Health Care Budget Case Study

Table 1. HealthWays Clinic, Monthly Expense Budget Report, June 2018. Item June 2018 May 2018 Budget Actual Difference Actual 1.0 1.0 0 1.0 3.0 3.0 0 3.0 Physician FTE Nurse PractitionerFTE Encounters: Established patients 275 291 New patients 25 18 Total encounters 300 309 Expenses: Physician Salaries & Benefits $10,500 $10,502 NP Salaries & Benefits $20,000 $20,992 Clerical (2 FTE) Salaries & Benefits $6,667 $6,771 Total personnel expense 37167 38264 Medical supplies $7,500 $8,136 Office supplies $623 $583 Rent $2,917 $2,917 Depreciation $333 $346 Capital Expenses $3,333 $3,480 Overhead $167 $167 Total non-personnel expense 14873 15628 Total health center expense 52040 53892 (16) 7 (9) (2) (992) (104) (1098) (636) 40 0 (13) (147) 0 (755) (1852) 286 27 313 $10,509 $20,191 $6,683 37383 $7,994 $508 $2,917 $346 $3,480 $167 15412 52795 2018 YTD Budget 1.0 3.0 1650 150 1800 $63,000 $120,000 $40,000 223000 $45,000 $3,498 $17,502 $1,998 $19,998 $1,002 88998 311998 Interpretation: I. Answer the following question related to the results of your calculations: What interpretations can you make based 1. The full-time equivalents (FTE) for HealthWay employees: 1. Answer: FTE equals employee’s scheduled hours divided by the employer’s hours for a full-time workweek. Based the projected FTE for both physicians and nursing practitioners. 2. The number of encounters, both new and established: 2. Answer: The number of encounters for new patients is 291 and 18 for the stablished patients which add up to 309 – 3. Non-personnel expenses: 3. Answer: The total actual non-personnel expenses amount to 15628 above the budgeted amount by 755 which creat the non-personnel expense budget and further adjustments are critical. 4.Total expenses: 4. Answer: The total health center expenses amount to 53892 which is significantly above the budget of 52040. As su funding for effective operation of the center. II. If these trends continue, what could it mean for HealthWays? What strategies might they employ to address any iss Answer: The persistence of these trends might plunge HealthWays into critical budget deficits and poor revenues tha profits or losses. Applying the zero budgeting approach will allow the business to contain cost containment through a budget adjiustment. Then, it becomes obviously crucial to assess the best budgeting approach, best cost-effective exp 2018 YTD Actual 1.0 3.0 1671 164 1835 All blue shaded cells require your answers. $63,149 $122,001 $41,978 227128 $47,883 $3,407 $17,502 $2,050 $20,439 $1,002 92283 319411 erpretations can you make based on the data? What is happening in regard to such measurables as: for a full-time workweek. Based on the above data, Healthway employees FTE sums up to 4.0 which is at par to ed patients which add up to 309 – suppassing the projections by 9. geted amount by 755 which creates unfavorable deficit for the facility. This implies that there is a budget deficit in above the budget of 52040. As such, the budget variance is unfavourable with a deficit of 1852 that requires ht they employ to address any issues your analysis suggests? et deficits and poor revenues that work to offset the poorly projected expenses that eventually result into low ntain cost containment through a financial restructuring or a major economic or market downturn that necessitates approach, best cost-effective expenses and budget variance analysis to ensure the process is excellent. W2A2 Practice Design Refer to the Healthcare Budget Guide for an example of what to include and how it should look. W4A3 Estimated Expenses Refer to the Healthcare Budget Guide for an example of what to include and how it should look. W6A4 Budget Development Bring forward your work from W4A3 and add ratios as directed in the Healthcare Budget Guide W8A5 Estimated Expenses Refer to the Healthcare Budget Guide for directions on completing this Expense Forecasting scenario Expense Forecasting Based on the information provided, prepare an expense forecast for 20X1 using the template below Spending during January- June 20X1 (6 months) • Fixed expense items: $210,000 • Variable expense items: $1,200,000 • One time expense: $50,000 of fixed expense money was spent on preparing for a Joint Commiss Procedures preformed during January- June 20X1 (6 months) • Your department has performed 20,000 procedures during the first six months On November 1,20X1, two new procedure technicians will begin work. Health Care Budget Case Study

The salary and fringe benef Description Year to Date Expense Adjustments Add back “One Time” credits Deduct “one Time” expenses Adjusted total for year to date expense Annualization Divide by months (fixed) Multiple by months (fixed) Divide by volume Multiply by volume Annualized Amounts Adjustments Add back “One Time” expenses Deduct “One Time” credits Expense two new technicians Expense Forecast as of 12/31/X1 Fixed 6 12 recasting scenario 0X1 using the template below: preparing for a Joint Commission survey six months The salary and fringe benefit costs for each is: Variable 20,000 40,000 TOTAL $ 96,000.00 yearly W8A5 Breakeven Analysis Refer to the Healthcare Budget Guide for directions on completing this Breakeven Analysis Break-Even Analysis Scenario You can charge $1,075 for a new service. Demand is anticipated to be 8,000 units a year. Your bus handle up to 16,500 units annually, so capacity should not be a problem. The average collection ra Price to be Charged Collection Rate Average Collection per Service Variable cost per unit of service Fixed Operating Costs Break-Even Point =Fixed Cost/(Net Revenue per UnitVariable Cost per Unit) Capacity: Demand: Breakeven: Question: Use break-even analysis to determine if this new service is financially viable. If the business is not financially viable, what steps could you take to make a case to proceed with implementation? Explain your decision. Answer: on completing this Breakeven Analysis mand is anticipated to be 8,000 units a year.Health Care Budget Case Study

Your business is able to ity should not be a problem. The average collection rate is 80%. The mine if this new service is financially viable. If the s could you take to make a case to proceed with W8A5 Marginal Profit and Loss Refer to the Healthcare Budget Guide for directions on completing this Marginal Profit and Loss scenario Marginal Profit and Loss Statement Scenario You are examining a proposal for a new business opportunity – a new procedure for which deman the first year, growing by 600 units each year thereafter. The price charged per procedure is $1,000 anticipated to be 80%. Each procedure consumes $300 of supplies. Salary cost is estimated to cos benefits are 25% of salaries, rent for the facility is $55,000/yr and operating cost are $120,000/yr. Year One Year Two Marginal Revenue: Units of Volume Price Procedure Collection Rate Marginal Net Revenue Marginal Costs: Variable Costs Units of Volume Variable Cost Supplies per Unit/procedure Marginal Variable Cost Fixed Costs: Salary Costs Fringe Benefits Rent Operating Cost Marginal Fixed Costs Total Marginal Costs Annual Marginal Profit Cumulative Profit Margin Question: Below is a marginal P&L for this business opportunity. Based on that analysis, should th Explain your decision. Answer: inal Profit and Loss scenario a new procedure for which demand is expected to be 1,400 units e charged per procedure is $1,000. The collection rate is es. Salary cost is estimated to cost $540,000 each year, fringe operating cost are $120,000/yr. Year Three Year Four Year Five . Based on that analysis, should this opportunity be pursued. Option 1 Healthways Finacials * The cells where you complete these calcu You have 2 data options for completing the Week10/11A6 analysis. If you cannot obtain the finacial documents for y Nurse-Run Clinic Scenario Patient Encounters Established patients New patients Total Encounters FY 2018 3,348 331 3,679 Cash FY 2017 3,204 287 3,491 $5,675 $12,098 Financial Ratios: Expense per Encounter = Total Operating Expenses / Total Encounters Total Operating Revenue per Encounter = Total Operating Revenue / Total Encounters Operating Margin = Net Income/Total Operating Revenue Days Cash On Hand = (Cash + Cash Equivalents) / (Operating Expenses / Days in Time Period) Table 2. HealthWays Clinic, Income Statement, FY 2018. Gross Revenue (charges) Less write-offs & adjustments Net Patient Revenue (collected) +Other Revenue Total Operating Revenue FY 2018 $558,520 117,254 $441,266 209,671 FY 2017 Horizontal Analysis $497,221 104,332 $392,889 234,953 $ 650,937 $ 627,842 459,171 97,627 7,471 39,148 43,762 445,396 92,418 7,302 37,023 47,009 Operating Expenses Salaries & Benefits Medical Supplies Office Supplies Rent & Depreciation Other Percentage change Total Operating Expenses $ 647,179 $ 629,148 Net Income $ ($1,307) Return on Assets 3,758 Financial Reports: Quick Tips for Interpretation •income statement: positive net income indicates profitability •balance sheet: positive equity indicates that there is a positive net worth, representing the amount remaining if a •compare changes in reports from prior year(s) to identify trends in financial performance, and with industry stand Financial Ratios FY 2018 FY 2017 Expense per Encounter $ 175.91 $ 180.22 Total Operating Revenue per Encounter $ 176.93 $ 179.85 Operating Margin 0.58% -0.21% Days Cash On Hand 3.2 7.0 ou complete these calculations are highlighted in blue. he finacial documents for your organization (your project) use this Healthways Financials option. Table 3. HealthWays Clinic, Balance Sheet, December 31, 2018. December 31, December 31, Current Assets 2018 2017 Cash 5,032 9,877 Short-term Investments 40,389 34,181 Accounts Receivable 63,392 59,359 Supply Inventories, at Cost 16,029 14,918 Prepaid Expenses & Other 2,104 1,876 Total Current Assets $ 126,946 $ 120,211 Property, Plant & Equipment (Fixed Assets) Cost of PP&E Less Accumulated Depreciation Net PP&E (Net Fixed Assets) $ Other Assets $ Total Assets $ 56,047 4,194 51,853 $ 1,289 180,088 $ 55,701 3,943 51,758 1289 173,258 Health Care Budget Case Study Interpretation/Analyses In your narrative analysis that you will write in the Healthcare Budget Request T Income Statement Balances Expense per Encounter Total Operating Revenue per Encounter Operating Margin Days Cash On Hand Current Liabilities Notes Payable Accounts Payable Accrued Expenses: Salaries & Benefits Taxes Interest Payable Total Current Liabilities December 31, December 2018 31, 2017 27,449 50,000 78,702 69,412 $ Long-Term Liabilities Net Assets Unrestricted Restricted Total Net Assets $ Total Liabilities & Net Assets $ 38,265 28,274 1,419 1,398 3,294 500 149,129 $ 149,584 $0 $0 28,541 2,418 20,569 3,105 30,959 $ 23,674 180,088 $ 173,258 the Healthcare Budget Request Template, you should address: Option 2 Your project data You have 2 data options for completing the Week10/11A6 analysis. Assuming you have access to your organization’s from W6A4 and add any new data and calculations needed. ccess to your organization’s financial statements, you my use it. Bring forward your work Healthcare Budget Request Prepared by: Submitted: <06/14/2020> W2A2 Executive Summary In the Georgetown community, a new medical building was developed, and there is a need for an electronic medical record (EMR). There is some shortfalls within the healthcare system and hence the need to establish a system that can improve the flow of information. This new implementation of the EMR system is going to be a significant change to the organization. Successful implementation of this change involves not only new technology but also about the people. Digital innovation has transferred the world drastically; hence the information plays a significant role in healthcare delivery and helps address the health problems and challenges faced by clinicians and healthcare professionals. The perioperative service is critical to Modern Medical. This department is challenging that provides complex clinical care involving several teams, with high cost, sophisticated technologies, and a large array of supplies, instruments, and implants. These variables create a complex environment and have been a source of some patient safetyrelated adverse incidence in the past. Systems are needed to solve this gap in traditional reimbursement systems. Health Care Budget Case Study

The proposed solution will allow the staff to manage Operating rooms, capture clinical data, track the use of equipment and instrument, and produce reports to aid in reimbursements. Also, OR managers and directors will have access to a wealth of information that will enable them to make informed decisions that directly impact patient safety satisfaction, operational efficiencies, improved OR utilization, and financial performance. The stakeholder groups that will be impacted by the implementation of EMR are physicians, staff, patients, scheduling department, super-user/trainers, IT department, billing department, laboratory department and insurance company (Health.gov, 2019). These stakeholders can make or break the implementation process, their perspectives, knowledge, ability, and willingness is 2 vital to this implementation. Stakeholders should be involved in each phase of the implementation process, to give support, provide suggestions for design, and participate in the evaluation and continuous quality improvement activities. The stakeholders responsible for assisting to address this health gap are; clinicians, finance department, Information Technology department, OR manager, and staff members. They play a crucial component in the selection, buy-in, and decision-making process. Electronic medical records (EMR) shows to be promising for facilitating healthcare improvement. Hence, the opportunity has presented itself for implementing such a system. EMR is a computerized medical information system that replaces paper-based medical practice. According to Abdekhoda (2016), patient clinical information is collected and shared by EMR, as it is the tool to create legible and structured patient information records. The primary use of the EMR is for digital storage system for patient records. This system provides healthcare organizations with services such as decrease medical errors, increase the effectiveness of healthcare services, and reduce healthcare costs. EMR implementation can be expensive and can take time and energy for staff members to fully integrate the system into healthcare (Roussel et al., 2020). The technology makes it easier to report quality data and has the potential to improve quality, permanence, and safety and effective healthcare services. Health Care Budget Case Study

In conclusion, EMR implementation is timely, complete, and provides accurate information about patient healthcare delivery. As such implementing this system can yield a positive return on investments to the healthcare organization. 3 References Abdekhoda, M., Ahmadi, M., Dehnad, A., Noruzi, A., & Gohari, M. (2016). Applying electronic medical records in health care: Physicians’ perspective. Applied Clinical Informatics, 7(2), 341-354. doi:10.4338/ACI-2015-11-RA-0165 Hartzler, A., McCarty, C. A., Rasmussen, L. V., Williams, M. S., Brilliant, M., Bowton, E. A., Clayton, E. W., Faucett, W. A., Ferryman, K., Field, J. R., Fullerton, S. M., Horowitz, C. R., Koenig, B. A., McCormick, J. B., Ralston, J. D., Sanderson, S. C., Smith, M. E., & Trinidad, S. B. (2013). Stakeholder engagement: a key component of integrating genomic information into electronic health records. Genetics in medicine: official journal of the American College of Medical Genetics, 15(10), 792–801. doi.org/10.1038/gim.2013.127 HealthIT.Gov. (2019) Who are key stakeholders during electronic health record (EMR) implementation? https://www.healthit.gov/faq/who-are-key-stakeholders-duringelectronic-health-record-ehr-implementation Roussell, L., Thomas, P., & Harris, J. (2020). Management and Leadership for Nurse Administrators (8th ed). James and Bartlett Learning. 4 W4A3 Projected Expenses and Revenues (Five Year) When evaluating the profitability of a project, it is crucial to assess the returns that the company or investment project generates against the costs of producing these incomes. The Projected Expenses and Revenues (Five Year) shows a total expenditure amounting to $1,509,867 compared to total revenues or benefits of $1,631,436. Interestingly, the expenditures are during the start of the project, over the second year, and during the fifth Year with other years recording zero costs. This implies that the project requires a minimal interval of sustenance costs over the project’s economic life. The estimates then project a $1,631,436 gain, which means that the project is profitable and generates revenue over the five periods. The estimated financial impact of this proposal is a projection of benefits realizable within the time frame. However, further analysis of ROI could provide a better indication. Investment Return (ROI) is an investment efficiency measure used to assess or compare the performance of investments. There are crucial aspects that need to be sighted when interpreting the calculated ROI – total returns and total costs. This percentage metric is intuitively easy to comprehend and incorporates the net return (numerator) because investment returns can be a gain (positive) or loss (negative). The project’s ROI yields a positive figure of 8.05% to imply that the health care should anticipate net returns worth 8.05% of their initial investment outlays and additional investments throughout 5-years. Health Care Budget Case Study

These results for the organization indicate that if the project is successfully implemented, the company will expect the estimated percentage gain on its investment. However, this measure is favorable for a company intending to choose between two investment projects so that it becomes possible to select a project with a higher return on investment ratio that promises more efficiency in income generation. 5 W6A4 Projected Budget (Five Year) In healthcare just like in all segments of the economy, budget is very important. A clearly and well defined budget is essential as it helps a healthcare organization to better comprehend the funds that can be spend on various sections of the project and how much spending should be selected to each. Every project has some startup expenses which are incurred before the project commences and starts getting revenues. In this project we have four startup expenses. These are expenses for training staff, server, and hardware and software setup and software license. The table below shows the costs for each of the expenses and also its percentages. Expenses/ Cost Year 0 Percentage $ 160,000 23% Startup expenses Software License Hardware & software setup Server $ 217,000.00 $ 115,000.00 Training (Staff) $ 217,000.00 31% Total startup expenses $ 709,000.00 100% 31% 16% Training of staff and hardware and software setup have the highest costs as they both have 31% of the startup expenses. The server is the least with 16%. 6 Surplus or deficit is a figure that shows if a business is making positive cash flows or negative ones. It shows if the firm is making profits or not. We have deficits from year one to year 4. In year 5, the healthcare business will have a surplus. Thus it will have made its profits. Year Year 1 Year 2 Year 3 Year 4 Year 5 Deficit/ Surplus $ (688,206.00) $ (382,983.00) $ (142,760.00) $ (71,630.00) $ 168,593.00 The table below shows the estimated budget together with the Return on Investment for the years from 1 to 5. We can see that from year 1 to year 4, the ROI is negative. This means that the company is not efficient enough on the revenues compared with the cost. In year 5, the ROI is positive which is equal to 0.16. This means that the money that was invested is real .. Health Care Budget Case Study