August 27, 2012
Operating Budget for Patton-Fuller Community Hospital 2010
In 2008 Patton-Fuller Community Hospital suffered financial loss that has been turned into profit for 2009 of over $16 million (Annual Report, 2009). Patient revenues increased while expenses were kept to a minimum even through these hard economic times (Annual Report, 2009). Based on the 2009 operating budget and 2010 budget assumptions the 2010 operating budget was developed. In this paper the budget will be discussed as well as identification and discussion of effective and ineffective financial management practices in the healthcare setting and as applied to Patton-Fuller Community Hospital.
Budget Projection 2010
Based on the 2009 operating budget and the 2010 operating budget assumptions the total revenue is for the 2010 budget is expected to increase by three percent because of increase in patient revenue related to new managed care contracts that were negotiated in 2009 and because marketing's goal to achieve a 15 percent increase in donations to the organization (Operating Budget Assumptions 2010, 2009). Total expenses for 2010 are expected to rise approximately 30 percent mainly because of repayment of borrowing in 2009. Salaries and benefits should stay around a one percent overall increase because of deflation across the country (Operating Budget Assumptions 2010, 2009). Price deflation and the company purchasing a surplus of supplies at a large discount in 2009 will also cause supply cost to decrease by three percent (Annual Report, 2009). The poor economy across the country is causing oil prices to rise which is causing increase of rising utility cost which is expected to increase five percent in 2010. However, the new heating and air system the hospital purchased in 2009 is the reason the increase is expected to be no more than the five percent (Operating Budget Assumptions 2010, 2009). The net income in 2010 is expected to increase by 93 percent because of the hospital improved financial operations, steady investment market, price deflation, new equipment efficiency, and new managed care contracts with little increase in patient volume (Operating Budget Assumptions 2010, 2009).