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You hire a new surgeon that will begin doing elective surgeries in year 2. This increases your surgical volume by 10% from year 1 and another 15% in year 3. Surgery patients use operating rooms and anesthesiology services. Surgeon salary is $350,000 per year plus 25% for benefits. Support staff costs for the surgeon are $50,000 in Year 1, $55,000 in Year 2 and $60,000 in year 3.

A nearby hospital closes their OB unit and you receive an influx of new patients in year 2. This increases your OB volume by 25% in Year 2 and 30% in Year 3, however, many are uninsured or not able to pay their bills. With this increase, you need to increase the staff costs by 20% per year to care for these patients. The average current revenue per delivery is $15,000. With the increase in uninsured patients, doubtful accounts need to increase by 10% to account for these losses. In year 1, OB Staffing is under other professional services and is 20% of the total amount and total deliveries were 350 in Year 1.

You lose half your physical therapists over a contract dispute midway through year 1 and don’t get them to return by the end of year 3. One physical therapist creates $49,166.67 per year in revenue (total of 50 therapists) and costs $131,000 under other professional services.

CoVid testing is a new source of revenue for your lab and increases your revenue by 50% every year for the next 3 years. You also need to add $20,000 per year for staff to complete the tests (under professional revenue).

You build a new Emergency Department, and your visits increase by 25% in year 3. ED patients flow into radiology services, and they also increase by 10%. The new building increases depreciation by $1,000,000 year. No increase in staffing costs in the ED or other services.

 

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(O) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Practice Exercise 16-1: Budgeting Revenue 17 Expenses 18 19 20 21 22 23 24 25 26 27 36 37 38 A Item Routine Revenue Lab Radiology OB-nursery Pharmacy Emergency service Medical and Surgical Operating Rooms Anesthesiology Respiratory Therapy Physical therapy Total Operating Revenue Nursing Services Other professional services General services Support services Depreciation Amortization Interest Property, Plant and Equipment Provision for doubtful accounts Total Expenses From the book $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 28 29 Revenue and Gains in Excesses of Expenses and Losses $ 30 31 32 33 34 35 B Year () 9,850,000.00 7,375,000.00 5,825,000.00 450,000.00 3,175,000.00 2,200,000.00 5,050,000.00 5,250,000.00 1,600,000.00 900,000.00 1,475,000.00 43,150,000.00 5,025,000.00 13,100,000.00 3,200,000.00 8,300,000.00 1,900,000.00 50,000.00 325,000.00 19,300,000.00 14,500,000.00 65,700,000.00 (22,550,000.00) C Your projections Year 1 D Year 2 E Year 3 F State any assumptions-or why? (O) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Practice Exercise 16-1: Budgeting Revenue 17 Expenses 18 19 20 21 22 23 24 25 26 27 36 37 38 A Item Routine Revenue Lab Radiology OB-nursery Pharmacy Emergency service Medical and Surgical Operating Rooms Anesthesiology Respiratory Therapy Physical therapy Total Operating Revenue Nursing Services Other professional services General services Support services Depreciation Amortization Interest Property, Plant and Equipment Provision for doubtful accounts Total Expenses From the book $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 28 29 Revenue and Gains in Excesses of Expenses and Losses $ 30 31 32 33 34 35 B Year () 9,850,000.00 7,375,000.00 5,825,000.00 450,000.00 3,175,000.00 2,200,000.00 5,050,000.00 5,250,000.00 1,600,000.00 900,000.00 1,475,000.00 43,150,000.00 5,025,000.00 13,100,000.00 3,200,000.00 8,300,000.00 1,900,000.00 50,000.00 325,000.00 19,300,000.00 14,500,000.00 65,700,000.00 (22,550,000.00) C Your projections Year 1 D Year 2 E Year 3 F State any assumptions-or why?

Answer rating: 100% (QA)

Here are the projections with assumptions Practice Exercise 161 Budgeting From the book Your project... View the full answer