Financial Plan Development PowerPoint Presentation with Speaker Notes
Develop a financial plan for Patton-Fuller Community Hospital for the upcoming year using the 2010 Operating Budget Assumptions memo and the 2009 Operating Budget in the Patton-Fuller Community Hospital Virtual Organization.
Create a 10- to 12-slide Microsoft PowerPoint presentation. Your presentation should:
1. Identify the GAAP used to create the financial plan.
2. Identify the financial statements used to develop the financial plan.
3. Describe the payment systems and participants that contribute to the hospital revenue.
4. Describe revenue trends that affect the hospital.
Your speaker notes should:
1. Explain the relevance of each GAAP to the financial plan.
2. Discuss the value of each identified financial statement to your decision-making process in the financial plan.
3. Describe the relationship of the financial statements used in the financial plan.
4. Describe each payment system and its effect on financial planning.
5. Clarify the financial contribution of each participant and the effect they have as a source of revenue.
6. The speaker notes provide sufficient background on the topic and address major points of each slide.
Mechanics:
1. The speaker notes and bullet points are logical, flow, and review the major points.
2. The presentation is laid out with effective use of headings, font styles, and white space.
3. Rules of grammar, usage, and punctuation are followed; spelling is correct.
4. The presentationincluding the title page, reference page, tables, and any appendixesis formatted according to APA format
Resources:
See 8 attachments that include financial statements and budgets for Patton-Fuller Community Hospital
PATTON FULLER COMMUNITY HOSPITAL
From: Zachary Hardie, CFO
To: Davis Geach, President/CEO
Fredric Adair, Chief Compliance Officer
Jess Ducat, Chief Operating Officer
Caterina Hossack, Chief Nursing Officer
Brent Houze, Chief Medical Officer
Nadene Saetteurn, Chief Human Resource Officer
Re: 2010 Operating Budget Assumptions
Based upon a review of the 2007, 2008 and 2009 Operating Budget variances, the long
and short-term plans of the various hospital departments and an in-depth analysis of
general economic conditions, we have arrived at the following assumptions that will be
used in the preparation of the 2010 Operating Budget projections.
In general, we anticipate a 3% overall deflation rate for prices in 2009 due to the
weak economy will continue into 2010.
Revenues
Net Patient Revenue Patient revenue will continue to increase –
but at a decreased rate (3%) – with little or
no increase in patient volume, due to new
managed care contracts.
Other Revenue Other revenue is projected to increase by
15% based on Marketing’s plan to increase
donations by 15%.
Expenses
Salaries and benefits Salaries will hold to a 1% overall increase in
cost due to price “deflation” nation-wide,
with no increase in labor hours (due to no
increase in patient volume). This
assumption could be affected by a board
decision to either raise nursing wages by $1
per hour or to increase the nursing hour
ratio.
2
2010 Operating Budget Assumptions
Supplies Supplies cost will decrease 3% due to the
price deflation and our current over-stock
purchased last year.
Physcian and Professional Fees Contracts for fees have a built-in 3%
increase.
Utilities Utilities cost will increase 5% due to the
rising cost of oil partially offset by the
efficiency of the hospital’s new heating and
cooling systems.
Other No net change in the cost or volume of these
items.
Depreciation & Amortization
(non-cash expenses)
Some high-cost equipment (air conditioning,
telephone system, all patient beds and
headwalls) were replaced in 2009, and
“depreciation” rose sharply. Depreciation
will remain at this level in 2010 so no
projected increase.
Interest The repayment plan for any monies
borrowed in 2009 will come due in 2010,
with a sharp increase (30%) in interest cost.
Provision for Doubtful Accounts The renegotiation of Managed Care plans
has delayed collection and made collections
less certain. We will assume a 10% increase
in doubtful accounts.
Operating Income
Non-operating Income (Loss) We do not expect to have any non-operating
income or loss.
Investment Income (Loss) The Market is down, expected to hold
steady, so a “zero” return is expected, with
neither losses nor gains.
We believe that the hospital will continue its dramatic “turnaround”, taking advantage of
the stagnation in patient volume, price “deflation”, the efficiency of new equipment and
the improved arrangements with the managed care companies
3
2010 Operating Budget Assumptions
If you have any further thoughts or comments regarding these assumptions, please
communicate them to me no later than Friday.
ZH 2008
Revenues
Net Patient Revenue $418,509
Other Revenue $2,805
Total Revenues $421,314
Expenses
Salaries and benefits $214,129
Supplies $71,346
Physician and professional fees $107,065
Utilities $1,164
Other $1,784
Depreciation & Amorization
(“non-cash” expenses) $24,955
Interest $3,597
Provision for doubtful accounts $13,383
Total Expenses $437,424
Operating Income ($16,110)
Non-operating Income (Loss)
Investment Income $264
Net Income ($15,846)
Patton – Fuller Community Hospital
Operating Budget
2008
(In Thousands)
Sheet2 (2) 2008
Budget %
Change
from 2008
2009
(Projection)
Based on these 2008 assumptions: a 3% overall
“inflation rate” in 2009, with the cost of oil
disproportionately affecting some expense items.
Revenues
Net Patient Revenue $418,509 7% $447,805
Patient revenue will increase with little or no
increase in patient volume, due to new managed
care contracts
Other Revenue $2,805 15% $3,225 Marketing’s plan to increase donations by 15%
Total Revenues $421,314 7% $451,030
Expenses
Salaries and benefits $214,129 3% $220,553
Salaries will hold to a 3% overall increase in
cost, no increase in labor hours due to no
increase in patient volume.
Supplies $71,346 3% $73,487
Supplies cost will increase more due to the
rising cost of oil and its effect on the cost of
plastics and transporation
Physician and professional fees $107,065 3% $110,277 contracts for fees have a built-in 3% increase
Utilities $1,164 5% $1,222
Utilities cost will increase more due to the rising
cost of oil.
Other $1,784 3% $1,838
Depreciation & Amorization
(“non-cash” expenses) $24,955 20% $29,946
Some high-cost equipment (air conditioning,
telephone system, all patient beds and
headwalls) will have to be replaced this year,
and “depreciation” will rise sharply.
Patton – Fuller Community Hospital
Operating Budget
2009
(In Thousands)
(Projection)
Interest $3,597 3% $3,705
The repayment plan for any monies borrowed in
2009 will not come due until 2010.
Provision for doubtful accounts $13,383 10% $14,721
The renegotiation of Managed Care plans could
make collections less certain.
Total Expenses $437,424 4% $455,749 Total expenses will rise 4%
Operating Income ($16,110) ($4,719)
Operating Income will improve, with the
hosptial’s loss reduced by 2/3
Non-operating Income (Loss)
Investment Income $264 15% $304
The Market has been going up for years, the
“bull market” should continue in 2009.
Net Income ($15,846) ($4,416)
The hospital’s loss will be further reduced by
good returns on investment income.
Sheet2 2009
Projected
2009
(9 months actual data
projected to 12 months) Variance
Revenues
Net Patient Revenue $447,805 $459,900 3%
Other Revenue $3,225 $3,082 -4%
Total Revenues $451,030 $462,982 3%
Expenses
Salaries and benefits $220,553 $220,752 0%
Supplies $73,487 $74,584 1%
Physician and professional fees $110,277 $110,376 0%
Utilities $1,222 $1,200 -2%
Other $1,838 $1,840 0%
Depreciation & Amorization
(“non-cash” expenses) $29,946 $36,036 20%
Interest $3,705 $3,708 0%
Provision for doubtful accounts $14,721 $13,797 -6%
Total Expenses $455,749 $462,293 1%
Operating Income ($4,719) $689 P
Non-operating Income (Loss)
Investment income $304 ($62) -120%
Net Income ($4,416) $627 P
Patton – Fuller Community Hospital
Operating Budget Variance Report
2009
Sheet1 2009 2008
Beginning Retained Earnings and Stockholders’ Equity $335,035 $454,612
Plus: Net Income ($373) ($15,846)
Less: Dividends Paid $209,098 $103,731
Ending Retained Earnings and Stockholders’ Equity $125,564 $335,035
Patton – Fuller Community Hospital
Statement of Retained Earnings and Stockholders’ Equity
For the Year Ending December 31, 2009
(In thousands)
(Audited)
Stm. of Chg. in Owner’s Equity 2009 2008
Cash Flows from operating Activities
Net Income (Loss) ($373) ($15,846)
Adjustments
Depreciation expense (non-cash) $36,036 $28,118
Decrease in Assets of Limited Use $14,257 $5
Increase in Patient Accounts Receivable ($21,121) ($801)
Decrease in Other Receivables $87 –
Increase in Inventory ($10,026) ($51)
Decrease in Prepaid Expenses $106 $3
Increase in Accounts payable, accrued expenses $5,013 $11
Net Cash Flow from Operations $23,979 $11,439
Cash Flows from Investing Activities
Decrease (Increase) in Funded Depreciation $29,434 $4,431
Held under Bond Indenture $1,748 –
Investment in Property, Plant and Equipment ($72,572) ($2)
Net Cash Flows from Investing Activities ($41,390) $4,429
Cash Flows from Financing Activities
Proceeds of Long Term Debt (net of issuance costs) $197,239 $0
Change in Current portion of long-term debt $10,414 $8
Dividends Paid ($209,098) ($103,681)
Net Cash Flows from Financing Activities ($1,445) ($103,673)
Net Increase (Decrease) in Cash and Cash Equivalents ($18,856) ($87,805)
Beginning Cash and Cash Equivalents $41,851 $129,656
Ending Cash and Cash Equivalents $22,995 $41,851
Patton – Fuller Community Hospital
Statement of Cash Flows
(As of December 31)
(In thousands)
(Audited)
2009 – 2008
Stmt. of Cash Flows C:Documents and SettingsmkriordaMy DocumentsWeb DevelopmentCIST ServerCISTVOP
DevelopmentHealthcarePFCHHosDeptsCFO2009 Financial Statements2009-2008BalanceSheetUnaudited.xls
2009 2008
Assets
Currrent Assets
Cash and Cash Equivialents $22,995 $41,851
Assets of Limited Use $27,594 $41,851
Patient Accounts Receivable $59,787 $37,666
(net of Allowance for Bad Debts
2009: $10,757 / 2008: $6,777)
Other Receivables (3rd party payer $0 $87
settlements)
Inventories $18,396 $8,370
Prepaid Expenses $95 $201
Total Current Assets $128,867 $130,026
Other Assets
Funded Depreciation $137,970 $167,404
Held under Bond Indenture $73,584 $75,332
Property, Plant and Equipment, net $248,346 $175,774
Total Assets $588,767 $548,535
Liabilities and Equity
Current Liabilities
Current portion of long-term debt $14,599 $4,185
Accounts payable, accrued expenses $9,198 $4,185
Bond interest payable $10 $10
Total Current Liabilities $23,807 $8,380
Other Liabilities
Long term debt $452,945 $209,255
less: current portion of long term debt $14,599 $4,185
Net long term debt $438,346 $205,069
Total Liabilities $462,153 $213,450
Equity
Common Stock, $ 0.01 par value
10,000,000 shares authorized
5,000,000 shares outstanding
$50 $50
Additional Paid-in Capital
Retained Earnings (or “Net Worth” or
“Unrestricted Fund Balance”) $126,564 $335,035
Total Liabilities and Equity $588,767 $548,535
Note: Maximum Annual Debt Service
Bond interest payable $10 $10
Current portion of long term debt $14,599 $4,185
Maximum Annual Debt Service $14,609 $4,195
Patton – Fuller Community Hospital
Balance Sheet
2009 to 2008
(In thousands)
(Unaudited)
Unaudited Balance Sheet C:Documents and SettingsmkriordaMy DocumentsWeb DevelopmentCIST ServerCISTVOP
DevelopmentHealthcarePFCHHosDeptsCFO2009 Financial Statements2009-2008StatementRevenueUnaudited.xls
2009 2008
Revenues
Net Patient Revenue $459,900 $418,509
Other Revenue $3,082 $2,805
Total Revenues $462,982 $421,314
Expenses
Salaries and benefits $220,752 $214,129
Supplies $74,584 $71,346
Physician and professional fees $110,376 $107,065
Utilities $1,200 $1,164
Other $1,840 $1,785
Depreciation & Amorization
(“non-cash” expenses) $36,036 $24,955
Interest $3,708 $3,597
Provision for doubtful accounts $13,797 $13,383
Total Expenses $462,293 $437,424
Operating Income $689 ($16,110)
Non-operating income (loss)
Investment income ($62) $264
Net Income $627 ($15,846)
Patton – Fuller Community Hospital
Statement of Revenue and Expense
2009 to 2008
(In thousands)
(Unaudited)
unaudited Financial Statements
