Having a budget is critical for the financial stability of an organization. Keeping track of how well the organization is actually adhering to the budget, and subsequent identification of why the budget numbers are being missed is equally important. Without this critical “why” piece, it is difficult to make the necessary adjustments to the budget or to organizational behavior that might be promoting overspending.

A good budget is built with thoughtful consideration of future costs and revenue. Though your budget is formulated with expected figures in mind, the actual resulting values may vary considerably. This variance–from projected to actual–can be a pleasant surprise or a fiscal nightmare and can make financial decision making difficult. Fortunately, variance analysis can enable management to determine why variance occurred and what can be done to mitigate its effects.

 

Note: For those Assignments in this course that require you to perform calculations you must:

• Use the Excel spreadsheet template for the Week 8 assignment
• Show all your calculations and formulas in the spreadsheet.
• Answer any questions included with the problems (as text in the Excel spreadsheet).

 

Salary Variance Scenario

For this Assignment run a variance analysis. Based on the information you obtain: assess the results of the analysis, suggest potential causes of the budget variances and an explanation for addressing the situation.

Using the following performance data calculate the volume adjusted labor rate variance and volume adjusted efficiency variance. Your Variable Expense Factor is 40% and your Volume Change Factor is 50%.

Note: Submit the Excel spreadsheet containing your Salary Variance Scenario calculations to the Assignment submission link.

 

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Throughout this course, you’ve examined the importance of anticipating financial fluctuations that may impact your organization’s ability to provide services. While financial managers have no time machines or crystal balls, they do have expense forecasts. Expense forecasting is one of the preeminent tools that financial managers can use to prepare their organizations for future fiscal turbulence. In this Assignment, you will examine a scenario and generate a corresponding expense forecast in Excel.

Before pursuing an opportunity or making a major purchase, financial decision makers must first ascertain if the expenditures are justified. Determining whether a new process, system, or purchase will yield worthwhile returns is no easy task. However, managers have a variety of tools to help them decide whether the new expenditure is warranted. Analyzing a venture’s benefit/cost ratio, marginal profit and loss statement, and break-even points enable nurse managers to make educated decisions about how they choose to commit their funds.

Note: For those Assignments in this course that require you to perform calculations you must:Use the Excel spreadsheet template for the Week 3 assignment
Show all your calculations and formulas in the spreadsheet.
Answer any questions included with the problems (as text in the Excel spreadsheet).

 

Expense Forecasting

In this Application Assignment you calculate scenarios focusing on benefit/cost ratio analysis, marginal profit and loss statements, and break-even analysis. For these scenarios, you will utilize the provided figures to perform calculations and then make recommendations about the viability of the investment opportunities 

Expense Forecasting Scenario

Your department has performed 20,000 procedures during the first six months (January–June) of 20X1. Spending during that period of time was $210,000 for fixed expense items and $1,200,000 for variable expense items. Of those amounts, $50,000 of fixed expense money was spent on preparing for a Joint Commission survey. Volume is anticipated to be 10% higher in the second half of the year. On November 1st, two new procedure technicians will begin work. The salary and fringe benefit costs for each are $96,000/year. Based on the information provided, prepare an expense forecast for 20X1.

Annualization for Fixed:  (Adjusted Total for Year to Date Expense/6) * 12 =Total Annualized Amounts

Annualization for Variable (Adjusted Total for Year to Date Expense/ 20,000) * 40,000 =Total Annualized Amounts.

Financial Analysis Cycle

Marginal Profit and Loss Statement Scenario

You are examining a proposal for a new business opportunity – a new procedure for which demand is expected to be 1,400 units the first year, growing by 600 units a year thereafter. The price charged per procedure is $1,000. The collection rate is anticipated to be 80%. Each procedure consumes $300 of supplies. Salary cost is estimated to cost $540,000 each year, fringe benefits are 25% of salaries, rent for the facility is $55,000/yr and operating cost are $120,000/yr.

Questions:

1. Develop a marginal profit and loss statement for this business opportunity.Based on that analysis, should this opportunity be pursued?

Break-Even Analysis Scenario

You can charge $1,075 for a new service. Demand is anticipated to be 8,000 units a year. Your business is able to handle up to 16,500 units annually, so capacity should not be a problem. The average collection rate is 80%. The new service has annual fixed costs of $4,700,000. Variable cost per unit of service is $420.

Question: Use break-even analysis to determine if this new service is financially viable. If the business is not financially viable, what steps could you take to make a case to proceed with implementation?  Explain your decision.

Benefit/Cost Ratio Analysis Scenario

You are considering the acquisition of a new piece of equipment with a useful life of five years. This new technology will make your clinical operation more efficient and allow for a reduction of 10 FTEs. The equipment purchase price is $4,500,000 plus 10% installation fee. The purchase price includes service for the first year, an item that has an annual cost of $10,000. There is a potential for additional volume of 150,000 units in the first year, growing by 30,000 each year thereafter. The price charged per unit is $15.00 with a 50% collection rate. The staff being eliminated are paid $12.50 per hour. The fringe benefits rate is 20%. The hurdle rate is 7.5%.

Questions: After reviewing Dr. Ward’s Video and the calculations below, please answer the following questions:

• What is meant by  benefit/cost ratio, average payback period and ROI  and why are the all  important to understand when purchasing new equipment?
• Based on this information, would you pursue this opportunity?
• Explain your decision  in 250-500 words in the text box below.

References:

 

Baker, J. J., Baker, R. W., & Dworkin, N. R.  (2018). Health care finance: Basic  tools for nonfinancial managers (5th ed.). Burlington, MA: Jones and  Bartlett Learning.

Chapter 14, “Trend Analysis, Common Sizing, and Forecasted Data” (pp. 149-160)
The focus of this chapter is the use of trend analysis and forecasting to develop future budgets and make financial decisions about capital purchases, programs, and personnel.
Chapter 15, “Using Comparative Data” (pp. 161-173)
In this chapter, you are introduced to the criteria for identifying other health care organizations that are comparable to your own. Data from these organizations can then be used to evaluate your own organizational performance.
Chapter 19, “Estimates, Benchmarking, and Other Measurement Tools” (pp. 223-231)
In this chapter, you continue exploring the concept of financial benchmarking. The chapter focuses on the importance of benchmarking for identifying performance gaps.

Zelman, W., McCue, M., & Glick, N. (2009). Financial management of health care organizations: An introduction to fundamental tools, concepts, and applications (3rd ed.). Hoboken, NJ: Jossey-Bass.
Retrieved from the Walden Library databases.
Chapter 5, “Working Capital Management” (pp. 187–231)
This chapter examines the concept of working capital. The authors explore the specifics of current assets and the management of the working capital cycle.
Chapter 11, “Responsibility Accounting” (pp. 468–497)
Review: This chapter explores the trend toward the decentralization of health care organizations and the challenges this presents. This chapter also describes responsibility centers, or organizational units intended to achieve specific tasks.

Mulva, S., & Dai, J. (2009) Health care facility benchmarking. HERD, 3(1), 28–37.
Reprinted by permission of Sage Publications via the Copyright Clearance Center.

This article describes a national health care facility’s benchmarking program. It is designed to compare measures of capital project performance.

Agency for Healthcare Research and Quality. (2013). Measuring and benchmarking clinical performance. Retrieved from www.ahrq.gov

Ettorchi-Tardy, A., Levif, M., & Michel, P. (2012). Benchmarking: A Method for Continuous Quality Improvement in Health. Healthcare Policy, e101-e119. Retrieved fromhttp://www.ncbi.nlm.nih.gov/pmc/articles/PMC3359088/

 

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Should other health professions “borrow” nursing theories, such as McCormack and McCance’s PCN framework, for their practice? Why or why not?

about 300 words

apa format and if references are used, please use within the last 5 years

 

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One of the pivotal goals of consumer health literacy efforts is to design educational materials that attract as well as educate users. In this Assignment, you design a health information document on a topic that is of interest to you.

To prepare:

Select a health issue of interest to you.

Identify the audience or population that you seek to educate about this issue.

Search the Internet to find credible sites containing information about your selected topic.

Review the two health literacy websites listed in this week’s Learning Resources. Focus on strategies for presenting information.

To complete:

Design an educational handout on the health issue you selected.

Include a cover page.

Include an introduction that provides:

An explanation of your issue and why you selected it

A description of the audience you are addressing

In the handout itself:

Develop your handout in such a way that it attracts the attention of the intended audience.

Include a description of the health issue and additional content that will enhance your message (i.e., key terms and definitions, graphics, illustrations, etc.).

Recommend four or five sites that provide clear, valuable, and reliable information on the topic.

 

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