Question
One of the owners of the Fleming Medical Group recently attended a conference on medical practice management, learned of flexible budgeting, and believes it can
One of the owners of the Fleming Medical Group recently attended a conference on medical practice management, learned of flexible budgeting, and believes it can help the practice better manage its revenues and expenses. Using the table in Problem 14-3, BUILD a flexible budget based on 2022 year to date actual expenses and visits, a 4% inflation factor for each line item, and 52,560 forecast patient visits in 2023. What are the total budget, projected net income, and profit margin? Did net income and profit margin increase from the incremental budget prepared in Problem 14-3?
2021 | 2022 YTD Actual | 2022 YTD Budget | Budget 2023 | |
Revenue | $4,885,987 | $2,964,750 | $2,950,000 | |
Operating Expenses | ||||
Physician salaries | $960,000 | $585,306 | $576,800 | |
Nursing staff salaries | 1,380,000 | 857,157 | 829,150 | |
Mgt and clerical salaries | 780,000 | 466,971 | 468,650 | |
HE IS | 238,680 | 143,397 | 143,407 | |
Health Insurance | 390,000 | 238,760 | 234,325 | |
Retirement | 124,800 | 76,763 | 74,984 | |
Unemployment | 31,200 | 18,323 | 18,746 | |
Medications | 148,152 | 91,687 | 89,015 | |
Medical instruments | 102,792 | 64,287 | 61,761 | |
Bandages, gauze | 57,468 | 34,140 | 34,529 | |
Gloves, gowns | 40,416 | 24,476 | 24,283 | |
Sterile wipes | 26,820 | 15,780 | 16,114 | |
Office supplies | 115,200 | 69,388 | 69,216 | |
Cleaning supplies | 39,048 | 23,103 | 23,461 | |
Rent | 144,000 | 89,251 | 86,520 | |
Maintenance | 13,764 | 11,245 | 8,270 | |
Electricity | 10,788 | 6,684 | 6,482 | |
Gas | 18,504 | 11,215 | 11,118 | |
Water and sewage | 6,756 | 4,225 | 4,059 | |
Telephone | 3,228 | 2,004 | 1,939 | |
Housekeeping | 36,000 | 21,694 | 21,630 | |
Travel/meetings/meals | 7,908 | 4,744 | 4,751 | |
Prof. insurance | 22,380 | 15,669 | 13,447 | |
CME | 29,856 | 17,994 | 17,938 | |
Other expenses | 57,732 | 35,955 | 34,687 | |
$4,785,492 | $2,920,218 | $2,875,282 | ||
Total visits | 51,986 | 30,331 | 30,672 | 52,560 |
Problem 14.3
14.3
The Fleming Medical Group has had a modest net income recently, and the first six months of 2022indicate that their profit margin may be less than 2% if current performance continues. The owners want to put greater emphasis on budgeting to improve financial performance. Using the following table create an incremental budget for the practice based on 2022 year-to-date actual expenses and a 4% inflation factor for each line item. What are the total budget, projected ne income, and profit margin?
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