Number of visits	45
Net revenue	$1,845
Salaries and wages	$451
Physicians fees	600
Malpractice insurance	107
Travel and education	0
General insurance	28
Utilities	36
Equipment leases	5
Building lease	417
Other operating expenses	300
Total operating expenses	$1,944
Net profit (loss)	($99)

Variable Costs:

Medical supplies $4.00 per visit

Administrative supplies $1.00

Total variable costs $5.00 per visit

Semi-fixed Costs:

Salaries and wages $100

Physician Fees $267

Total daily semi-fixed costs $367

N ote: The semi-fixed costs are daily costs that a pp ly when volume increases by 1120 visits. However,

the physical capacity of the clinic is only 60 visits per day.

Q1:Thus far, the analysis has considered the clinic's near-term profitabilitythat is, an average day in 2009. Redo the forecasted profit and loss statement developed in Question 1 for an average day in 2014, five years hence, assuming that volume stays constant (does not increase). (Hint: You must consider likely changes in revenues and costs due to inflation and other factors. The idea here is to see whether the clinic can "inflate" its way to profitability even if volume remains at its current level).

Q2:Suppose you just found out that the $3,215 monthly malpractice insurance charge is based on an accounting allocation scheme that divides the hospitals 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. What impact does this allocation scheme have on the clinics true (cash) profitability? (No calculations are necessary).

Q3:Does the clinic have any value to the hospital beyond that considered by the numerical analysis just conducted? Do the actions by Baptist Hospital have any bearing on the final decision regarding the clinic?

Q4:What is your final recommendation concerning the future of the walk-in clinic?