Tulsa Memorial Hospital Break-Even Analysis

Visits to the Doctor (Once a week @$100 per visit for 20 years) = $104,000

The economic cost for the clinic due to waiting times rise. By taking more time to process the patients, the clinic cannot reach its potential of seeing 108 patients. This of course results in less revenue. Currently the clinic operates at 74% capacity, resulting in a loss of 26% revenue.

Currently the clinic sees about 45 patients per day and they have capacity to handle 85. If they continue how they are operating the clinic is looking at a loss of $3,173. At this rate the clinic will not be able to make a profit in spite of inflation over the next couple years.

Management should note that the level of activity was above what had been planned for the month. This led to an expected increase in profits of $1,100. However, the individual items on the report should not receive much management attention. The favorable variance for revenue and the unfavorable variances for expenses are entirely caused by the increase in activity.

| ▪ A 33% increase in personnel cost as well as the cost of another physicians.▪It cannot be break-even(see Exhibit 1 and 2)

Decrease in funding is another economic challenge in health care. The amount of finances coming from various sources not just the

2. Analyze the available MD and NP capacity.  How effective is the clinic in matching supply and demand?

1. Using the historical data as a guide (Exhibit 6.1), construct a pro forma (forecasted) profit and loss statement for the clinic's average month for all of 2010 assuming the status quo. With no change in volume (utilization), is the clinic projected to make a profit?

On the other hand, clinical labor costs account for the majority of the clinic’s expenses; during the high season they run up to $150,000 a month, however it drops to $120,000 a month during the remainder of the year. The clinic must pay for other monthly expenses, such as fixed general and administrative expenses including clerical labor ($30,000/month), lease obligations ($12,000/month) and miscellaneous expenses ($10,000/month) as well as maintain a minimum cash balance of $50,000 at First Bank because of compensating balance requirements on its term loan. This amount, but no more, is expected to be on hand on January 1, 2010.

Analyses used to collect the data were the profitability, break-even and utilization/volume. A dashboard analysis was also used. To analyze the profit of the organization over the next five years, profitability analysis was used with considering inflation rates for each item. Break-even analysis was used to compare the amount of additional visits per day if the clinic operated as-is to operating with the expansion of the new marketing program. The break-even analysis was also used to recognize the volume required to cover the costs of the marketing program. The dashboard analysis was then used to summarize all analyses used.

As we all know many health care providers operate on a shoe string budget, and in order for them to make as much profit as possible for services rendered they must come up with the most accurate total of expenses to be incurred for each service provided. Not only will the health care provider need to adjust the expenses to include the inflation rate, this inflation rate needs to

The actual charge was $70.00 with the projected 1600 at $80.00 totaling $128,000.00. The actual revenue was 1,400 at $70.00 with a total of $98,000.00. Flu treatment had a negative price variance of 12.5% per patient which comes out to $30,000.00, an unfavorable result. Patients traffic is an uncontrollable variable, but pricing is fixed.

Pro-Forma Financial Statements (I/S, B/S and Statement of Cash Flows) with deltas out three years and analysis

When, where, why, and how the Business pro forma is used will be discussed in this paper. The purpose of a business pro forma and components (income statement, balance sheet, statement of cash-flows) will also be included. The roll and purpose of an executive summary will be discussed as well.

Also remember to change EBIT, EBT, and net income calculations to reflect ***************************** pro forma (vs.