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Critical Care Hospital Critical Care Hospital will be purchasing a CATSCAN (computerized axial tomography scanner) in the next six months. The CATSCAN equipment will be installed in the radiology department and will require a signifi cant renovation for the area. The scanner will arrive in about fi ve months, but the construction project cannot be started until the unit is set in place. This will result in a project length of approximately 12 months. The hospital estimates the equipment will generate an income of $25,000 per month and is therefore in a hurry to complete the project. The project manager feels she may be able to cut the time on some aspects of the project, but at an increased cost. She has decided, in an effort to make the best decision, to use a resource allocation version of CPM. Questions: What information must the project manager gather to use this method properly? How should she use this version of CPM to reduce the project time?

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Casey Durgan
Casey DurganLv2
28 Sep 2019

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HOME CARE Scenario Type of care provided Scenario Question 1 Question 2 Care in this capacity can range from a short-term to long-term based upon the changing needs of the patient. Patient age can range from pediatric to elderly. Care can be provided in the patient’s private home, group home, or assisted living setting. Medical homes fall into this category and are a new focus of Accountable Care Organizations through the Affordable Care Act of 2010. Review your current budget. Taking this information into account, what are some strategies you would use to identify resources to focus on improving efficiency and meeting customer expectations during this time? What do you see as the biggest financial issues of your organization? Hint: You are a nonprofit organization—so look at your means of funding and the relationship this has on your ability to treat patients and hire new staff. How will you address this financial issue? In home care, a patient is visited at home by a nurse or nursing assistants with activities of daily living (ADL), wound care, IV therapy, etc. These organizations can be nonprofit or for-profit. A physician supervises the care with the assistance of RNs or LPNs and certified nursing assistants (CNAs). You are a new administrator for a home health agency that is a national nonprofit organization that serves the surrounding Phoenix community. The agency has been recognized for the delivery of on-time quality services for a number of years. It is known to employ only the top staff within the community, but in recent months staffing numbers have dropped dramatically and you, as the agency’s administrator, have found yourself in a position where your facility is short staffed. You are unable to admit any additional patients unless you are able to have your staff work over time. Budget Considerations Operational Budget – This budget focuses on a broader view of the total operations of the organization in which all departments are reviewed for both their income potential and the costs associated with the work activities used to generate projected revenues. Each department will have its own budget for the managers to follow and on which to base the activities of the department in order to meet its contribution to the total revenues and the associated costs of the organization. Dietary Services – This is a departmental budget focused on the costs and potential reimbursement for the organization. The operation is overseen by a dietitian or nutritionist who is responsible for supplying the nutritional needs of the patients within their care. This department may utilize the services of several consultants or contract this service to an outside organization. Medical Supplies – This budget is focused specifically on the requirement-based services being delivered by the hospital professional, which are often referred to as nondurable disposable items. This budget includes specific items for the surgeon or professional performing the services. These may include such things as oxygen supplies, diabetic supplies, ostomy supplies, bandages, and related supportive items. These items are generally manufactured for one-time use. They are not reused due the inability to sterilize them. The items that are reusable are classified under capital assets and have a use-time identified with the specific piece of equipment. Human Resources – This budget indicates the finances needed to support the organization’s objectives, from a personnel perspective. Full-time equivalent (FTE) calculations are used to project the personnel budget. These individuals could include nonskilled labors to professional licensed physicians and various job descriptions within the categories. In addition to listing the FTEs, the associated benefits of the FTEs would be projected within this department for each FTE within the organization. This will generally include line items for consultants and temporary positions based on the needs of the organization. Departmental Costs – This budget focuses on the specific department and its overall needs, costs, and potential revenue in relation to the overall goals of the organization’s strategic plan. The manager’s primary responsibility is to monitor the operational efficiency of the department, including all areas that directly impact and support the generating of revenue for the organization. Managers may be required to present an analysis of the weekly or monthly operational analysis to the Chief Financial Officer of the organization or a lead manager. Vendor/External Suppliers – Health service organizations have special needs and may require certain external items and/or services. Most organizations have projected budgets to include the purchase of supplies and services for outside contractors (vendors) who specialize in installation, monitoring, and the repair of specialized equipment or technology being utilized by the specific health care delivery system. Maintenance/Facility Operations – This departmental budget focuses on the overall upkeep of the building and the related equipment and machines to provide a safe and comfortable environment for both the patients and workers. This budget includes all FTEs and may also include line items for consultants and outside sources based on needs of the facility.

Revenue 2011 2012 2013

Donations 50,000 55,000 75,200

Grants and Foundations 100,000 80,500 125,780

Government Grants 947,280 878,000 695,120

Interest Expense 6,050 8,000 10,000

Total 1,103,330 1,021,500 906,100

Expenses 2011 2012 2013

Health Center 2,482,845 2,558,265 2,668,951

Administrative Staff 100,000 110,000 125,000

Professional Staff 80,000 100,000 150,000

Family/Youth Services 214,888 210,987 230,985

General Management/Admin140,000 152,000 159,000

Total 3,017,733 3,131,252 3,333,936

Budget Spreadsheet

The following memo contains 35 intentional errors in sentence structure, grammar, spelling, and proofreading. Delete these instructions when you print.

Rawlinson Enterprises

Interoffice Memo

DATE: June 5, 201x

TO: Larry LaGrange, Vice President, Operations

FROM: Elyse Ellerman, Manager, Accounting

SUBJECT: INSTALLATION OF UNDERCARPET WIRING

Proposal

Because the Accounting Department need a flexible economical wiring system that can accommodate our ever changing electrical needs. That’s why I propose that we install a flat undercarpet wiring system.

Present System

At this time the Accounting Department has an out of date system of floor wiring and power poles that limit us to surface wiring. This network of surface wiring appear to be totally overwhelmed by the demands we are now placing on them. The operation of 27 pieces of equipment in addition to 34 telephone lines require extensive electrical circuits and cabling. Moreover, our overhead lighting, which consist of fluorescent fixtures in an suspended egg-crate structure, contains excessive wiring above the ceiling. Technicians whom have came to our office have said that its the worse system they have ever saw.

Advantages of Proposed System

Cabling for telephone, power, and data are now available in a flat form only .043 inches thick. This flat flexible cable can be install underneath existing carpeting. Thus preventing costly and disruptive renovation. Undercarpet wiring would mean less office power poles. Moreover, flat cables can be moved easy, giving we accountants greater flexibility when we need to add equipment. Having a undercarpet wiring system all ready installed in the Accounting Department would also enable the company to evaluate the systems effectiveness before considering it for other departments. It also comes with a ten year warranty.

Cost and Savings

Suppliers and consultants estimates that an undercarpet wiring system for the Accounting department would cost about $50,000. If we was to use conventional methods to install round wiring, we would have to renovate our entire department, costing over $200,000. Equally important, however, is the savings in terms of productivity and employee satisfaction. Which would decline if renovation was required.

Please let me know by June 10 whether you want me to proceed with this project.

Financial Analysis Case Study

Complete Case 1, River Community Hospital (A):

Review Case 1, pages 3--12, You will find a case spreadsheet model via the Student Spreadsheets.

Write a case review that assesses hospital financial performance. Your review should be approximately three pages.

CASE 1 Student Version Copyright 2014 Health Administration Press
11/28/2015
RIVER COMMUNITY HOSPITAL (A)
Assessing Hospital Performance
Case 1 presents the opportunity to conduct an extensive financial statement and operating
indicator analysis on a 210-bed not-for-profit hospital. The case includes statement of cash
flows analyses, Du Pont analyses, ratio analyses, and economic value added analyses.
The instructor version of the model is the same as this model. The key to student success in
this case lies in interpretation of the data presented rather than number crunching.
However, there is ample opportunity for students to extend the model to include percentage
change analysis and common size analysis, as well as to create graphs (charts) as needed
to present their findings.
Note that the industry data used in this case are for instructional use only, and do
not represent actual industry data for the time period of the case.
Statements of Operations (Millions of Dollars):
Revenues 2011 2012 2013
Net patient service revenue $ 28.796 $ 30.576 $ 34.582
Other revenue 1.237 1.853 1.834
Total revenues $ 30.033 $ 32.429 $ 36.416
Expenses
Salaries and wages $ 12.245 $ 12.468 $ 13.994
Fringe benefits 1.830 2.408 2.568
Interest expense 1.181 1.598 1.776
Depreciation 2.350 2.658 2.778
Medical supplies and drugs 0.622 0.655 0.776
Professional liability 0.140 0.201 0.218
Other 9.036 10.339 11.848
Total expenses $ 27.404 $ 30.327 $ 33.958
Net income $ 2.629 $ 2.102 $ 2.458
Balance Sheets (Millions of Dollars):
Assets 2011 2012 2013
Cash and investments $ 4.673 $ 5.069 $ 2.795
Accounts receivable (net) 4.359 5.674 7.413
Inventories 0.432 0.523 0.601
Other current assets 0.308 0.703 0.923
Total current assets $ 9.772 $ 11.969 $ 11.732
Gross plant and equipment $ 47.786 $ 55.333 $ 59.552
Accumulated depreciation 11.820 14.338 17.009
Net plant and equipment $ 35.966 $ 40.995 $ 42.543
Total assets $ 45.738 $ 52.964 $ 54.275
Liabilities and Net Assets
Accounts payable $ 0.928 $ 1.253 $ 1.760
Accruals 1.460 1.503 1.176
Current portion of long-term debt 0.110 1.341 1.465
Total current liabilities $ 2.498 $ 4.097 $ 4.401
Long-term debt $ 15.673 $ 19.222 $ 17.795
Net assets $ 27.567 $ 29.645 $ 32.079
Total liabilities and net assets $ 45.738 $ 52.964 $ 54.275
Statements of Cash Flows (Millions of Dollars):
Cash Flows from Operating Activities 2012 2013
Net income $ 2.102 $ 2.458
Depreciation 2.633 2.756
Change in accounts receivable (1.315) (1.739)
Change in inventories (0.091) (0.078)
Change in other current assets (0.395) (0.220)
Change in accounts payable 0.325 0.507
Change in accruals 0.043 (0.327)
Net cash flow from operations $ 3.302 $ 3.357
Cash Flows from Investing Activities
Investment in plant and equipment $ (7.686) $ (4.328)
Cash Flows from Financing Activities
Change in long-term debt $ 3.549 $ (1.427)
Change in current portion of long-term debt 1.231 0.124
Net cash flow from financing $ 4.780 $ (1.303)
Net increase (decrease) in cash and investments $ 0.396 $ (2.274)
Beginning cash and investments 4.673 5.069
Ending cash and investments $ 5.069 $ 2.795
Note: The depreciation and fixed asset acquisitions data in the statements of
cash flows are somewhat different than they would be if calculated
directly from the other financial statements because of asset revaluations.
Operating Revenue and Expense Allocation (Millions of Dollars):
2011 2012 2013
Operating revenue
Gross inpatient service $ 26.117 $ 29.148 $ 33.216
Gross outpatient service 6.535 9.130 11.912
Gross patient service revenue $ 32.652 $ 38.278 $ 45.128
Contractual allowances $ 1.729 $ 5.196 $ 7.516
Bad debt and charity care 2.127 2.506 3.030
Total revenue deductions $ 3.856 $ 7.702 $ 10.546
Net patient service revenue $ 28.796 $ 30.576 $ 34.582
Operating expenses
Inpatient service $ 20.573 $ 22.229 $ 24.771
Outpatient service 6.831 8.098 9.187
Total operating expenses $ 27.404 $ 30.327 $ 33.958
Selected Operating Data:
2011 2012 2013
Medicare discharges 2,721 2,860 2,741
Total discharges 8,784 8,318 8,576
Outpatient visits 32,285 32,878 36,796
Licensed beds 210 210 210
Staffed beds 193 197 178
Patient days 44,085 42,434 40,062
All-payer Case Mix Index 1.2869 1.2993 1.3161
Full-time equivalents 610.8 625.8 619.3
Selected Financial Ratios:
2013 Industry Data (200-299 Beds)
2011 2012 2013 +Quartile Median -Quartile
Profitability Ratios
Total margin 8.75% 6.48% 6.75% 5.58% 3.48% 0.53%
Return on assets 5.75% 3.97% 4.53% 5.80% 3.10% 0.40%
Return on equity 9.54% 7.09% 7.66% 15.66% 6.01% 0.62%
Deductible ratio 0.12 0.20 0.23 0.34 0.26 0.18
Liquidity Ratios
Current ratio 3.91 2.92 2.67 2.53 1.99 1.48
Days cash on hand 68.08 66.87 32.72 32.35 15.89 6.24
Debt Management Ratios
Debt ratio 39.73% 44.03% 40.90% 62.90% 48.40% 35.20%
Debt to equity 56.85% 64.84% 55.47% 127.00% 64.70% 26.90%
Times interest earned 3.23 2.32 2.38 4.29 2.23 1.14
Cash flow coverage 5.22 3.98 3.95 5.32 3.22 1.76
Asset Management Ratios
Fixed asset turnover 0.84 0.79 0.86 2.20 1.76 1.49
Total asset turnover 0.66 0.61 0.67 1.04 0.89 0.75
Current asset turnover 3.07 2.71 3.10 3.94 3.38 2.88
Days in patient accounts receivable 55.25 67.73 78.24 87.53 75.67 63.33
Average payment period (days) 36.39 54.05 51.52 71.24 56.52 45.84
Other Ratios
Average age of plant (years) 5.03 5.39 6.12 8.86 7.39 6.14
Selected Operating Indicators:
2013 Industry Data (200-299 Beds)
2011 2012 2013 +Quartile Median -Quartile
Profit Indicators
Profit per inpatient discharge $280.03 $126.72 $79.61 $89.04 ($21.30) ($120.08)
Profit per outpatient visit ($33.07) ($24.49) ($1.60) $6.22 $0.66 ($7.01)
Net Revenue Indicators
Net revenue per discharge $2,622 $2,799 $2,968 $4,091 $3,411 $2,815
Net revenue per visit $179 $222 $248 $201 $139 $98
Medicare revenue percentage 30.98% 34.38% 31.96% 43.47% 36.60% 31.25%
Bad debt / charity care percentage 6.51% 6.55% 6.71% 7.89% 4.76% 2.97%
Contractual allowance percentage 5.30% 13.57% 16.65% 25.27% 20.02% 12.12%
Outpatient revenue percentage 20.01% 23.85% 26.40% 25.26% 21.03% 17.44%
Volume Indicators
Occupancy rate 62.58% 59.01% 61.66% 67.12% 58.10% 47.84%
Average daily census 120.78 116.26 109.76 173.23 144.73 114.39
Length of Stay Indicators
Average length of stay (days) 5.02 5.10 4.67 6.80 6.07 5.41
Adjusted length of stay 3.90 3.93 3.55 6.48 5.36 4.52
Expense Indicators
Expense per discharge $2,342 $2,672 $2,888 $3,937 $3,392 $2,972
Expense per adjusted discharge $1,820 $2,057 $2,195 $3,417 $2,924 $2,572
Expense per visit $212 $246 $250 $202.23 $141.97 $111.53
All-payer Case Mix Index 1.2869 1.2993 1.3161 1.2795 1.1756 1.0259
Efficiency Indicators
FTEs per occupied bed 4.04 4.10 4.15 4.59 4.15 3.77
Labor hours/visit 7.88 9.44 9.24 8.66 5.84 4.68
Unit Cost Indicators
Salary per FTE $20,047 $19,923 $22,596 $24,447 $22,517 $20,347
Fringe benefits percentage 14.94% 19.31% 18.35% 19.58% 17.04% 15.18%
Liability expense per discharge $15.94 $24.16 $25.42 $80.94 $42.05 $18.31
Note:
The quartile values are based on the upper and lower numerical values regardless of whether that value is
good or bad. The interpretation is left to the analyst.

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