You are the administrator of the medical - surgical department at UMGC Health.

Transcripts:

Transcript of the VOICEMAIL FROM George Costanza (CFO):

Hi, it's George. I hear you're working on a budget for the Med-Surg department for FY 2019.

Transcript from BUDGET MEETING:

George

I think you might need to hear this first. 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

That's right.

Jerry

That's a big ask. We're already operating awfully lean.

George

Agreed. But it's the situation we're in. I'll get to the reasons, but based on what I'm going to go over, I just want everyone to keep in mind that we can't make assumptions we were making before. So let me give you an overview of the budget and the year-to-date numbers, and I think you'll see why we're going to have to make those cuts.

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. We're also currently negotiating with a couple of our primary commercial payers, but those negotiations remain uncertain. All things considered, I'm 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. I want to be reasonably conservative in case market conditions change or negotiations with our payers don't go as expected.

Newman

Wow. Well, okay, so that's the reality. 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. Our first official budget committee meeting is in early May. So I'd suggest getting your ducks in a row within the next week or so.

Prepares a budget for the next fiscal year.

F le Home Insert Page Layout Formulas Data Review View 2 A B C D E NET REVENUE BEFORE ITEMS LISTED E $ (3,474,134] $ 8,000,000 $ (7,474,134) EXTRAORDINARY ITEM $ $ $ NET REVENUE OR (EXPENSE) (3,474,134) $ 8,000,000 | $ (7,474,134) Med/Surg Department Budget FY 2018 YTD ( Jul - FY 2018 FY 2018 Decl Budget Variance OPERATING REVENUE: Inpatient Revenue $ 23.123,516 $ 50,000,000 $ (1,876,484) TOTAL PATIENT SERVICES REVENUE $ 23,123,516 $ 50,000,000 $ (1,876,484) OPERATING EXPENSES Salaries and Wages $ 12,157,632 $ 23,000,000 $ 657,632 Employee Benefits $ 3,040,408 $ 5,750,000 $ 165,408 Professional Fees $ 250,160 $ 400,000 $ 50,160 Supplies $ 5,883,497 $ 10,000,000 $ 883,497 Purchased Services - Utilities $ 27,456 $ 50,000 $ 2,456 Purchased Services - Other $ 23,484 $ 50,000 $ (1,516) Insurance 57.315 $ 105,000 $ 4,815 License and Taxes 21,456 $ 40,000 $ 1,456 Other Direct Expenses $ 972.157 $ ,500,000 $ 222.157 TOTAL OPERATING EXPENSES $ 22,433,565 $ 40,895,000 $ 1,986,065 NET REVENUE OR (EXPENSE) $ 689,951 $ 9,105,000 $ (3.862.549) 60 61 62 63 64 1388838 8 72 73 Trinity Budget Execution YTD Ready Type here to search O