Unit 5 Assignment: Action Items

Budgeting Reporting

Using the Budget Worksheet Template, add an additional employee for October – December. The monthly salary for the employee is $2,000. What impact does that have to your budget? Don’t forget to include employer Retirement contributions and other employee benefits.

Because of demand, the practice is going to add an additional physician for October – December. The physician’s salary is $8,000 per month. What is the impact to the budget of adding an additional physician? Don’t forget to include employer retirement contribution.

You have negotiated lower rates from your drug provider. Effective July your monthly cost for drugs will be $11,000. Calculate the annual cost of drugs for the entire year using the input amount for January – June and the new cost for July – December. What is your actual drug cost? What percentage of your budget for drugs was utilized for the year?

Action Items

Year to Date Percent of Budget Worksheet: FY XXXX	Annual Budget	JAN	FEB	MAR	APR	MAY	JUNE
Service Forecast
Total RVUs	55,000	4,059	4,300	4,500	4,670	5,002	4,100
Physician work RVUs	31,000	2,155	2,459	2,583	2,789	3,012	2,256
Encounters	32,000	2,155	2,210	2,666	3,001	3,600	2,100
Total procedures	50,000	4,099	4,122	4,512	4,569	4,989	4,256

Income
Fee-for-service collections	$ 3,002,177	222,356	245,788	257,808	259,760	260,441	245,100
Other revenue	42,149	3,100	3,456	3,711	3,799	3,511	3,690
Total Practice Income	$ 3,044,326	225,456	249,244	261,519	263,559	263,952	248,790

Operating Expenses
Total employee salaries	$ 946,156	$ 78,846	$ 78,846	$ 78,846	$ 78,846	$ 78,846	$ 78,846
Employee retirement contributions	78,854	6,571	6,571	6,571	6,571	6,571	6,571
Other employee benefits	69,537	5,795	5,795	5,795	5,795	5,795	5,795
Temporary support staff	21,400	1,783	2,559	1,700	2,650	2,160	1,785
Information technology depreciation	44,925	3,744	3,744	3,744	3,744	3,744	3,744
Information technology supplies and maintenance	9,788	816	852	765	740	891	650
Telephone/internet access	3,200	670	201	256	260	198	201
Drugs	136,285	11,400	11,659	36,000	6,559	14,899	10,266
Medical and surgical supplies	72,238	6,256	6,152	6,250	6,936	5,897	6,020
Building rent	208,012	17,334	17,334	17,334	17,334	17,334	17,334
Building maintenance and utilities	11,450	954	988	942	978	954	956
Property taxes	6,235	3,117	–	–	–	–	–
Furniture and equipment maintenance	9,340	778	812	810	792	785	776
Furniture/equipment depreciation	28,650	2,388	2,388	2,388	2,388	2,388	2,388
Administrative supplies and services	51,737	4,312	4,533	4,623	4,459	4,500	4,200
Laboratory equipment depreciation	53,666	4,472	4,472	4,472	4,472	4,472	4,472
Laboratory maintenance and supplies	35,000	2,900	3,120	3,266	2,998	2,917	2,987
Radiology equipment depreciation	24,020	2,002	2,002	2,002	2,002	2,002	2,002
Radiology maintenance and supplies	6,733	561	575	589	612	541	589
Accounting services	4,800	395	450	425	436	399	381
Legal services	13,287	1,159	1,100	1,120	1,256	1,106	1,189
General liability insurance-G&A	6,739	591	591	598	563	548	589
Prof liability insurance	49,024	–	49,024	–	–	–	–
Promotion and marketing	8,330	694	725	723	698	712	700
Total Operating Expenses	$ 1,899,406	157,538	204,493	179,219	151,089	157,659	152,441

Amount Available for Distribution to Physician Owners	$ 1,144,920	67,918	44,751	82,300	112,470	106,293	96,349

Physician salaries	$ 900,000	$ 60,000	$ 60,000	$ 60,000	$ 60,000	$ 60,000	$ 60,000
Physician distribution	57,255	–	–	9,116	–	–	22,265
Physician retirement contribution	107,700	6,600	6,600	6,600	6,600	6,600	6,600
Physician meetings & travel	23,750	1,980	2,562	1,988	1,955	1,897	2,695
Physician other fringe benefits	56,215	4,848	4,985	4,596	4,680	4,652	4,789
Total Physician Compensation and Benefits	$ 1,144,920	$ 73,428	$ 74,147	$ 82,300	$ 73,235	$ 73,149	$ 96,349

Net Income after Physician Distributions	$ –	$ (5,510)	$ (29,396)	$ –	$ 39,235	$ 33,144	$ –

Copyright © 2009. All Rights Reserved. Medical Group Management Association. This sample budget uses family medicine data from the MGMA Cost Survey for Single Specialty Practices: 2008 Report Based on 2007 Data. The budget is based on a 5 FTE Physician Medical Practice.



How to Use this Tool: The budgeting process involves monitoring an organization on a period to period basis. This sample year to date percent of budget worksheet is meant to be a template for medical practice administrators to use monthly. It allows administrators to compare their organization’s actual financial performance to the predicted annual budget and allows them to monitor and control finances. By reviewing performance on a monthly basis an administrator is in a better position to make adequate adjustments to compensate for any deviation from the budget.

Column O has the calculation for “Year to Date Total” and Column P has the calculation for “Year to Date Percent of Budget.” Column P will show how much of the budgeted amount for the particular entry is spent year to date. For example, if it is the end of June, the percent of budget of any particular entry would ideally be around 50% of budget, as June is the midyear mark.

In physician-owned medical groups, the compensation of the shareholder / owners is the amount that remains from total practice revenue after all expenses are paid. On a practical basis, most practices pay the doctors a predicted amount monthly with a periodic distribution of any excess revenue. In the sample budget, the distribution occurs quarterly, in March and June. In these months, the net income of the practice was zero because the excess revenue was distributed to the physicians as compensation.

Last Updated on February 10, 2019