Assignment Exercise 142: Cumulative Inflation Factor for Comparable Data Review Table 143 and the accompanying text. SEE SEPARATE ATTACHMENT FOR TABLE 14-3 Assumptions Two hospitals report their annual projected revenue for five years to the local newspaper for a story on the areas future economic outlook. However, Hospital 1 has applied a cumulative inflation factor of 5% per year while Hospital 2 has not applied any inflation factor. Thus the information is not properly comparable. Projected Revenue Year 1 Year 2 Year 3 Year 4 Year 5 Hospital 1 $20,000,000 $22,500,000 $27,500,000 $27,500,000 $30,000,000 Hospital 2 $20,000,000 $21,000,000 $25,000,000 $24,000,000 $26,000,000 Required Revise Hospital 2s projections by applying a cumulative inflation factor of 5% per year. Assignment Exercise 143 The head of your department is a prominent researcher. A health research foundation has asked him travel to London to give an important speech at a conference. He will then travel to Paris to tour a research facility before returning home. Although his travel expenses are being funded by the foundation, he will still need to take along some personal money. Consequently, he asks you to figure the exchange rates for $500 and for $1,000 in both pounds and euros. He explains that he is trying to judge the spending power of U.S. dollars when converted to the other currencies so he can decide how much personal money to take on the trip. Required Locate the current exchange rates for pounds and euros and compute the currency conversion for $500 and for $1,000. Assignment Exercise 144: The Discovery The Chief Financial Officer at Sample General Hospital has just discovered that the hospitals Chief of the Medical Staffs son Jason, a student at the local community college, is paid $100 per week year-round for grounds maintenance at the hospitals Outpatient Center. The CFO, no fan of the Chief of Medical Staff, now wants you to prepare a report that compares the relative costs of lawn care at each of three locations: the hospital itself, the outpatient center, and the hospital-affiliated nursing home down the block. Required Review the available information for grounds maintenance at the three facilities. Decide how to convert this information into comparable data. Then prepare a report, based on your assumptions, that presents comparable costs of grounds care. Also provide your assessment of what the best future course of action should be. Relevant Information So far you have assembled the following information. Now you need to decide how it can be converted into comparable data. Introduction to the Three Facilities Sample General Hospital is an older 100-bed hospital. The new Outpatient Center, built last year, is across the street and the Golden Age Nursing Facility is down one block, on the corner. All three facilities are part of the Metropolis Health System. (Appendix 28-A contains some financial details about Sample Hospital.) The hospital is located in the midwestern sunbelt; there is occasional frost in the winter but no snow. SEE SEPARATE ATTACHMENT FOR APPENDIX 28-A Grounds Maintenance Tasks That Should Be Performed at All Three Sites Mowing and edging Walk sweeping Raking leaves Blowing off parking lot Flower bed maintenance (where necessary) Hedge trimming and minor tree pruning (major tree trimming is performed by a contractor on an as-needed basis and thus should be disregarded) Figure Ex-1 provides a map that illustrates the layout of the grounds for each facility and their proximity to each other. SEE BELOW Grounds Maintenance Arrangements for the Three Facilities The current grounds maintenance arrangements vary among the three facilities as follows: 1. Sample General Hospital uses its Maintenance department employees for grounds care. The hospital pays these employees $15 per hour plus 15% employee benefits; it is estimated they spend 1,000 hours per year on grounds maintenance work. Another estimated 120 hours per year are spent on maintaining the lawn care equipment. The employees use a riding lawn mower, edger, and blower, all owned by the hospital. The hospital just bought a new mower for $2,995 less a 10% discount. It is expected that the mower should last for five years. 2. The hospitals Chief of the Medical Staffs son Jason, a student at the local community college, is paid $100 per week year-round for grounds maintenance at the hospitals Outpatient Center. A friend sometimes helps, but when that happens Jason pays him out of his weekly $100. It takes about 1.5 hours to mow, edge, and blow. Jason uses his dads riding mower and blower, but Jason recently bought his own edger. Jason also buys fertilizer for the grass twice a year. 3. The Nursing Facility contracts with a landscape service on a seasonally adjusted sliding scale. The landscape service is paid $600 per month from April to October (mowing season); $400 per month for February, March, and November; and $200 per month for November, December, and January. The landscape service provides all their own equipment. They also provide fertilizer and provide annuals to plant in the flower beds every quarter. Sample General Hospital Property Description The grounds to be maintained are as follows: The front lawn is grass in two sections on either side of the front entrance. Each section is about 50 by 60. There is a hedge along the front of the building that is about 50 on either side of the front entrance. There are two small matching flower beds on either side of the front entrance. Another strip of grass alongside of the building is 30 by 100. A third small strip of grass about 5 by 25 is by the Emergency entrance. The walkway dimensions are as follows: about 50 of front walk; about 30 of staff entrance walk, both of which are 5 wide. The Emergency Departments paved patient drop-off area is about 25 by 30. The parking lot surface is about 200 by 250. Along one side are overhanging trees that drop leaves and debris and are a constant sweeping problem. These are the only trees on the hospital site. Outpatient Center Property Description The grounds to be maintained are as follows: There is a strip of grass at the front of the building that is 12 wide and 65 long, split in the middle by a walkway 5 wide. There is a strip of grass at the back of the building between the building and the parking lot that is 5 wide and 50 long All the rest of the property is paved. Nursing Center Property Description Golden Age Nursing Center occupies one whole block. The grounds have many large trees. Flowerbeds have been planted around the trees as well as along the front walk and entrance. There are also two secured patio areas at the side of the building, screened by hedges, and each has a small bed of annuals. Because of the unique design of the building, grounds maintenance requires considerable handwork such as edging with a weed eater.