Budget Analysis II | ABC Facility

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When you write the paper, please don’t use a excel spreadsheet, only use analysis of the data in Microsoft word sheet - Budget Analysis II | ABC Facility introduction. I mean explain everything in words. Thanks!

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Case Study Assignment Part II

Budget Analysis II | ABC Facility

This is your second budget analysis, but more detailed to review a skilled nursing facility based on a prior year budget. As a health care administrator/manager it will be your responsibility to analyze your current year’s budget based on your prior year’s budget. You will review what changes are projected for revenue and expenses as well as provide a sound precise reason for those changes. Healthcare organizations must set rates at levels sufficient to maintain their financial viability. Prices must be set to cover the following individual areas: 1. Average costs

2. Losses on third- party fee- schedule payments
3. Medicaid
4. Medicare
5. Other
6. Discounts on billed- charge patients
7. Self- pay
8. Commercial
9. Reasonable return on investment
10 Sustainable growth
Failure to develop pricing to cover all these areas results in eventual failure. Prices must be set to also recover any losses from third- party fee schedule payment. This is referred to as cost shifting, which is pervasive in health care organizations. For example, Medicaid may pay a nursing home $90 per day when the cost of one day of care is $110. Any price that is set must cover the cost of providing the service at $110 and must also include the loss from Medicaid patients of $20 per day. It is not just governmental programs that may have payment rates below cost. A number of major health plans may have contracts that call for payment at levels below full cost, such as MCO, HMO and PPO providers.

Instructions:

1. Open and review the spreadsheet labeled “ABC Facility Budget” (located in Doc Sharing) 2. Observe the specific details of this budget compared to your previous Budget Analysis I. This analysis has specific tabs located at the bottom of the spreadsheet: a. Summary- this is where you will be inputting the majority of your assignment that compared two budget periods

b. Revenue detail- you will review on this sheet the types of revenue payors (Private, Medicare, Medicaid, Managed care, Other). These are also allocated for every month, so you have a monthly view as well as an annual view of your facility’s revenue.

c. Expense detail- this is another imperative part of the budget process and that is your expense allocations. You will be reviewing every line item of a budget within each department within the facility. Again, you will be comparing expenses for the prior year’s budget to the current year budget in the per patient day (PPD) format as well as input of your administrative analysis. d. SUTAFUTA- will be a review area; no input will be needed by you. This is a reflection of the facility payroll. e. Payroll- this is a complete overview of your staff, wages and hours of the facility. No input will be required by you, but this is extremely important to view as payroll is the largest cost center for a healthcare organization. This sheet breaks down the vacation, holiday/sick, and taxes for the facility. Please make sure you take time to review this spreadsheet, extremely important detail regarding your budget analysis. f. Facility payroll- this sheet is the input sheet for a health care administrator/manager that determines how many staff will be allocated to each department, such as: i. Nursing ii. Medical records

iii. Central supply
iv. Activities
v. Social services/admissions
vi. Dietary
vii. Laundry
viii. Housekeeping
ix. Maintenance
x. Administration

You will get great use out of this spreadsheet because you can input your staffing ratios based on your projected census. This sheet already calculates the per patient day (PPD) for each department. Then you will be able to distribute this to the department managers to utilize on a daily basis for their budget allocation which is based on the patient census. For example, if the budgeted census is 50 patients which allocates the nursing department to have 5 LPNs and the census drops to 40 patients, the department manager will input 40 patients which then will calculate the total number of LPNs they are allotted. This is an excellent MUST HAVE tool for every health care administrator/manager. Analysis Assignment

As the health care administrator/manager of ABC Facility you will be working on a new budget year based on reflection of your prior budget year’s revenue and expenses. As the health care administrator/manager, you should know, understand and be able to analyze your facilities budget better than any employee. You are the captain of your ship, it is up to you to make sure it runs and works efficiently for everyone aboard (which is the patients as well as the staff). You will not be the most popular individual of your facility at times, but it is your responsibility to the corporation as well as the patients to have an efficiently and effectively run facility. Follow the directions below to complete your Budget Analysis II: 1. Begin with the revenue by clicking the “Rev Detail” tab. You will be calculating areas highlighted in the blue cells, which are: a. Row 37: Calculating the PPD Monthly Rev b. Row 43: Calculating the Total Revenue PPD

c. Row 53: Calculating the PPD Therapy Rev
d. Row 65: Calculating the What is the Total combined Revenue e. Row 66:
Calculating the What is the PPD combined Revenue

2. Next review the expenses by clicking the “Exp Detail” tab. You will continue to input data in the fields highlighted in blue, which are: a. Column I: 2011 PPD- the prior year budget figures are to be calculated into PPD numbers b. Column J: 2012 PPD- the current year budget figures are to be calculated onto PPD numbers c. Column K: Diff- calculate the difference between the two budget years as PPD numbers d. Column O: Administrative Comments Compare the Two Years- you will provide your analysis of the difference in the two years, such as: i. Was there and increase or decrease in the two years ii. What would be your projections of the differences (you can do a comparison by reviewing the census, revenue and pay mix, etc.). You may feel it could be a cost increase; more services may be required due to a projected increase in patients, etc.

3. Finally, review the complete budget summary by clicking on “Summary” tab. You will be calculating the highlighted areas in blue, which are: a. Column H: 2011 PPD b. Column I: 2012 PPD
c. Column J: PPD Diff
d. Column K: PPD % Change

Conclusion
When finished with the spreadsheets, write a one page analysis of your findings with the ABC facility. Include the following: 1. Provide an overview of your findings from the Administrative Comments comparing the two budget years of your expense detail. 2. What were the expenses for both years both in dollars and in PPD 3. What was the total census and how many beds did this facility have? Break your census down into payer categories which total the projected census.

4. What were the total patient days
5. What was the total calculated revenue both in dollars and in PPD 6. What was the total budgeted number of nursing staff for this facility, list by discipline: RN, LPN, and CNA. Provide the total numbers for each and the PPD number of each. 7. What is the overall Total PPD for nursing for this facility 8. What is the Administrator’s budgeted hours, current average wage and budgeted salary for the current budget. 9. What is the Net Income for 2011 and 2012, both in dollars and PPD 10. What is the EBITDARM for 2011 and 2012, both dollars and PPD. What does EBITDARM represent and what is its importance?

ABC Facility

Print Date

14-Jan-14

Budget Year End
12/31/2012
2011
YTD Jul

2011
Annzd

2012
Budget

% Change

Private
Medicare A
Medicaid
Mgd Care/Other

2011
PPD

2012
PPD

ADC

Diff

Census:

ADC

PPD
Diff

PPD
% Change

476
1,617
8,004
20
10,117

820
2,784
13,780
34
17,418

730
2,555
14,235
17,520

(90)
(229)
455
(34)
102

-11.0%
-8.2%
3.3%
-100.0%
0.6%

2.2
7.6
37.8
0.1
47.7

2.0
7.0
39.0
48.0

(0.2)
(0.6)
1.2
(0.1)
0.3

-0.030%
-0.022%
0.009%
-0.274%
-0.318%

57,847
619,618
1,179,410
3,318
216,288
1,892
2,078,373

99,595
1,066,796
2,030,589
5,712
372,383
3,257
3,578,332

91,980
7,514,630
2,163,396
372,383
156,339
10,298,728

(7,615)
6,447,834
132,807
(5,712)
153,082
6,720,396

-7.6%
604.4%
6.5%
-100.0%
0.0%
4700.1%
187.8%

272.9
2,922.7
5,563.3
15.6
1,020.2
8.9
9,803.6

252.0
20,588.0
5,927.1
1,020.2
428.3
28,215.7

(20.9)
17,665.3
363.9
(15.6)
419.4
18,412.0

-0.021%
1.656%
0.018%
-0.274%
0.000%
12.877%
14.256%

55,132
463,014
297,221
130,502
84,643
47,288
37,217
218,475
43,388
59,684
13,454
16,020
23,291
32,853
75,839
194,983
1,793,004

171,132
2,991
810,838
514,812
226,383
145,102
82,720
65,790
374,529
74,380
103,273
24,307
27,898
41,244
58,010
146,613
334,257
3,204,279

181,021
5,886
727,824
816,677
123,758
145,102
51,240
83,032
337,185
77,504
11,004
11,004
46,851
54,158
25,160
334,257
3,031,663

9,889
2,895
(83,014)
301,865
(102,625)
(31,480)
17,242
(37,344)
(74,380)
(25,769)
(13,303)
(16,894)
5,607
(3,852)
(121,453)
(172,616)

5.8%
96.8%
-10.2%
n/a
58.6%
-45.3%
0.0%
-38.1%
26.2%
-10.0%
-100.0%
-25.0%
-54.7%
-60.6%
13.6%
-6.6%
-82.8%
0.0%
-5.4%

468.9
8.2
2,221.5
1,410.4
620.2
397.5
226.6
180.2
1,026.1
203.8
282.9
66.6
76.4
113.0
158.9
401.7
915.8
8,778.8

495.9
16.1
1,994.0
2,237.5
339.1
397.5
140.4
227.5
923.8
212.3
30.1
30.1
128.4
148.4
68.9
915.8
8,305.9

27.1
7.9
(227.4)
827.0
(281.2)
(86.2)
47.2
(102.3)
(203.8)
(70.6)
(36.4)
(46.3)
15.4
(10.6)
(332.7)
(472.9)

0.016%
0.265%
-0.028%
0.161%
-0.124%
0.000%
-0.104%
0.072%
-0.027%
-0.274%
-0.068%
-0.150%
-0.166%
0.037%
-0.018%
-0.227%
0.000%
-0.636%

Net Income

285,369

374,053

7,267,065

6,893,012

1842.8%

1,024.8

19,909.8

18,885.0

EBITDARM
EBITDARM %

562,664
27.1%

849,416
23.7%

8,080,974
78.5%

7,231,558
-231.2%

2,327.2
0.065%

22,139.7
0.215%

19,812.5
-0.633%

Revenue:
Private
Medicare A
Medicaid
Mgd Care/Other
Medicare B
Other
Expenses:
Nursing Admin
Nursing NATCEPS
Nursing Certified
Nursing Non-Certified
Administration
Dietary
Fringe Benefits
Laundry
Housekeeping
Ancillary Services
Pharmacy
Other Costs
Medical Records
Central Supplies
Social Services
Activities
Plant Operations
Property Costs

5000
5001
5100
5200
7000
5600
6900
6100
6200
5800
5900
8500
5400
5700
5300
5500
6000
8000
Total Expenses

-14.892%

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