passage require analysis and breakdown

Cost value profit analysis takes the impact of all changes of the volume for the departments activities and predicts the costs, revenue and profit of the company with all the changes included. Some different changes could be increase or decrease in the charges or selling price of the service, an increase or decrease in expenses, the income tax rates changes and finally the mix of services that the company is offering. A CVP provides the senior leaders with the information needed to determine if they should make additional changes to the analysis to increase the profit needed to keep the company profitable. CVP is a comprehensive overview of the impact on all items in the income statement, cash flow, and balance sheet on a short run basis (Hilton & Pratt, 2016). The ability to predict the future profit and all items related to costs the company has to be able to know what it will take to break even. This is the minimum amount of contribution margin needed to cover all the costs. The companys break even analysis shows zero profit or loss. The expenses will be classified as either fixed or variable costs and input into the CVP analysis. The total contribution margin will show the revenue less the variable costs then the fixed costs will be subtracted from the contribution margin to get the profit or loss (Hilton & Pratt, 2016).

The way my healthcare ministry uses CVP is when we are looking at some of the smaller rural hospitals that are in trouble and if we can bring them into our ministry and turn them around. The reason for this is because as a ministry providing healthcare to everyone and not be 1 hour around from any hospital or clinic. The trend is expected to continue with more and more rural hospitals closing which make it hard for people in these rural areas to have access to healthcare services. The CVP is completed by taking the current historical data and doing the analysis with all things constant. The next step is to do CVP with the changes to revenue streams and costs savings. This can also be tough because sometimes these rural hospitals only have 1 doctor in the area. This would also be an item that we would look at to see if we could recruit another doctor to bring in the volume. Some of the analysis that we have completed have led to the following decisions, we have managed the rural hospital, leased the hospital, converted it to a FQHC (federal qualified health center), converted it to more of an outpatient (OP) facility with emergency room and OP services, and converting a small PPS (prospective payment system) hospital into a CAH (Critical Access Hospital) by making the changes needed to qualify. We truly do a CVP for every small change so that we can see the impact of that change. We have to understand the impact for access of healthcare and the impact of Medicare reimbursement.

The data collecting for the CVP is interviewing community stakeholders and nearby hospitals (usually 1 hour away or more). We have a list of questions that need to be answered before the CVP starts truly being developed. Data regarding the number of beds, occupancy rate, number of employees, and admission rates have to be collected. We also have to understand the impact of loss of major employers, the evaporation of local industry (i.e., mining, textiles, manufacturing and agriculture), and the subsequent rise in unemployment and loss of employer health coverage as factors. This would increase the bad debt at the rural hospitals because as a hospital the patient cant be turned away from care regardless of the ability to pay. Another area that has to be looked at is the infrastructure improvements that should have been done and was not due to financial struggles. This for my ministry is a huge part because we have a standard of care starting with the building itself. We would have to decide the amount of investment it would take to bring them into our ministry. The investment would include installing EPIC so that all the billing would be integrated.