Health Care Business Analysis

Health Care Business Analysis
Part 1 - 2010 Operating Budget
 
Review the "2009 Budget Issues - Nurses of the Patton-Fuller Community Hospital Virtual Organization 

Patton - Fuller CommunityHospital
PatientStatistics
		Jan	Feb	Mar	Apr	May	Jun
Days in themonth		31	28	31	30	31	30
PatientDays(60%occxseasonalxdaysinmonth)		13,271	11,983	12,286	10,171	9,092	7,258
AverageCensus:
Patton Fuller # ofbeds=	600						
Patton Fuller avgoccupancy(HFMA)	60%						
Patton Fuller Avg Daily Census(ADC)	360						
Monthas%ofAverage"SeasonalAdjustment"		119%	119%	110%	94%	81%	67%
PattonFullerAvgDailyCensusw/seasonaladj.		428	428	396	339	293	242
Patton Fuller Avg Net Rev/ptday	$3,500						
Average DailyRevenue		1,498,381	1,497,857	1,387,134	1,186,616	1,026,495	846,801
PattonFullerAvgNetRev/month(1000's)		$	46,450	$	41,940	$	43,001	$	35,598	$	31,821	$	25,404








Patton - Fuller CommunityHospital
PatientStatistics
		Jul	Aug	Sep	Oct	Nov	Dec	Total
Days in themonth		31	31	30	31	30	31	365
PatientDays(60%occxseasonalxdaysinmonth)		7,294	10,723	11,182	11,607	13,419	13,113	131,400
AverageCensus:
Patton Fuller # ofbeds=	600							
Patton Fuller avgoccupancy(HFMA)	60%							
Patton Fuller Avg Daily Census(ADC)	360							
Monthas%ofAverage"SeasonalAdjustment"		65%	96%	104%	104%	124%	117%	100%
PattonFullerAvgDailyCensusw/seasonaladj.		235	346	373	374	447	423	
Patton Fuller Avg Net Rev/ptday	$	3,500							
Average DailyRevenue		823,560	1,210,686	1,304,520	1,310,523	1,565,592	1,480,451	
PattonFullerAvgNetRev/month(1000's)		$	25,530	$	37,531	$	39,136	$	40,626	$	46,968	$	45,894	$	459,900














Patton - Fuller CommunityHospital
NursingStatistics
		Jan	Feb	Mar	Apr	May
Number of Patients perday		428	428	396	339	293
Cost of nurse per hourw/benefits		$	30.00	$	30.00	$	30.00	$	30.00	$	30.00
Cost of nurse per 24hourday		$	720.00	$	720.00	$	720.00	$	720.00	$	720.00
Numberofnursesperpatientbasedon5patientspernurseora"5 to 1" nursingratio	
0.2					
Number of nurses perday		85.6	85.6	79.3	67.8	58.7
Nursing cost perday		$	61,648	$	61,626	$	57,071	$	48,821	$	42,233
Nursing cost permonth		$ 1,911,078	$ 1,725,532	$ 1,769,190	$ 1,464,623	$ 1,309,221
Simulation:  Effect of a $1 per hour raise for allnurses
Cost of nurse per hourw/benefits		$	31.00	$	31.00	$	31.00	$	31.00	$	31.00
		$	744.00	$	744.00	$	744.00	$	744.00	$	744.00
Numberofnursesperpatientbasedonaratioof5patientspernurse or a "5 to 1" nursingratio	
0.2					
Number of nurses perday		85.6	85.6	79.3	67.8	58.7
Nursing cost perday		$	63,703	$	63,680	$	58,973	$	50,448	$	43,641
Nursing cost permonth		$ 1,974,781	$ 1,783,050	$ 1,828,163	$ 1,513,444	$ 1,352,862

Increaseincostpermonthduetoa$1raiseper nursinghour		
$ 63,702.62	
$ 57,517.73	
$ 58,973.00	
$ 48,820.77	
$ 43,640.71
						
Simulation:  Effect of changing to a "4 to 1" nursingratio
Number of nurses perday	0.25	107.0	107.0	99.1	84.8	73.3
Nursing costperday(Nursing ratioof "4to1" and anhourlyrateof
$30)		

$	77,060	

$	77,033	

$	71,338	

$	61,026	

$	52,791
Nursing cost permonth		$ 2,388,848	$ 2,156,915	$ 2,211,487	$ 1,830,779	$ 1,636,527
Increaseincostpermonthduetoachangeinnursingratio from 5 to 1 down to 4 to1		

$	477,770	

$	431,383	

$	442,297	

$	366,156	

$	327,305


Patton - Fuller CommunityHospital
NursingStatistics
		Jul	Aug	Sep	Oct	Nov	Dec	Total
Number of Patients perday		235	346	373	374	447	423	
Cost of nurse per hourw/benefits		$	30.00	$	30.00	$	30.00	$	30.00	$	30.00	$	30.00	
Cost of nurse per 24hourday		$	720.00	$	720.00	$	720.00	$	720.00	$	720.00	$	720.00	
Numberofnursesperpatientbasedon5patientspernurseora"5 to 1" nursingratio	
0.2							
Number of nurses perday		47.1	69.2	74.5	74.9	89.5	84.6	
Nursing cost perday		33,884	49,811	53,672	53,919	64,413	60,910	
Nursing cost permonth		1,050,392	1,544,143	1,610,150	1,671,479	1,932,388	1,888,210	
Simulation:  Effect of a $1 per hour raise for allnurses
Cost of nurse per hourw/benefits		$	31.00	$	31.00	$	31.00	$	31.00	$	31.00	$	31.00	
		$	744.00	$	744.00	$	744.00	$	744.00	$	744.00	$	744.00	
Numberofnursesperpatientbasedonaratioof5patientspernurse or a "5 to 1" nursingratio	
0.2							
Number of nurses perday		47.1	69.2	74.5	74.9	89.5	84.6	
Nursing cost perday		$	35,013	$	51,471	$	55,461	$	55,716	$	66,560	$	62,940	
Nursing cost permonth		$ 1,085,405	$ 1,595,615	$ 1,663,822	$ 1,727,195	$ 1,996,801	$ 1,951,150	

Increaseincostpermonthduetoa$1raiseper nursinghour		
$ 35,013.05	
$ 51,471.44	
$ 53,671.66	
$ 55,715.97	
$ 64,412.93	
$ 62,940.33	
$ 630,720.01
								
Simulation:  Effect of changing to a "4 to 1" nursingratio
Number of nurses perday	0.25	58.8	86.5	93.2	93.6	111.8	105.7	
Nursing costperday(Nursing ratioof "4to1" and anhourlyrateof
$30)		

$	42,354	

$	62,264	

$	67,090	

$	67,398	

$	80,516	

$	76,137	
Nursing cost permonth		$ 1,312,989	$ 1,930,179	$ 2,012,687	$ 2,089,349	$ 2,415,485	$ 2,360,262	
Increaseincostpermonthduetoachangeinnursingratio from 5 to 1 down to 4 to1		

$	262,598	

$	386,036	

$	402,537	

$	417,870	

$	483,097	

$	472,052	

$	4,730,400

 
Decide which of the two highlighted options you will implement from the Nursing Statistics memo of the "2009 Budget Issues - Nurses" document.
 
Create a new 2010 Operating Budget based on the labor decision you select from the Nursing Statistics memo.   
           
Part 2 - Analysis Paper
 
Write a 1050 to 1,400 word paper in which you detail the following:
•	Explain the decision-making processes in creating a budget.
•	Explain the role of variance analysis in maintaining an operating budget.
•	Differentiate between managerial accounting and financial management.
•	Analyze how generally accepted accounting principles in the health care industry apply to your Operating Budget Projection.
•	Analyze the decision between the two labor alternatives facing the management of PFCH and the annual cost increase of each.
•	Evaluate the labor alternative you would recommend.  Your justification should present numbers related to fiscal management including how each decision impacts the 2010 Budget Projection. 
•	Analyze the effect of the labor alternative you recommended would have on the operating budget with respect to each of the following:
â—¦	The opportunity cost of your recommendation.
â—¦	How your recommendation impacts employee satisfaction.
â—¦	How your recommendation impacts patient care and patient satisfaction.
Cite a minimum of four sources.
 
Format your sources consistent with APA guidelines.
 
Submit the 2010 Operating Budget and Analysis Paper.