You are the administrator of the medical - surgical department. Review the transcripts from the budget meeting and recent voicemails from your CFO and, using the available information and resources, develop an operating budget for your department. Provides the revenue and expenses through the current month of the current year. Estimates the revenue and expenses for the rest of the current fiscal year based on the assumptions provided in the transcript documents. Prepares a budget for the next fiscal year. Service Line Break Even Analysis Memo Transcript of the Transcript from BUDGET MEETING: George C., CFO Hi, everyone. Here's the situation: The hospital has to cut operating expenses by 5 percent for next fiscal year. Kramer, Director of Clinical Operations I'm sorry, did you say 5 percent? Operating expenses? George Now, last year, for the entire hospital, we assumed that we would see $1.2 billion in total patient revenue. But as you can see, for half the year, we've only hit just over $607 million. By this point in the year, we should be over $612 million. So already in terms of total patient revenue, we've got a deficit of nearly $5 million that we didn't expect. The problem is made worse when we see that other operating revenue is also under budget by $1.5 million. I believe that recent efforts in the billing department coupled with some of the solid work by the c-suite team on physician engagement and external marketing are going to have an impact on the revenue side of things. Were also currently negotiating with a couple of our primary commercial payers, but those negotiations remain uncertain. All things considered, Im hoping for about a 5% bump on the revenue side for FY 19. Our operating expenses are fairly close to target so far this year, but given the situation with uncertain revenue, we will need to try to find some additional cost savings opportunities.Newman . What's the timeline? How long do we have to make these cuts? George Well, implementation is obviously by June 30 since the next fiscal year starts July 1. The board will approve the new budget probably by mid-June, but all the negotiation at the unit and department level will be going on this month. FY 2018 YTD (Jul - Dec) FY 2018 Budget FY 2018 Variance YTD OPERATING REVENUE: Inpatient Revenue $375,040,349 $ 700,000,000 $ 25,040,349 Outpatient Revenue $232,498,397 $ 525,000,000 $ (30,001,603) TOTAL PATIENT SERVICES REVENUE $607,538,746 $ 1,225,000,000 $ (4,961,254) DEDUCTIONS FROM REVENUE: Contractual Adjustments $476,543,215 $ 950,000,000 $ 1,543,215 Charity and Uncompensated Care $ 6,725,412 $ 14,000,000 $ (274,588) TOTAL DEDUCTIONS FROM REVENUE $483,268,627 $ 964,000,000 $ 1,268,627 NET PATIENT SERVICE REVENUE $124,270,119 $ 261,000,000 $ (6,229,881) OTHER OPERATING REVENUE Other Operating Revenue $ 3,500,000 $ 10,000,000 $ (1,500,000) TOTAL OPERATING REVENUE $127,770,119 $ 271,000,000 $ (7,729,881) OPERATING EXPENSES Salaries and Wages $ 42,932,230 $ 88,000,000 $ (1,067,770) Employee Benefits $ 12,624,012 $ 25,000,000 $ 124,012 Professional Fees $ 4,082,215 $ 9,000,000 $ (417,785) Supplies $ 23,883,407 $ 46,000,000 $ 883,407 Purchased Services - Utilities $ 1,632,191 $ 3,000,000 $ 132,191 Purchased Services - Other $ 11,536,320 $ 22,000,000 $ 536,320 Depreciation $ 8,455,254 $ 17,000,000 $ (44,746) Rentals and Leases $ 2,252,670 $ 4,000,000 $ 252,670 Insurance $ 2,715,378 $ 5,000,000 $ 215,378 License and Taxes $ 7,992,144 $ 18,000,000 $ (1,007,856) Interest $ 8,393,790 $ 18,000,000 $ (606,210) Other Direct Expenses $ 4,744,642 $ 8,000,000 $ 744,642 TOTAL OPERATING EXPENSES $131,244,253 $ 263,000,000 $ (255,747) NET OPERATING REVENUE $ (3,474,134) $ 8,000,000 $ (7,474,134) NET REVENUE OR (EXPENSE) $ (3,474,134) $ 8,000,000 $ (7,474,134)