Family Medical Care (FMC) is a family medical practice with 6 physicians and a nursing staff of 8-10 nurses and an administrative staff that varies from 4-7 personnel. Rajat Patel, the chief physician at FMC is interested in studying the efficiency of the practice, as a basis to set some benchmarks for further improvement, for rewarding his staff, and for comparing the efficiency of the FMC practice to other family medical practices. He is able to get comparable data for other practices from industry sources. So that the data is consistent with the industry sources, Rajat has asked Marin & Associates, his accounting firm, to develop a set of productivity measures that would satisfy this requirement. Upon investigation, Joseph Marin finds that the measures to be used are the partial financial and operational productivity measures as defined in the chapter. The following information is for the last two years for the FMC practice:

Required
1. Compute the partial financial productivity ratios for nursing and administrative support for the current and prior year.
2. Separate the change of the partial financial productivity ratio from the prior year to the current year into productivity changes, input price changes, and output changes.
3. Write a brief memo from Joseph Marin to Rajat Patel interpreting the findings above.

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Current yearPrior Year Patient visits Nursing hours used Administrative hours used Cost of nursing support per hour Cost of administration per hour Industry average financial productivity 33,000 20,300 13,425 $39.00 $25.56 28,600 19,400 13,425 $38.00 $24.00 Nursing Administrative 0.035 1.12 0.034 1.14