Clinic Financial Analysis

Table 1. HealthWays Clinic, Monthly Expense Budget Report, June 2018. Item June 2018 May 2018 Budget Actual Difference Actual 1.0 1.0 1.0 3.0 3.0 3.0 Physician FTE Nurse PractitionerFTE Encounters: Established patients 275 291 New patients 25 18 Total encounters 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 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 Total health center expense 286 27 2018 YTD Budget 1.0 3.0 1650 150 $10,509 $20,191 $6,683 $63,000 $120,000 $40,000 $7,994 $508 $2,917 $346 $3,480 $167 $45,000 $3,498 $17,502 $1,998 $19,998 $1,002 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: Clinic Financial Analysis

1. Answer: 2. The number of encounters, both new and established: 2. Answer: 3. Non-personnel expenses: 3. Answer: 4.Total expenses: 4. Answer: II. If these trends continue, what could it mean for HealthWays? What strategies might they employ to address any iss Answer: 2018 YTD Actual 1.0 3.0 1671 164 All blue shaded cells require your answers. $63,149 $122,001 $41,978 $47,883 $3,407 $17,502 $2,050 $20,439 $1,002 erpretations can you make based on the data? What is happening in regard to such measurables as: ht they employ to address any issues your analysis suggests? 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) Clinic Financial Analysis

• Your department has performed 20,000 procedures during the first six months On November 1,20X1, two new procedure technicians will begin work. 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. Clinic Financial Analysis

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. Clinic Financial Analysis

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 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 .. Clinic Financial Analysis