The nurse manager in orthopedics has asked for your assistance with a finance project. She is being asked to estimate revenue for the next fiscal year based on the projected number of hip replacements increasing from 300 this year to 340 next year.

The nurse manager must also factor in the expected changes in sources of revenue by payer. It is estimated that the hospital will lose some contracted insurers due to local competition, and see an increase in Medicare and Medicaid patients due to area demographics and economic conditions. She has provided you with the numbers from this year's budget and the projections on numbers and payment amounts for next year.

Instructions

(Prepare) a financial forecasting memo to your nurse manager that:

Part One- Financial Forecasting Model

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• Calculate the income projected from each payer source and total for the year to compare next year's revenue to this year's revenue.
• Provide your nurse manager with your estimates on the increase/ decrease in revenue for next year's budgeting.

E G H J K L A B C D 123 L Prior Year Revenue Budget 300 patient Source of Payment Percent Number Payment 3 Medicare 4 Medicaid 34% 102 22,436 Income 2,288,472 11% 33 18,400 607,200 5 Contracted Insurance 45% 135 29,540 3,987,900 6 Non-contracted Ins 3% 9 32,350 291,150 7 ACA Plans 5% 15 16,400 246,000 8 Self-pay 2% 6 17,400 104,400 9 Total 300 7,525,122 10 11 Next Year Revenue Projections 340 patient 12 Source of Payment Percent Number Payment Income 13 Medicare 42% 143 22,463 14 Medicaid 18% 61 18,400 15 Contracted Insurance 18% 61 29,549 16 Non-contracted Ins 1% 3 32,350 17 ACA Plans 18% 61 16,400 18 Self-pay 3% 11 16,400 19 Total 100% 340 20 21 22 23 24 25 26 27 28 29 30 To be cut from the budget to serve same number of patients