Patients are expected to be treated and discharged throughout the year as follows.

Quarter 1 January-March	Quarter 2 April-June	Quarter 3 July-September	Quarter 4 October-December	Total
30%	30%	25%	15%	100%

Historically, Swedish has found that private insurance, pays the next quarter after the service; Medicare/Medicaid pay 1/2 in the next quarter and another 1/2 - two quarters following service, and self-pay patients pay 1/4 in three consecutive quarters after the service, whereas the remaining 1/4 payment is never received. Charity care is never collected. 

Assume that the above patient flow, payment rates, staffing, and supplies purchases are the same as those projected in the budget for the coming year. Costs attributed to supplies and staffing are directly related to the number of patients served.

Assume that all interest earned by the endowment is received on the first day of the third month of the year. Assume that gift shop revenue is received in equal amounts each quarter. Assume that all management salaries are also paid equally each quarter.

Swedish plans to start next year with $100,000 in cash.  If you need to take a loan, assume an 8% annual interest rate. In your loan calculations, convert the annual interest rate to the quarterly rate, if needed. 

Essay 3. The Task: Put together a cash budget for the coming year. It will help you to develop it in the following order:

1. Determine patient revenues by quarter, by type of payer, in the coming year (i.e. determine private insurance revenues for each quarter, Medicare/Medicaid revenues by quarter, and so on).
2. Determine cash collections by quarter for the coming year, using revenue information from part a).
3. Develop the cash budget by quarter:
   1. Start with beginning cash.
   2. Add cash receipts shown by source (i.e. patient revenue by payer, from an endowment, and from the gift shop).

• Deduct cash payments by line item (i.e. salaries, supplies).

1. If needed, you can take a bank loan and then repay it. Show the loan as a separate line item within expenditures. When issuing loan repayment, factor in the interest amount(s).
2. Calculate the available cash balance at the end of each quarter.