1. Using the historical data as a guide, construct a pro forma (forecasted) profit and loss statement for the clinic's average month for all of 2018 assuming the status quo. With no change in volume (utilization), is the clinic projected to make a profit?

2. Now consider the clinic's situation without the new marketing program. How many additional daily visits must be generated to break even? Construct a breakeven graph that can be included in your report.

3. Repeat the Question 2 analysis, but now assume that the new marketing program is implemented.

4. Now focus solely on the expected profitability of the proposed marketing program. How many incremental daily visits must the program generate to make it worthwhile? (That is, how many incremental visits would it take to pay for the marketing program, irrespective of overall clinic profitability?) Construct a breakeven graph.

5. Thus far, the analysis has considered the clinic's near-term profitability, that is, an average month in 2018. Recast the pro forma (forecasted) profit and loss statement developed in Question 1 for an average month in 2023, five years hence, assuming that volume is constant over time. (Hint: You must consider likely changes in revenues and costs due to inflation and other factors. The idea here is to see if if is possible for the clinic to "inflate" its way to profitability even if volume remains flat.) Hint: do not simply say the inflation rate is 3% for everything and not give an explanation. Justify your levels of inflation.

6. Although you are basically satisfied with the analysis thus far, you are concerned about the uncertainties inherent in the revenue and expense data supplied by the clinic's director. Assess each element in your Question 1 pro forma profit and loss statement. Are there any items that are more uncertain than the others? How could uncertainty be worked into the analysis? Is there any additional information that you might want to get from the clinic's director?

7. After all the work thus far in the analysis you suddenly realize that the hospital, as a for-profit corporation, must pay taxes. What impact does tax status have on your breakeven analysis? Consider what type of organization Tulsa Memorial is.

8. What is your final recommendation concerning the future of the walk-in clinic?

Monthly Averages Current Year 2013 Jan 2018 Feb 2018 2017 Jan/Feb 2018 Total Number of visits Net revenue 14,522 $548,747 1,365 $55,028 1,335 $54,748 1,210 $45,729 1,350 $54,888 1,230 $47,037 $13,544 18,000 3,215 665 $12,854 16,000 $13,540 18,000 3,215 538 843 2,620 Salanes and wages Physician fees Malpractice insurance Travel and education General insurance Subscriptions Electricity Water Equipment rental $13,542 18,000 3,215 602 843 $12,952 16,286 2,705 469 700 447 843 $154,250 192,000 31,440 5,365 8,112 189 11,820 1,260 1,260 155,745 103,779 $665,220 1,124 135 676 16 985 105 105 12,979 8,648 $55,435 705 1,029 142 105 12,500 7,923 $57,966 Building lease Other operating expenses Total operating expenses 12,500 8,152 $58,152 1,077 139 105 12,500 8,038 $58,059 998 110 105 12,910 8,561 $55,810 Case 4 Tulsa Memorial Hospital Net profit (loss) IS 3,124) ($ 3,218) ($ 9,706) ($116,473) -212% ($ 3,173) ($ 8,773) Gross margin (%) -57% -59% -212% -58% -187% EXHIBIT 4.2 TMH Urgent Care Center: Monthly Incremental Cost Data Number of Additional Visits per Day 1 -10 11-20 21-30 31-40 0 Variable Costs Medical supplies Administrative supplies $5 00 per visit 200 per visit Total variable costs per visit $700 per visit Semifixed Costs Salaries and wages Physician fees $ 5,000 $ 6,000 $ 7,000 $ 8,000 12,000 12,000 12,000 16,000 Total monthly semifixed costs $ $17,000 $18,000 $19,000 $24,000 Fixed Costs Marketing assistant's salary Advertising expenses $ 3,000 $ 3,000 $3,000 $ 3,000 $ 3,000 4,000 4,000 4,000 4,000 4,000 Total monthly fixed costs $ 7,000 $ 7,000 $ 7,000 $ 7,000 $ 7,000 Monthly Averages Current Year 2013 Jan 2018 Feb 2018 2017 Jan/Feb 2018 Total Number of visits Net revenue 14,522 $548,747 1,365 $55,028 1,335 $54,748 1,210 $45,729 1,350 $54,888 1,230 $47,037 $13,544 18,000 3,215 665 $12,854 16,000 $13,540 18,000 3,215 538 843 2,620 Salanes and wages Physician fees Malpractice insurance Travel and education General insurance Subscriptions Electricity Water Equipment rental $13,542 18,000 3,215 602 843 $12,952 16,286 2,705 469 700 447 843 $154,250 192,000 31,440 5,365 8,112 189 11,820 1,260 1,260 155,745 103,779 $665,220 1,124 135 676 16 985 105 105 12,979 8,648 $55,435 705 1,029 142 105 12,500 7,923 $57,966 Building lease Other operating expenses Total operating expenses 12,500 8,152 $58,152 1,077 139 105 12,500 8,038 $58,059 998 110 105 12,910 8,561 $55,810 Case 4 Tulsa Memorial Hospital Net profit (loss) IS 3,124) ($ 3,218) ($ 9,706) ($116,473) -212% ($ 3,173) ($ 8,773) Gross margin (%) -57% -59% -212% -58% -187% EXHIBIT 4.2 TMH Urgent Care Center: Monthly Incremental Cost Data Number of Additional Visits per Day 1 -10 11-20 21-30 31-40 0 Variable Costs Medical supplies Administrative supplies $5 00 per visit 200 per visit Total variable costs per visit $700 per visit Semifixed Costs Salaries and wages Physician fees $ 5,000 $ 6,000 $ 7,000 $ 8,000 12,000 12,000 12,000 16,000 Total monthly semifixed costs $ $17,000 $18,000 $19,000 $24,000 Fixed Costs Marketing assistant's salary Advertising expenses $ 3,000 $ 3,000 $3,000 $ 3,000 $ 3,000 4,000 4,000 4,000 4,000 4,000 Total monthly fixed costs $ 7,000 $ 7,000 $ 7,000 $ 7,000 $ 7,000