Wk 4, HCS 577: Financial Plan

Patton - Fuller Community Hospital Operating Budget 2009 (In Thousands) (Projection)

2008

Budget % Change from 2008

2009 (Projection)1

Revenues

Net Patient Revenue

$418,509

7%

$447,8052

Other Revenue

2,805

15%

3,2253

Total Revenues

$421,314

7%

$451,030

Expenses

Salaries and benefits

$214,129

3%

$220,5534

Supplies

71,346

3%

73,4875

Physician and professional fees

107,065

3%

110,2776

Utilities

1,164

5%

1,2227

Other

1,784

3%

1,838

Depreciation & Amortization (non-cash expenses)

24,955

20%

29,9468

Interest

3,597

3%

3,7059

Provision for doubtful accounts

13,383

10%

14,72110

Total Expenses

$437,424

4%

$455,74911

Operating Income

($16,110)

($4,719)12

Non-operating Income (Loss)

Investment Income

264

15%

30413

Net Income

($15,846)

($4,416)14

Assumptions

1 Based on these 2008 assumptions: a 3% overall "inflation rate" in 2009, with the cost of oil disproportionately affecting some expense items.

2 Patient revenue will increase with little or no increase in patient volume, due to new managed care contracts.

3 Marketing's plan to increase donations by 15%.

4 Salaries will hold to a 3% overall increase in cost, no increase in labor hours due to no increase in patient volume.

5 Supplies cost will increase more due to the rising cost of oil and its effect on the cost of plastics and transpiration.

6 Contracts for fees have a built-in 3% increase.

7 Utilities cost will increase more due to the rising cost of oil.

8 Some high-cost equipment (air conditioning, telephone system, all patient beds and headwalls) will have to be replaced this year, and "depreciation" will rise sharply.

9 The repayment plan for any monies borrowed in 2009 will not come due until 2010.

10 The renegotiation of Managed Care plans could make collections less certain.

11 Total expenses will rise 4%.

12 Operating Income will improve, with the hospital's loss reduced by 2/3.

13 The Market has been going up for years, the "bull market" should continue in 2009.

14 The hospital's loss will be further reduced by good returns on investment income.