Budgets are a vital part of management. They are the plan for the fiscal year and they estimate revenue and the necessary associated expenses. Budget creation is not limited to individuals in finance roles. Operations managers generally have the best idea of the needs of their areas, so they play an important role. Ensuring that resources are planned for properly can help the department run optimally.

For this assignment, you will be playing the role of an operations manager and creating two budget income statements based on the information provided below. You will also explore options for increasing margin. The required reading from HBR that is listed in this week's required readings will provide you with valuable insights. Please make sure you have read this thoroughly before you attempt this assignment.

Here are the two case studies used in our program. You will utilize inputs from these cases.

Case Study #$1$: Southview Health Systems $($PDF$)$Download Southview Health Systems $($PDF$)$

Case Study #$2$: Central Valley Health System $($PDF$)$ Download Central Valley Health System $($PDF$)$

Assignment:

Question $1$: Create an annual proforma income statement in Excel for both health systems in the program case study, using the inputs in the tables below.

Question $2$: Does each system have a positive or negative margin?

If one$/$both have a negative net income, enumerate and explain three actions that could be taken to close the gap.

Payer

Payment

Medicare:

$$35\mathrm{.}00$

Medicaid:

$$25\mathrm{.}00$

Commercial:

$$45\mathrm{.}00$

Self$-$Pay

$$5\mathrm{.}00$

Volume

Time

Volume

Days

$250$

Visits$/$Day

$144$

Cost

Item

Cost

Supplies$/$Visit

$$5\mathrm{.}50$

Annual Overhead to Health System

$$75,000$

Position

FTEs

CVHS Salaries

SHS Salaries

MD Salaries

$2\mathrm{.}00$

$$209,000$

$$220,000$

RN Salary

$2\mathrm{.}00$

$$76,000$

$$80,000$

APP Salary

$1\mathrm{.}00$

$$114,000$

$$120,000$

Medical Assistant

$1\mathrm{.}00$

$$38,000$

$$40,000$

Patient Service Representative

$1\mathrm{.}00$

$$38,000$

$$40,000$

Benefits

$25\mathrm{.}00\%$

$25\mathrm{.}00\%$