Fianace Of HealthCare

Preparing a Business Plan

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Assumptions

Types of assumptions required for the financial portion of a business plan typically include answers to the following questions:

Example of Typical Income Statement Assumption Information Requirements:

  • What types of revenue?
  • How many services will be offered to produce the revenue (by month)?
  • How much labor will be required (FTEs)?
  • What will the labor cost?
  • How many and what type of supplies, drugs, and/or devices will be required to offer the service?
  • What will the supplies, drugs, and/or devices cost?
  • How much space will be required?
  • What will the required space occupancy cost?
  • Is special equipment required? If so, how much will it cost?
  • Is staff training required to use the special equipment? If so, how much time is required, and what will it cost?

Refer to the course project to add a nuclear cardiac stress lab.

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Identify how many of the assumption items listed in the example above can be found in the project worksheets.

Use of Excel is strongly encouraged!

2

>PRO FORMA INC STMT PRO FORMA INCOME STATEMENT

REVENUE

S:

Gross revenue $

3,000

,000 Less contractual allowances $ (9

4

1,223) Net patient revenue $ 2,0

5 8

,777

EXPENSES

:

Salaries $ 388,080 Benefits $ 93,139 Medical supplies $ 3

6

,000 Radiopharmaceuticals $ 456,000 Nuclear license $ 425 Radiation safety consultant $

3,500 Radiation exposure monitoring $ 13,

20

0 First-year marketing expense $ 20,000 Clinician education (one-time) $ 40,000 Equipment insurance coverage $ 800 Liability insurance coverage $

24

,000 Patient education materials

$ 800
Interest expense $

10

0,000 Depreciation

expense $

12

7,000 Bad debt expense $ 149,363 Total Expenses $ 1,452,

30

7 Net Income Before Taxes $ 606,470

INCOME TAX

ES:

Federal $ 200

,135 State $ 30,323 Local $ 12,129 Total Taxes $ 242,588 Net Income After Taxes $ 363,882

CONT MGN and BREAK-EVEN

PRO FORMA INCOME STATEMENT

Gross revenue

,000

Less contractual allowances $ (941,223)

Net patient revenue

VARIABLE

Salaries $ 388,080

Benefits $ 93,139

variable

Medical supplies

.00

variable

Radiopharmaceuticals $ 456,000

.00

variable

Patient education materials $ 800

Bad debt expense $ 149,363

Nuclear license $ 425

Radiation safety consultant

fixed

Radiation exposure monitoring $ 13,200 semi-variable
First-year marketing expense $ 20,000 fixed
Clinician education (one-time) $ 40,000 fixed
Equipment insurance coverage $ 800 fixed
Liability insurance coverage

semi-variable

Interest expense

fixed

Depreciation expense

fixed

$ 328,925 Total Fixed Expenses

$ 389.75 Contribution Margin per exam

Federal $ 200,135
State $ 30,323
Local $ 12,129
Total Taxes $ 242,588
Net Income After Taxes $ 363,882

CONTRIBUTION MARGIN
BREAK-EVEN ANALYSIS
VOLUME 2,400
REVENUES: PER EXAM TYPE OF EXP
$ 3,000
$ 2,058,777 $ 857.82 Net patient revenue per exam
EXPENSES:
$ 161.70 variable
$ 38.81
$ 36,000 $

15
$ 190
$ 0.33 semi-variable
$ 62.23
Total Variable Expenses $ 1,123,382 $ 468.08 Total Variable Expense per exam
Contribution Margin $ 935,395 $ 389.75 Contribution Margin per exam
FIXED EXPENSES:
fixed
$ 3,500
$ 24,000
$ 100,000
$ 127,000
Total Fixed Expenses $ 328,925
8

44 BREAK-EVEN POINT
INCOME TAXES:

INCOME TAX

INCOME TAXES:

Federal

$ 200,135

State

$ 30,323

Local

$ 12,129

$ 242,588

RATES AMOUNT
3

3%
5%
2%
Total taxes 40%

REVENUE

5%

40% 3%

6%

6%

4%

4%

5%

2%

3%

1%

2%

40%

1% Gross charge 100%

0

.84

MEDICARE FEE

5%

5% 10% 20%

3,000 5% 10% 20%
3,500 5% 10% 20%

caseload

3,000

8

10%

2,400

PAYOR VOLUME

Medicare

$ 987.39

Medicaid

Blue Cross/Blue Shield

Aetna

$ 113,747

Cigna 96

,000

United Healthcare 120

Other commercial 48

Workers’ Comp 24

Self pay 48 $ 60,000 $ 1,250.00

$ 60,000 $ 24,000

Charity care 24 $ 30,000 $ 1,250.00 $ – 0 $ 30,000 $ 30,000

2,400 $ 3,000,000

$ 2,058,777 $ 149,363

PAYOR % OF PATIENTS % OF MPFS BAD DEBT %
Medicare 5

1% 100%
Medicaid 12%
Blue Cross/Blue Shield 1

6% 85% 4%
Aetna 80%
Cigna 82%
United Healthcare 70% 8%
Other commercial 75%
Workers’ Comp 60% 7%
Self pay Gross charge
Charity care
DESCRIPTION CPT CODE BALTO MD RATE
Radionuclide various $ 265.00 estimate per patient
Myocardial perfusion imaging; tomographic (SPECT), multiple studies (including attenuation correction when performed), at rest and/or stress (exercise and/or pharmacologic), and redistribution and/or rest injection, with or without quantification 78465 $ 511.08 Use participating, non-facility price (with no modifiers)
Myocardial perfusion study with wall motion, qualitative or quantititative study (use in conjunction with 78460, 78461, 78464, 78465) 78478 $ 62.22
Myocardial perfusion study with ejection fraction (use in conjunction with 78460, 78461, 78464, 78465) 78

48 $ 52.25
Cardiovascular stress test using maximal or submaximal treadmill or bicycle exercise, continuous electrocardiographic monitoring, and/or pharmacological stress; with physician supervision, with interpretation and report 93015 $

96
TOTAL $ 987.39
GROSS CHARGE PER TEST $ 1,250.00
% OF PATIENTS NEEDING STRESS TEST
PHYSICIAN CASELOAD LOW MEDIUM HIGH
2,000 10% 20%
2,500
TOTAL ANNUAL TEST VOLUME
Physician
# of cardiologists
% of patients needing stress testing
Annual anticipated test volume
GROSS REVENUE NET FEE PER TEST CONTRACTUAL ALLOWANCE NET REVENUE BAD DEBT EXPENSE
1,224 $ 1,530,000 $ 321,435 $ 1,208,565 $ 60,428
288 $ 360,000 $ 394.96 $ 246,253 $ 113,747 $ 3,412
384 $ 480,000 $ 839.28 $ 157,716 $ 322,284 $ 12,891
144 $ 180,000 $ 789.91 $ 66,253 $ 6,825
$

120 $ 809.66 $ 42,273 $ 77,727 $ 3,109
$ 150,000 $ 691.17 $ 67,059 $ 82,941 $ 6,635
$ 60,000 $ 740.54 $ 24,454 $ 35,546 $ 1,066
$ 30,000 $ 592.43 $ 15,782 $ 14,218 $ 995
$ – 0
TOTALS $ 941,223

Shana K Wolfe:
2009 fee schedule; does not exist for 2010
Shana K Wolfe:
2009 fee schedules; does not exist for 2010
Shana K Wolfe:
2009 fee schedule; does not exist for 2010
Shana K Wolfe:
2010 fee schedule

EXPENSES

2,400

Physician

8

10

0.50 6

0.58

1.00 2

1.15

6

4

4

0.20 4

0.23

TOTAL 44 $ 388,080

$ 93,139

COST

TYPE OF EXP

Salaries variable $ 388,080
Benefits variable $ 93,139

$ 15

variable $ 36,000

Radiopharmaceuticals $ 190 per test variable $ 456,000
Nuclear license $ 425

fixed $ 425

Radiation safety consultant $ 3,500 per year fixed $ 3,500

semi-variable $ 13,200

First-year marketing expense $ 20,000 per year fixed $ 20,000
Clinician education (one-time) $ 40,000 per year fixed $ 40,000
Equipment insurance coverage $ 800 per year fixed $ 800
Liability insurance coverage $ 3,000

semi-variable $ 24,000

Patient education materials $ 200

semi-variable $ 800

Interest expense fixed $ 100,000
Depreciation fixed $ 127,000

COST

8

12

$ 40,000 15

$ 30,000 15

5

$ 20,000 5

30 $ 20,000

$ 127,000

8%

20

PROJECTED VOLUME:
STAFFING: AVG HR RATE HOURS/TEST TOTAL STAFF COUNT COST FTE
$ 160.00 0.50 $ 192,000 0.58
Registered Nurse $ 28.00 1.00 $ 67,200 1.15
Respiratory Technician $ 24.50 $ 29,400
Nuclear Medicine Technician $ 32.00 $ 76,800
Receptionist $ 9.50 0.20 $ 4,560 0.23
Insurance verifier $ 13.50 0.30 $ 9,720 0.35
Biller $ 11.00 0.10 $ 2,640 0.12
Collector $ 12.00 $ 5,760
4.38
Benefits as % of salary cost 24%
OPERATING EXPENSES: UNITS
Routine medical supplies per test
per year
Radiation exposure monitors $ 300 per employee per year
per year per physician
for 600 pieces
TOTAL EXPENSES (not including bad debts) $ 1,302,944
CAPITAL EXPENDITURES: USEFUL LIFE (YRS) DEPRECIATION
Dual-headed nuclear camera $ 560,000 $ 70,000
“Hot lab” renovations $ 220,000 $ 18,333
Additional plumbing $ 2,667
Electrical & data cabling $ 2,000
Treadmill, exam table, etc. $ 50,000 $ 10,000
Computer equipment $ 4,000
Structural renovations $ 600,000
$ 1,520,000
FINANCING:
Borrow $ 1,250,000
Interest rate
Term in years

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