2010 Operating Budget Projection
HCS/577 Version 4
1
University of Phoenix Material
Patton-Fuller Community Hospital
Statement of Revenue and Expense
2009 to 2010 Operating Budget
Complete the Operating Budget. Assume the 2009 projections were realized. Use the 2009 budget and the 2010 budget assumptions to calculate expenses
and income for 2010. The revenues have been completed for you.
2009
(Proj)
2010
Budgeted
% Change
From
2009
Projection
2010
Budget
2010 Operating Budget Assumptions
Based on these 2009 assumptions: a 3% overall deflation rate for prices in 2009
—due to the weak economy—will continue into 2010.
Revenue
Net patient revenue
459,900
3%
473,697
Patient revenue will continue to increase, but at a decreased rate, with little or no
increase in patient volume, due to new managed care contracts.
Other revenue
3,082
15%
3,544
Marketing’s plan to increase donations by 15%
462,982
3%
477,241
Total revenue
2010 Operating Budget Projection
HCS/577 Version 4
2009
(Proj)
2010
Budgeted
% Change
From
2009
Projection
2010
Budget
2
2010 Operating Budget Assumptions
Expenses
Salaries and benefits
220,752
1%
229,959.52
Salaries will hold to a 1% overall increase in cost due to price deflation
nationwide, with no increase in labor hours, due to no increase in patient volume.
This assumption could be affected by a board decision either to raise nursing
wages by $1 per hour or to increase the nursing hour ratio.
Supplies
74,584
-3%
72,346.48
Supplies cost will decrease 3% due to the price deflation and our current overstock purchased last year.
Physician and
professional fees
110,376
3%
113,687.28
Contracts for fees have a built-in 3% increase.
Utilities
1,200
5%
1,260
Utilities cost will increase to the rising cost of oil partially offset by the efficiency of
the hospital’s new heating and cooling systems.
Other
1,840
0%
1,840
No net change in the cost or volume of these items.
Depreciation &
amortization (noncash
expenses)
36,036
0%
36,036
Some high-cost equipment—air conditioning, telephone system, all patient beds,
and headwalls—were replaced in 2009, and depreciation rose sharply.
Depreciation will remain at this level in 2010.
Interest
3,708
30%
4,820.40
The repayment plan for any monies borrowed in 2009 will come due in 2010, with
a sharp increase in interest cost.
Provision for doubtful
accounts
13,797
10%
15,176.70
The renegotiation of managed care plans has delayed collection and made
collections less certain.
462,293
238%
1,098,844
Total expenses will rise __238__%.
Total expenses
2010 Operating Budget Projection
HCS/577 Version 4
2009
(Proj)
2010
Budgeted
% Change
From
2009
Projection
2010
Budget
3
2010 Operating Budget Assumptions
Income
Operating income
689
Operating Income will improve, with the hospital’s loss reduced by 2/3.
(62)
The market is down, expected to hold steady; a zero-return is expected, with
neither losses nor gains.
627
The hospital will continue its dramatic turnaround, taking advantage of the
stagnation in patient volume, price deflation, the efficiency of new equipment, and
the improved arrangements with the managed care companies.
Loss (nonoperating income)
Investment income
Net income
