Unit 5 Assignment: Action Items

Budgeting Reporting  

  1. 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.

 

  1. 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.

 

  1. 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?

 

  1. Your landlord has renegotiated your lease. Starting in October, your monthly building rent will be 19,000. What is your total cost for rent for the year? What percentage of your budget for rent was utilized for the year?

 

  1. In reviewing the percentages of each category used for the first six months of the year, are there any areas of the budget that you would adjust either up or down and why?

Universal Healthcare Assignment

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.

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