Brookside Hospital: preparing a departmental budget from the given data

Prepare a professional document to present to the VP of Radiology which will include separate tables for each of the following:

1. Prepare a statistics budget summary by procedure and payer

2. Prepare a gross and net revenue worksheet by procedure and payer. Hint: prepare a table for each procedure and then one for the total of all procedures.

3. Prepare an expense worksheet based on the volume increases and the rate increases for each of the three types of expenses. Do not separate the expenses by procedure only by type of expens  

Brookside Hospital: preparing a departmental budget from the given data

Brookside Hospital’s imaging for hand, foot and forearm is a sub-unit of the Radiology department. They project ending the current year (2017) with 2,000 total procedures broken down as follows:

Procedure

Time   Required

Volume   proportion

Rate

(Charge)

Hand imaging

10   minutes

60%

$100 

Foot imaging

20   minutes

30%

$300 

Forearm imaging

30   minutes

10%

$400 

This sub-unit accounts for 20% of the Radiology department’s current expenses of $1,225,000 broken down as follows:

Expense

Amount

Labor

$425,000 

Imaging   Materials

$300,000 

Overhead

$500,000 

Total

$1,225,000 

Payer

Volume proportion

Reimbursement

Medicare

50%

70%   of charges

Medicaid

20%

50%   of charges

Managed   care

20%

80%   of charges

Self   Pay

10%

100%   of charges *

* 20%   of the self pay result in charity care

Payer Mix and Reimbursement is as follows:

Budget Assumptions for 2018:

· Volume increase is expected to be 10% with the same procedure mix

· Due to volume increase, all three expenses are expected to increase 10%, in addition:

· Labor rates are expected to increase 5% due to merit increases

· The cost of Imaging materials are expected to increase 6%

· Overhead rate is expected to stay the same

Required:

Prepare a professional document to present to the VP of Radiology which will include separate tables for each of the following:

1. Prepare a statistics budget summary by procedure and payer

2. Prepare a gross and net revenue worksheet by procedure and payer. Hint: prepare a table for each procedure and then one for the total of all procedures.

3. Prepare an expense worksheet based on the volume increases and the rate increases for each of the three types of expenses. Do not separate the expenses by procedure only by type of expense.

4. Prepare a summary income statement for overall revenues and expenses. Include appropriate header.

Rubrics:

Problem 1: 25%

Problem 2: 25%

Problem 3: 25%

Problem 4: 25%e.

4. Prepare a summary income statement for overall revenues and expenses. Include appropriate header.