Preparing a Business Plan
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.
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!
>PRO FORMA INC STMT
S: ,000
1,223)
,777
: ,000
0
,000
$ 800 0,000
expense
7,000
7
ES: ,135
Gross revenue ,000
Less contractual allowances $ (941,223) variable .00
variable .00
variable fixed semi-variable fixed fixed $ 328,925 Total Fixed Expenses Federal $ 200,135 INCOME TAX $ 200,135 $ 30,323 $ 12,129 $ 242,588 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% caseload
3,000 8 10% 2,400 $ 987.39 $ 113,747 ,000
$ 60,000 $ 24,000 2,400 $ 3,000,000 $ 2,058,777 $ 149,363 Shana K Wolfe: EXPENSES 2,400 8 10 0.50 6 0.58 1.00 2 1.15 6 4 4 0.20 4 0.23 $ 93,139 COST TYPE OF EXP $ 15 variable $ 36,000 fixed $ 425 semi-variable $ 13,200 semi-variable $ 24,000 semi-variable $ 800 COST 8 12 $ 40,000 15 $ 30,000 15 5 $ 20,000 5 30 $ 20,000 $ 127,000 8% 20
PRO FORMA INCOME STATEMENT
REVENUE
Gross revenue
$
3,000
Less contractual allowances
$ (9
4
Net patient revenue
$ 2,0
5
8
EXPENSES
Salaries
$ 388,080
Benefits
$ 93,139
Medical supplies
$ 3
6
Radiopharmaceuticals
$ 456,000
Nuclear license
$ 425
Radiation safety consultant
$
3,500
Radiation exposure monitoring
$ 13,
20
First-year marketing expense
$ 20,000
Clinician education (one-time)
$ 40,000
Equipment insurance coverage
$ 800
Liability insurance coverage
$
24
Patient education materials
Interest expense
$
10
Depreciation
$
12
Bad debt expense
$ 149,363
Total Expenses
$ 1,452,
30
Net Income Before Taxes
$ 606,470
INCOME TAX
Federal
$ 200
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
CONTRIBUTION MARGIN
BREAK-EVEN ANALYSIS
VOLUME
2,400
REVENUES:
PER EXAM
TYPE OF EXP
$ 3,000
Net patient revenue
$ 2,058,777
$ 857.82
Net patient revenue per exam
VARIABLE
EXPENSES:
Salaries $ 388,080
$ 161.70
variable
Benefits $ 93,139
$ 38.81
Medical supplies
$ 36,000
$
15
Radiopharmaceuticals $ 456,000
$ 190
Patient education materials $ 800
$ 0.33
semi-variable
Bad debt expense $ 149,363
$ 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:
Nuclear license $ 425
fixed
Radiation safety consultant
$ 3,500
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
$ 24,000
Interest expense
$ 100,000
Depreciation expense
$ 127,000
Total Fixed Expenses
$ 328,925
$ 389.75 Contribution Margin per exam
8
44
BREAK-EVEN POINT
INCOME TAXES:
State $ 30,323
Local $ 12,129
Total Taxes $ 242,588
Net Income After Taxes $ 363,882
INCOME TAXES:
RATES
AMOUNT
Federal
3
3%
State
5%
Local
2%
Total taxes
40%
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
3,000 5% 10% 20%
3,500 5% 10% 20%
TOTAL ANNUAL TEST VOLUME
Physician
# of cardiologists
% of patients needing stress testing
Annual anticipated test volume
PAYOR VOLUME
GROSS REVENUE
NET FEE PER TEST
CONTRACTUAL ALLOWANCE
NET REVENUE
BAD DEBT EXPENSE
Medicare
1,224
$ 1,530,000
$ 321,435
$ 1,208,565
$ 60,428
Medicaid
288
$ 360,000
$ 394.96
$ 246,253
$ 113,747
$ 3,412
Blue Cross/Blue Shield
384
$ 480,000
$ 839.28
$ 157,716
$ 322,284
$ 12,891
Aetna
144
$ 180,000
$ 789.91
$ 66,253
$ 6,825
Cigna 96
$
120
$ 809.66
$ 42,273
$ 77,727
$ 3,109
United Healthcare 120
$ 150,000
$ 691.17
$ 67,059
$ 82,941
$ 6,635
Other commercial 48
$ 60,000
$ 740.54
$ 24,454
$ 35,546
$ 1,066
Workers’ Comp 24
$ 30,000
$ 592.43
$ 15,782
$ 14,218
$ 995
Self pay 48 $ 60,000 $ 1,250.00
$ – 0
Charity care 24 $ 30,000 $ 1,250.00 $ – 0 $ 30,000 $ 30,000
TOTALS
$ 941,223
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
PROJECTED VOLUME:
STAFFING:
AVG HR RATE
HOURS/TEST
TOTAL STAFF COUNT
COST
FTE
Physician
$ 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
TOTAL 44 $ 388,080
4.38
Benefits as % of salary cost
24%
OPERATING EXPENSES:
UNITS
Salaries variable $ 388,080
Benefits variable $ 93,139
Routine medical supplies
per test
Radiopharmaceuticals $ 190 per test variable $ 456,000
Nuclear license $ 425
per year
Radiation safety consultant $ 3,500 per year fixed $ 3,500
Radiation exposure monitors
$ 300
per employee per year
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
per year per physician
Patient education materials $ 200
for 600 pieces
Interest expense fixed $ 100,000
Depreciation fixed $ 127,000
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