due to collections delay, estimated at $15,177.

Summing these components results in total expenses approximately $468,127, which represents a slight increase over the prior year, maintaining budgetary balance and financial sustainability.

Projected Income

The projected operating income for 2010 is an improvement over 2009, with a net income estimated at around $9,052 after considering non-operating income and investment returns. The assumption of zero returns on investments aligns with the current market conditions, which are expected to be stagnant or down.

Conclusion

Developing an accurate operating budget requires integrating past financial data with forward-looking assumptions that reflect current economic conditions and hospital strategic initiatives. For Patton-Fuller Community Hospital, the 2010 projected budget indicates careful cost control, revenue growth through diversification, and prudent management of operational expenses. Such comprehensive financial planning is vital for ensuring the hospital remains financially viable while continuing to fulfill its mission of providing quality healthcare. Effective budget management, especially under the constraints of a weak economy and managed care adjustments, underscores the importance of rigorous financial analysis and strategic adaptation in healthcare administration.

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