Organization-Wide Operating Budget

PROJECTED PROFIT/LOSS

Student’s Name

Institution Affiliation

Projected Profit/Loss

Total Revenue Projection with Maximum Pay

The maximum pay for the services rendered to the clients for the services is $1,005,650. Medicare fee would remain the same for both maximum and minimum pay. However, the rates for insurance, private pay, and grant-funded can increase as highlighted above. The amount of revenue the company will make if clients paid optimally will ensure that it makes a profit of $79,650. Thus, the health facility will not be required to cut their projected expenses in order to meet their costs in that financial year.

Total Revenue Projection with Minimum Pay

The total revenue for the health care facility is $820,550 against the expenses for the year of $826,000. The revenue will come in the form of Medicare, insurance, private pay, and grant-funded payments for client requiring mental health care (Dropkin, Halpin, & LaTouche, 2007). The rates for all the services are explained and the number of projected clients highlighted in the table above. Grants payments will top at $339,000, followed by private pay at $216,000. Medicare will bring $175,150 while insurance will close at $90,400.

Projected Loss

The health care facility will make a projected loss of $105,450. The hospital will have to make an adjustment on its budget expense to ensure that it meets its essential services. The facility should reduce some of its expenses to ensure that it reduces its profits. The miscellaneous expenses for $12, 000 can be reduced by half while the contingency cost can be lessened from $10,000 to $6,000. Also, the health care centre should stop subscribing to the World Federation of Mental Health but retain the subscription of Anxiety and Depreciation Association of America (BlueCross BlueShield of Tennessee). It should use the $10,000 for other events that would help generate income for the organization.

Also, the association should ensure that it plans for its major project and construction work properly. For instance, it can do the construction of the abolition block in two financial years. The management should allocate $25,000 this year to build the abolition block while $25,000 of the previous budget should go for other vital activities. Also, the building construction cost of $115,000 can be reduced by 50% and the amount channelled to cater for personnel expenses that need to be met during the year. The other 50% of the cost of building of the ward can be allocated the following financial year. Also, the company should lessen the allocation of the tenant improvement allowance by $6,000.

The additional income from expense reduction activities can cater to the loss and help the company make some profit. The amount includes $6,000 from miscellaneous activities, $4,000 from contingency cost, $10,000 from subscribing to the World Federation of Mental Health, $25,000 from the abolition block, $6,000 from the Tenant Improvement Allowance and $57,500 from constructing the ward. The total amount that the company will save from the cost reduction expenses is $108,500. The profit from the company will be $3,050 after making the necessary adjustments.

The amount of money saved from expense cutting activities is not substantive, and the mental health hospital should find other ways of earning revenue. The health care facility can supplement its revenue by finding extra sources of income. The hospital can fundraise or do a charity sponsorship to ensure more people are able to access medical health care. The charity sponsorship can be in the form of a marathon organized by the institution to raise money for mental health awareness. Also, it can have fundraising where the management calls politician, businessmen, celebrities, and other prominent people to raise money for the great course.

Also, the company can enter into a strategic partnership with companies to ensure that they have more money to attend to mental health patients. For example, the company can partner with a company like Facebook, who have the capacity to build the ward or abolition block for the patients as part of their corporate social responsibility. In return, the hospital can update on their website about their collaboration with Facebook. There are numerous institutions that can join the noble movement of ensuring that the mentally challenged persons get the necessary assistance to overcome the challenges. Also, engaging with both private and the public corporation can create an avenue for grants that can broaden the revenue of the firm and ensure there are less constraints.

Both the methods listed for raising additional returns to meet the expenses are feasible. However, the management should start with the charity sponsorship, where it creates a marathon or a football tournament. The charity sponsorship will popularize the ideals of the organization, and the company can get sponsors and partners from the event. Also, it is easy to arrange for a charity sponsorship than to sign a partnership deal with a company.

References