Use the 2010 Operating Budget Projections.

Develop a budget for Patton-Fuller Community Hospital based on the 2009 Operating Budget and the 2010 Operating Budget Assumptions.

Write a 1,050- to 1,400-word paper in which you do the following: Discuss which financial management practices are most effective in creating and monitoring an operating budget. Discuss which financial management practices are least effective in creating and monitoring an operating budget.

		2009 (Proj)	2010 Budgeted % Change From 2009 Projection	2010 Budget	2010 Operating Budget Assumptions
Revenue					Based on these 2009 assumptions: a 3% overall deflation rate for prices in 2009due to the weak economywill continue into 2010.
	Net patient revenue	459,900	3%	473,697	Patient revenue will continue to increase, but at a decreased rate, with little or no increase in patient volume, due to new managed care contracts.
	Other revenue	3,082	15%	3,544	Marketing's plan to increase donations by 15%
Total revenue		462,982	3%	477,241

		2009 (Proj)	2010 Budgeted % Change From 2009 Projection	2010 Budget	2010 Operating Budget Assumptions
Expenses
	Salaries and benefits	220,752	1%		Salaries will hold to a 1% overall increase in cost due to price deflation nationwide, with no increase in labor hours, due to no increase in patient volume. This assumption could be affected by a board decision either to raise nursing wages by $1 per hour or to increase the nursing hour ratio.
	Supplies	74,584	-3%		Supplies cost will decrease 3% due to the price deflation and our current over-stock purchased last year.
	Physician and professional fees	110,376	3%		Contracts for fees have a built-in 3% increase.
	Utilities	1,200	5%		Utilities cost will increase to the rising cost of oil partially offset by the efficiency of the hospital's new heating and cooling systems.
	Other	1,840	0%		No net change in the cost or volume of these items.
	Depreciation & amortization (noncash expenses)	36,036	0%		Some high-cost equipmentair conditioning, telephone system, all patient beds, and headwallswere replaced in 2009, and depreciation rose sharply. Depreciation will remain at this level in 2010.
	Interest	3,708	30%		The repayment plan for any monies borrowed in 2009 will come due in 2010, with a sharp increase in interest cost.
	Provision for doubtful accounts	13,797	10%		The renegotiation of managed care plans has delayed collection and made collections less certain.
Total expenses		462,293			Total expenses will rise ____%.

		2009 (Proj)	2010 Budgeted % Change From 2009 Projection	2010 Budget	2010 Operating Budget Assumptions
Income
	Operating income	689			Operating Income will improve, with the hospital's loss reduced by 2/3.
Loss (nonoperating income)
	Investment income	(62)			The market is down, expected to hold steady; a zero-return is expected, with neither losses nor gains.
Net income		627			The hospital will continue its dramatic turnaround, taking advantage of the stagnation in patient volume, price deflation, the efficiency of new equipment, and the improved arrangements with the managed care companies.