Assume your clinic practice has the expenses outline in the Expense Grid table (fixed, semi-variable or variable)
Question:
Assume your clinic practice has the expenses outline in the Expense Grid table (fixed, semi-variable or variable) . You have been asked to perform an analysis of cost savings opportunities. In addition to understanding whether the costs are fixed, semi-variable or variable, you have been asked to determine whether costs should be classified as direct or indirect. Explain how you will classify the costs and give a rationale from the literature to support your classification method.
EXPENSE GRID (fixed, semi-variable or variable)
EXPENSE | COST CLASSIFICATION |
Rent for office paid quarterly under annual lease agreement. | |
Utilities - paid monthly | XXXXXXXXXXXXXXXX |
Electric (includes air-conditioning) | |
Gas heat and hot water | |
Water and sewage | |
Salaries and wages | XXXXXXXXXXXXXXXX |
Administrative staff retained under annual employment contract | |
Professional clinical practice staff retained under annual employment contract | |
Per diem clinical professional staff retained under per diem rate agreement | |
Secretarial and security staff retained under monthly employment agreement | |
Janitorial staff retained under monthly contract | |
Technology | XXXXXXXXXXXXXXXX |
Electronic medical records system annual lease agreement with monthly terms | |
Imaging equipment lease to own agreement with annual terms that includes maintenance agreement but not supplies. | |
Telephone/communications system annual lease agreement that includes maintenance. | |
Minor patient care equipment leased on an annual basis as part of medical office lease agreement.Does not include maintenance or supplies. | |
Office computer equipment including printers/fax/scanning. | |
Supplies | XXXXXXXXXXXXXXXX |
Major supplies - cost threshold $500.00 per itemor more | |
Minor supplies - cost threshold <$500.00 per item | |
Security/Fire Systems leased on a monthly basis with volume adjustment | |
Remote communications and answering services leased on a monthly basis with volume adjustment. | |
Malpractice expenses annual premiums based on number and type of professional staff | |
Property and general liability insurance annual premium based on number of employees and square footage of premises. | |
Professional services contracts excluding clinical staff | XXXXXXXXXXXXXXXX |
Legal services paid on monthly retainer no volume adjustment | |
Accounting services paid on monthly retainer no volume adjustment | |
Computer maintenance paid on monthly retainer base rate plus volume adjustment |
Financial Management for Public Health and Not for Profit Organizations
ISBN: 978-0132805667
4th edition
Authors: Steven A. Finkler, Thad Calabrese