Gapenski's Fundamentals of Healthcare Finance Variarice EXHIBIT 6.4 Flexible Actual Dollar or been 10. Carroll Clinic: 2016 Budget Results Visit of $322 21.500 Figoble Budget ithe relo Varianco Analysis A Volume (Number of Visits 10,090 10,ODD bottom revenue Payer A 41.500 11,500 Payer B 21,500 21,500 after ad Total Thus, t A. Reimbursement (per Visi effect, 100 $ 105 $ 5 Payer A 90 (S positiv S Payer B have all fact, hi AN. Costs to ori Variable costs: $ 322,500 $ 320,000 $ 5,000 expec Supplies more Fixed Costs: Labor $1,035,000 $1,050,000 ($15.000) Cost Overhead 500,000 550,000 ( 50,000) positi volur Total $1,535.000 $1,600,000 ($65.000) (4.2) the n iV. Forecasted P&L Statement 6.3 Revenues: am Payer A $1,000,000 $1,050,000 $50,000 Payer B 1,035.000 977.500 ( 57.500) (5.6) FI Total revenues $2,035.000 $2,027,500 ($ 7.500) [o.4) Th Variable costs $ 322,500 $ 320,000 $ 2,500 0.8 COT Fixed costs 1,535,000 1,600,000 ( 65,000) (4.2) Total costs $1,857.500 $1,920,000 ($62,500) (3.4) Profit $ 177,500 $ 107,500 ($70,000) (39.4) On the cost side, fixed costs are presumably unaffected by volume changes (in the relevant range), but budgeted variable costs reflect the actual volume of 21,500 visits 21,500 x $15 = $322,500, where $15 is the assumed variable cost rate in the simple budss The flexible budget can be described as follows. The $2,035,000 in total revenue is what the clinic would have expected at the start of the year if the volume estimates hold