Practice Exercise 16-I: Budgeting

Budget assumptions for this exercise include both inpatient and outpatient revenue and expense. Assumptions are as follows:

As to the initial budget:

The budget anticipated 30,000 inpatient days this year at an average of $650 revenue per day. ( the budgeted revenue will be $650*30,000)

Inpatient expenses were budgeted at $600 per patient day. (Budgeted Expenses will be 30,000 *$600)

The budget anticipated 10,000 outpatient visits this year at an average of $400 revenue per visit. (revenue per visit x number of visits)

Outpatient expenses were budgeted at $380 per visit. (Budgeted expenses for outpatient will be $380 x number of OP visits)

As to the actual results:

Assume that only 27,000, or 90%, of the inpatient days are going to actually be achieved for the year.

Revenue is going to be less than the budgeted due to a lower actual visits

The average revenue of $650 per day will be achieved for these 270,000 inpatient days.(typo in the book as this should be 27,000)

The outpatient visits will actually amount to 110%, or 11,000 for the year.

Assume higher OP visits x $400

The average revenue of $400 per visit will be achieved for these 11,000 visits.

Further assume that, due to the heroic efforts of the Chief Financial Officer, the actual inpatient expenses will amount to $11,600,000 and the actual outpatient expenses will amount to $4,000,000.

Total expenses for IP and OP visits will be the sum of the two