Assignment: Financial Management of Health Systems
Case 1
Brookside Hospital: preparing a departmental budget from the given data
Brookside Hospital's imaging for hand, foot and forearm is a sub-unit of the Radiology department. They project ending the current year (2017) with 2,000 total procedures broken down as follows:
|
Procedure
|
Time Required
|
Volume proportion
|
Rate (Charge)
|
|
Hand imaging
|
10 minutes
|
60%
|
$100
|
|
Foot imaging
|
20 minutes
|
30%
|
$300
|
|
Forearm imaging
|
30 minutes
|
10%
|
$400
|
This sub-unit accounts for 20% of the Radiology department's current expenses of $1,225,000 broken down as follows:
|
Expense
|
Amount
|
|
Labor
|
$425,000
|
|
Imaging Materials
|
$300,000
|
|
Overhead
|
$500,000
|
|
Total
|
$1,225,000
|
Payer Volume proportion Reimbursement
|
Payer
|
Volume proportion
|
Reimbursement
|
|
Medicare
|
50%
|
70% of charges
|
|
Medicaid
|
20%
|
50% of charges
|
|
Managed care
|
20%
|
80% of charges
|
|
Self Pay
|
10%
|
100% of charges *
|
|
* 20% of the self pay result in charity care
|
Payer Mix and Reimbursement is as follows:
Budget Assumptions for 2018:
• Volume increase is expected to be 10% with the same procedure mix
• Due to volume increase, all three expenses are expected to increase 10%, in addition:
• Labor rates are expected to increase 5% due to merit increases
• The cost of Imaging materials are expected to increase 6%
• Overhead rate is expected to stay the same
Required:
Prepare a professional document to present to the VP of Radiology which will include separate tables for each of the following:
1. Prepare a statistics budget summary by procedure and payer
2. Prepare a gross and net revenue worksheet by procedure and payer. Hint: prepare a table for each procedure and then one for the total of all procedures.
3. Prepare an expense worksheet based on the volume increases and the rate increases for each of the three types of expenses. Do not separate the expenses by procedure only by type of expense.
4. Prepare a summary income statement for overall revenues and expenses. Include appropriate header.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also include a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also Include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.