Reference no: EM131421679

Assignment

Established in 1977, Krona Community Hospital is a 60-bed, acute care hospital located in the heart of Banconota County. With a staff of nearly 100 physicians and specialists, 400 employees, and 75 volunteers, they offer a full range of health care services. They are accredited by The Joint Commission.

Nouveau Health, a private, not-for-profit health care chain, took over the management of Krona Hospital. Last year, state officials began to discuss Nouveau's proposal to build a new, replacement hospital in Banconota County. The new facility would have 74 acute care beds, four observation rooms, four surgical operating rooms, one c-section room, a 24-hour emergency department, a maternity center, an intensive care unit, and extensive support services, including physical therapy and cardiac rehabilitation. All patient rooms would be private.

You are a staff member in the finance department at Nouveau Health, whose sole responsibility is to advance the success of the organization through assisting in planning, forecasting, and finance management.

Your Key Assignment Draft is designed to help you prepare for the presentation in Phase 5. The chief executive officer (CEO) of Krona has asked that you complete the following:

• Prepare next year's financial plan and operational budget.

o Note: Keep in mind that the budget you created for your Phase 2 Individual Project did not take into account the growth of the new facility. The CEO has asked that you expand that budget and provide a finalized budget that will take into account the new services offered. The CEO has stated that there is $3 million that you can incorporate into the budget for additional staffing, services, maintenance, and so forth.

• Make sure the budget reflects the following:

o Increase in revenue reimbursement
o Allocation for the proposed improvements
o Increase in salaries

Be sure to discuss the following areas:

• Funding sources
• Your methodology in revenue forecasting
• How the new services will impact revenue
• Fixed and variable costs
• Project inpatient and outpatient visits based on current trends

Budget

KRONA HOSPITAL OPERATING BUDGET FOR 2017
Revenues
Inpatient	$ 27,500,000
Outpatient	17,250,000
Emergency Room	10,000,000
Laboratory	5,000,000
Pharmacy	1,575,000
Home Health and Hospice	1,725,000
Ambulance Services	950,000
Substance Abuse	250,000
Other	850,000
Subtotal	$ 65,100,000
Less Chartiy Care	18,000,000
Net Revenues	$ 47,100,000
Expenses
Payroll (including nursing salaries)	$ 13,750,000
Benefits	3,300,000
Contract Labor	100,000
Insurance	300,000
General Services (laundary, security, etc)	3,000,000
Depreciation	1,500,000
Interest Expense	300,000
Professional Services	10,000,000
Total Operating Expenses	$ 32,250,000
Net Income	$ 14,850,000