I have 2 questions:

1. I want to verify that the information on the Excel spread sheet highlighted in green is correct (Based of off the information in the dialog). If they are not correct could you please explain how to get the correct calculations.

2. I need to write a 2 page budget report but i am unsure how to go about it. Could you please provide points of topics for me to discuss?

You are the administrator of the medical - surgical department at UMGC Health. Review the transcripts from the budget meeting and recent voicemails from your CFO and, using the available information and resources, develop an operating budget for your department.

Your budget should include a 2-4 page document with an accompanying Excel spreadsheet that:

Provides the revenue and expenses through the current month of the current year.

Estimates the revenue and expenses for the rest of the current fiscal year based on the assumptions provided in the transcript documents

Transcripts:

Transcript of the VOICEMAIL FROM George Costanza (CFO):

Hi, it's George. I hear you're working on a budget for the Med-Surg department for FY 2019. I'd like you to come to the budget meeting this afternoon, because I'm going to be sharing some numbers that are likely to have an impact on your budget. I've sent you the year-to-date statements through December, the overall budget for the year, and the year-to-date budget variance for your department. Take a look at them, and bring them with you to the meeting. See you later!

Transcript from BUDGET MEETING:

George C., CFO Hi, everyone. Thanks for coming. We've got some important numbers to go through and a big challenge to respond to, so I think we better get started. Jerry, Vice President of Operations That sounds ominous. Newman, Vice President of Medical Support Well, can we at least get an idea of how we're doing year-to-date before you go to the 40,000-foot level? George I think you might need to hear this first. Here's the situation: The hospital has to cut operating expenses by 5 percent for next fiscal year. Kramer, Director of Clinical Operations I'm sorry, did you say 5 percent? Operating expenses? George That's right. Jerry That's a big ask. We're already operating awfully lean. George Agreed. But it's the situation we're in. I'll get to the reasons, but based on what I'm going to go over, I just want everyone to keep in mind that we can't make assumptions we were making before. So let me give you an overview of the budget and the year-to-date numbers, and I think you'll see why we're going to have to make those cuts. Now, last year, for the entire hospital, we assumed that we would see $1.2 billion in total patient revenue. But as you can see, for half the year, we've only hit just over $607 million. By this point in the year, we should be over $612 million. So already in terms of total patient revenue, we've got a deficit of nearly $5 million that we didn't expect. The problem is made worse when we see that other operating revenue is also under budget by $1.5 million. I believe that recent efforts in the billing department coupled with some of the solid work by the c-suite team on physician engagement and external marketing are going to have an impact on the revenue side of things. Were also currently negotiating with a couple of our primary commercial payers, but those negotiations remain uncertain. All things considered, Im hoping for about a 5% bump on the revenue side for FY 19. Our operating expenses are fairly close to target so far this year, but given the situation with uncertain revenue, we will need to try to find some additional cost savings opportunities. I want to be reasonably conservative in case market conditions change or negotiations with our payers dont go as expected. Newman Wow. Well, okay, so that's the reality. What's the timeline? How long do we have to make these cuts? George Well, implementation is obviously by June 30 since the next fiscal year starts July 1. The board will approve the new budget probably by mid-June, but all the negotiation at the unit and department level will be going on this month. Our first official budget committee meeting is in early May. So I'd suggest getting your ducks in a row within the next week or so.

Prepares a budget for the next fiscal year.

See attachment for the Budget spreadsheet

The UMUC Medical Center FY 2019 YTD FY 2019 Budget FY 2019 FY 2019 Actual FY 2020 Budget (Jul - Dec) Variance YTD OPERATING REVENUE: Inpatient Revenue $375,040,349 $ 700,000,000 $ 25,040,349 $ 750,080,698 $ 787,584,733 Outpatient Revenue $ 232,498,397 $ 525,000,000 $ (30,001,603) $ 464,996,794 $ 488,246,634 TOTAL PATIENT SERVICES REVENUE $ 607,538,746 $ 1,225,000,000 $ (4,961,254) $ 1,215,077,492 $ 1,275,831,367 DEDUCTIONS FROM REVENUE: Contractual Adjustments $ 476,543,215 $ 950,000,000 $ 1,543,215 $ 953,086,430 $ 1,000,740,752 Charity and Uncompensated Care $ 6,725,412 $ 14,000,000 $ (274,588) $ 13,450,824 $ 14,123,365 TOTAL DEDUCTIONS FROM REVENUE $ 483,268,627 S 964,000,000 $ 1,268,627 $ 966,537,254 S 1,014,864,117 NET PATIENT SERVICE REVENUE $ 124,270,119 $ 261,000,000 $ (6,229,881) $ 248,540,238 $ 260,967,250 OTHER OPERATING REVENUE Other Operating Revenue $ 3,500,000 $ 10,000,000 $ (1,500,000) $ 7,000,000 $ 7,350,000 TOTAL OPERATING REVENUE $ 127,770,119 $ 271,000,000 $ (7,729,881) $ 255,540,238 $ 268,317,250 OPERATING EXPENSES Salaries and Wages $ 42,932,230 $ 88,000,000 $ (1,067,770) $ 85,864,460 $ 81,571,237 Employee Benefits $ 12,624,012 $ 25,000,000 $ 124,012$ 25,248,024 $ 23,985,623 Professional Fees $ 4,082,215$ 9,000,000 $ (417,785) S 8,164,430 $ 7,756,209 Supplies $ 23,883,407$ 46,000,000 $ 883,407 $ 47,766,814 $ 45,378,473 Purchased Services - Utilities $ 1,632,191 $ 3,000,000 $ 132,191 $ 3,264,382 $ 3,101,163 Purchased Services - Other $ 11,536,320 $ 22,000,000 $ 536,320$ 23,072,640 $ 21,919,008 preciation $ 8,455,254 $ 17,000,000 $ (44,746) $ 16,910,508 $ 16,064,983 Rentals and Leases $ 2,252,670 $ 4,000,000 $ 252,670 $ 4,505,340 $ 4,280,073 Insurance $ 2,715,378 $ 5,000,000 $ 215,378$ 5,430,756 $ 5,159,218 License and Taxes $ 7,992 144 $ 18,000,000 $ (1,007,856) $ 15,984,288 $ 15,185,074 Interest $ 8,393,790 $ 18,000,000 $ (606,210) $ 16,787,580 $ 15,185,074 Provision For Bad Debts $ $ $ Other Direct Expenses $ 4,744.642 $ 8,000,000 $ 744,642 $ 9,489,284 $ 9,014,820 TOTAL OPERATING EXPENSES $ 131,244,253 $ 263,000,000 $ (255,747) $ 262,488,506 $ 249,364,081 NET OPERATING REVENUE $ (3,474,134) $ 8,000,000 $ (7,474,134) $ (6,948,268) $ 18,953,169 NET REVENUE BEFORE ITEMS LISTED BELO $ (3,474,134) $ 8,000,000 $ (7,474,134) $ (6,948,268) $ 18,953,169 EXTRAORDINARY ITEM $ $ $ NET REVENUE OR (EXPENSE) $ (3,474,134) $ 8,000,000 $ (7,474,134) $ (6,948,268) $ 18,953,169 Med/Surg Department Budget FY 2018 YTD FY 2018 FY 2018 Budget FY2018 Actual (Jul - Dec) Variance TYD Budget for FY 2019 OPERATING REVENUE: Inpatient Revenue $ 23,123,516 $ 50,000,000 $ (1,876,484) $ 46, 247,032 $ 4,855,938 TOTAL PATIENT SERVICES REVENUE $ 23,123,516 S 50,000,000 $ (1,876,484) $ 46,247,032 $ 4,855,938 OPERATING EXPENSES Salaries and Wages $ 12,157,632 $ 23,000,000 $ 657,632 $ 24,315,264 $ 23,099,501 Employee Benefits $ 3,040,408 $ 5,750,000 $ 165,408 $ 6,080,816 $ 5,776,775 Professional Fees $ 250, 160$ 400,000 $ 50,160 $ 500,320$ 475,304 Supplies $ 5,883,497 $ 10,000,000 $ 883,497 $ (11,766,994) $ 11,178,644 Purchased Services - Utilities $ 27,456 $ 50,000 $ 2,456 $ 54,912 | $ 52,166 Purchased Services - Other $ 23,484 $ 50,000 $ (1,516) $ 46,968 $ 44,620 Insurance $ 57,315$ 105,000$ 4,815 $ 114,630$ 108,899 License and Taxes $ 21,456$ 40,000 $ 1,456$ 42,912$ 40.766 Other Direct Expenses $ 972, 157 $ 1,500,000 $ 222, 157$ 1,944,314 $ 1,847,098 TOTAL OPERATING EXPENSES $ 22,433,565 $ 40,895,000 $ 1,986,065 $ 44,867,130 $ 42,623,774 NET REVENUE OR (EXPENSE) $ 689,951 $ 9,105,000 $ (3,862,549 $ 1,379,902 $ 37,767,835 The UMUC Medical Center FY 2019 YTD FY 2019 Budget FY 2019 FY 2019 Actual FY 2020 Budget (Jul - Dec) Variance YTD OPERATING REVENUE: Inpatient Revenue $375,040,349 $ 700,000,000 $ 25,040,349 $ 750,080,698 $ 787,584,733 Outpatient Revenue $ 232,498,397 $ 525,000,000 $ (30,001,603) $ 464,996,794 $ 488,246,634 TOTAL PATIENT SERVICES REVENUE $ 607,538,746 $ 1,225,000,000 $ (4,961,254) $ 1,215,077,492 $ 1,275,831,367 DEDUCTIONS FROM REVENUE: Contractual Adjustments $ 476,543,215 $ 950,000,000 $ 1,543,215 $ 953,086,430 $ 1,000,740,752 Charity and Uncompensated Care $ 6,725,412 $ 14,000,000 $ (274,588) $ 13,450,824 $ 14,123,365 TOTAL DEDUCTIONS FROM REVENUE $ 483,268,627 S 964,000,000 $ 1,268,627 $ 966,537,254 S 1,014,864,117 NET PATIENT SERVICE REVENUE $ 124,270,119 $ 261,000,000 $ (6,229,881) $ 248,540,238 $ 260,967,250 OTHER OPERATING REVENUE Other Operating Revenue $ 3,500,000 $ 10,000,000 $ (1,500,000) $ 7,000,000 $ 7,350,000 TOTAL OPERATING REVENUE $ 127,770,119 $ 271,000,000 $ (7,729,881) $ 255,540,238 $ 268,317,250 OPERATING EXPENSES Salaries and Wages $ 42,932,230 $ 88,000,000 $ (1,067,770) $ 85,864,460 $ 81,571,237 Employee Benefits $ 12,624,012 $ 25,000,000 $ 124,012$ 25,248,024 $ 23,985,623 Professional Fees $ 4,082,215$ 9,000,000 $ (417,785) S 8,164,430 $ 7,756,209 Supplies $ 23,883,407$ 46,000,000 $ 883,407 $ 47,766,814 $ 45,378,473 Purchased Services - Utilities $ 1,632,191 $ 3,000,000 $ 132,191 $ 3,264,382 $ 3,101,163 Purchased Services - Other $ 11,536,320 $ 22,000,000 $ 536,320$ 23,072,640 $ 21,919,008 preciation $ 8,455,254 $ 17,000,000 $ (44,746) $ 16,910,508 $ 16,064,983 Rentals and Leases $ 2,252,670 $ 4,000,000 $ 252,670 $ 4,505,340 $ 4,280,073 Insurance $ 2,715,378 $ 5,000,000 $ 215,378$ 5,430,756 $ 5,159,218 License and Taxes $ 7,992 144 $ 18,000,000 $ (1,007,856) $ 15,984,288 $ 15,185,074 Interest $ 8,393,790 $ 18,000,000 $ (606,210) $ 16,787,580 $ 15,185,074 Provision For Bad Debts $ $ $ Other Direct Expenses $ 4,744.642 $ 8,000,000 $ 744,642 $ 9,489,284 $ 9,014,820 TOTAL OPERATING EXPENSES $ 131,244,253 $ 263,000,000 $ (255,747) $ 262,488,506 $ 249,364,081 NET OPERATING REVENUE $ (3,474,134) $ 8,000,000 $ (7,474,134) $ (6,948,268) $ 18,953,169 NET REVENUE BEFORE ITEMS LISTED BELO $ (3,474,134) $ 8,000,000 $ (7,474,134) $ (6,948,268) $ 18,953,169 EXTRAORDINARY ITEM $ $ $ NET REVENUE OR (EXPENSE) $ (3,474,134) $ 8,000,000 $ (7,474,134) $ (6,948,268) $ 18,953,169 Med/Surg Department Budget FY 2018 YTD FY 2018 FY 2018 Budget FY2018 Actual (Jul - Dec) Variance TYD Budget for FY 2019 OPERATING REVENUE: Inpatient Revenue $ 23,123,516 $ 50,000,000 $ (1,876,484) $ 46, 247,032 $ 4,855,938 TOTAL PATIENT SERVICES REVENUE $ 23,123,516 S 50,000,000 $ (1,876,484) $ 46,247,032 $ 4,855,938 OPERATING EXPENSES Salaries and Wages $ 12,157,632 $ 23,000,000 $ 657,632 $ 24,315,264 $ 23,099,501 Employee Benefits $ 3,040,408 $ 5,750,000 $ 165,408 $ 6,080,816 $ 5,776,775 Professional Fees $ 250, 160$ 400,000 $ 50,160 $ 500,320$ 475,304 Supplies $ 5,883,497 $ 10,000,000 $ 883,497 $ (11,766,994) $ 11,178,644 Purchased Services - Utilities $ 27,456 $ 50,000 $ 2,456 $ 54,912 | $ 52,166 Purchased Services - Other $ 23,484 $ 50,000 $ (1,516) $ 46,968 $ 44,620 Insurance $ 57,315$ 105,000$ 4,815 $ 114,630$ 108,899 License and Taxes $ 21,456$ 40,000 $ 1,456$ 42,912$ 40.766 Other Direct Expenses $ 972, 157 $ 1,500,000 $ 222, 157$ 1,944,314 $ 1,847,098 TOTAL OPERATING EXPENSES $ 22,433,565 $ 40,895,000 $ 1,986,065 $ 44,867,130 $ 42,623,774 NET REVENUE OR (EXPENSE) $ 689,951 $ 9,105,000 $ (3,862,549 $ 1,379,902 $ 37,767,835