create a proforma profit and loss statement, anaylze historical financial information

part 1, 2, 3, 7, 8, 9

\begin{tabular}{|c|c|c|c|c|c|c|} \hline & \multirow[b]{2}{*}{ CY 2009} & \multirow[b]{2}{*}{tan2010} & \multirow[b]{2}{*}{ Feb 2010} & \multicolumn{3}{|c|}{ Monthly Averages } \\ \hline . & & & & 2009 & tanFeb2010 & Total \\ \hline Number of visits & 14,522 & 1,365 & 1,335 & 1,210 & 1,350 & 1,230 \\ \hline Net revenue & $548,747 & $55,028 & $54,748 & $45,729 & $54,888 & $47,037 \\ \hline Salaries and wages & $154,250 & $13,540 & $13,544 & $12,854 & $13,542 & $12,952 \\ \hline Physician fees & 192,000 & 18,000 & 18,000 & 16,000 & 18,000 & 16,286 \\ \hline Malpractice insurance & 31,440 & 3,215 & 3.215 & 2.620 & 3,215 & 2,705 \\ \hline Travel and education & 5,365 & 538 & 665 & 447 & 602 & 469 \\ \hline General insuranco & 8,112 & 843 & 843 & 676 & 843 & 700 \\ \hline Subscriptions & 189 & 0 & 0 & 16 & 0 & 14 \\ \hline Electricity & 11,820 & 1,124 & 1.029 & 985 & 1.077 & 998 \\ \hline Water & 1,260 & 135 & 142 & 105 & 139 & 110 \\ \hline Equipment rental & 1,260 & 105 & 105 & 105 & 105 & 105 \\ \hline Building lease & 155,745 & 12,500 & 12,500 & 12.979 & 12,500 & 12,910 \\ \hline Other operating expenses & 103,779 & 8,152 & 7.923 & 8.648 & 8,038 & 8,561 \\ \hline Total operating oxpenses & $665.220 & $58,152 & $57,966 & $55.435 & $58,059 & $55,810 \\ \hline Net profit (loss) & (\$\$116,473) & (\$ 3,124) & (\$ 3,218) & (\$ 9,706) & (\$ 3,173 ) & is 8.773 \\ \hline Gross margin (\%) & 21.2% & 5.7% & 5.9% & 21.2% & 5.8% & 18.7% \\ \hline \end{tabular} COLUMBIA MEMORIAL HOSPITAL Break-even Analysis 1. Using the historical data as a guide (Exhibit 6.1), construct a pro forma (forecasted) profit and loss statement for the clinic's average month for all of 2010 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 break-even 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? (In other words; how many incremental visits would it take to pay for the marketing program, irrespective of overall clinic profitability?) Construct a graph showing the expected profitability of the proposed program versus incremental dally visits. 5. Thus far, the analysis has considered the clinic's near-term profitability, that is, an average month in 2010. Recast the pro forma (forecasted) profit and loss statement developed in Question 1 for an average month in 2015, 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 the clinic can "inflate" its way to profitability even if volume remains flat.) 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 any items more uncertain than the others? How could uncertainty be worked into the analysis? What additional information, if any, might you want to obtain from the clinic's director? 7. Suppose you just found out that the $3,215 monthly malpractice insurance charge is based on an accounting allocation scheme that divides the hospital's total annual malpractice insurance costs by the total annual number of inpatient days and outpatient visits to obtain a per episode charge. Then, the per episode value is multiplied by each department's projected number of patient days or outpatient visits to obtain each department's malpractice cost allocation. Does this allocation scheme bias your break-even analysis? Explain. (No calculations are necessary.) 8. After al the work performed 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 break-even analysis? 9. Does the clinic have any value to the hospilal beyond that considered by the numerical analysis just conducted? Do the actions by Baptist fospital have any bearing on tho final decision rogarding the clinic? 10. What is your final recommendation concerning the future of the walk-in clinic