Scenario:

NLMS, like many hospitals, owns a number of primary care physician practices. To take advantage of some possible economies of scale, NLHS is considering the consolidation of their out-patient practices and relocating them to a single building close to the hospital.

The building under consideration is a 20,000 square foot existing facility and will be more that adequate to accommodate the physician practices. At a rental cost of $20 per square foot, the total annual rent will be $400,000. (This rent payment is considered a "fixed cost.")

There will be three (3) physicians located in the facility on a daily basis. On average, each physician will see approximately 15 patients per day, with each patient generating an average of $110 per visit. Additionally, there will be two (2) Physician Assistants (PAs) in the facility. The PAs are averaging ten (10) patients per day, and according to CMS rules, they can only bill at 85% of the physician's fee.

In addition to the above patient care provider's, there will be one (1) nurse (LPN), and two (2) Medical Assistants' (MA's) in the facility to assist the doctors and the PAs. Because NLHS cannot bill for non-provider staff, their salaries are part of the overhead for operating the clinic.

The base physician salary is $185,000, with an additional 35% for taxes and benefits. The P.A.'s salary is $80,000, with an additional 30% for taxes and benefits, the LPN salary is $35,000, and the 2 MA salaries are $21,500 each. Both the LPN and the MA's also have an additional 30% for taxes and benefits.

The physicians and PA's are exempt employees, and they all just renewed a 5-year employment contract. Both the LPN and MAs are non-exempt employees under the FLSA act, and earn $16.82/hr. are making $10.33/hr. respectively. Both the non-exempt employees, with an hourly rate of $21.64, or $45,000 annually.

The facility is open 235 days/year, and has a general operating cost (electricity, water and sewer, medical waste disposal, and supplies) which averages 40% of total payroll, including taxes and benefits. Said another way, this cost is 40% of everything NLHS will spend on the payroll in this project. (Just as a note, operating costs are typically considered "variable costs," however for the purposes of this exercise, they are constant as described here.)

The question NLHS needs to answer is, how much revenue must the clinic produce to cover the operating cost of the clinic, including the facility fees.

Each sections needs to be filled out (I did what I could but please correct me if I'm wrong):

File Home Insert Draw Page Layout Formulas Data Review View Help & Cut Times New Roman ~ 12 ~ A" A ab Wrap Text General Normal Bad Good [Copy Conditional Format as Neutral Calculation Check Cell Paste BIUYMAY Merge & Center $ ~ % " 00 20 Format Painter Formatting * Table v Clipboard Font Alignment Number Styles G22 X V D E G H C I A B 1 Revenue W N Avg. Appts. Per Day # of Providers Days of Operation Avg. Rev. Per Appt. Fixed Costs Provider Rev. Physician Revenue 15 3 Physician Assistant Revenue 10 2 Total Revenue Co 9 Expenses 10 Avg. Salary per Provider # of Providers Salaries Before Taxes Payroll Taxes Expense 11 Physician Salaries $185,000 3 12 Physician Assistant Salaries 13 Nursing Salary 14 Medical Assistant Salaries 15 General Operating Costs 16 Fixed costs (rent) 17 Total Expense 18 19 Total Profit (Loss) 20 21 22 Total Revenue SO 23 Total Expense SO 24 SO 25 26 27 28 29 30 31 32 33 34 35 36 37 Financial Anaylsis Recommedations +