The 7 Best Budget Projectors of 2021

Webster’s staffing strategy is adequate for the services it provides for the following reasons. First, of the 121 staff members, only nine are 60 years old and above. With a young and robust staff, the hospital will not have to invest to acquire talent as its existing staff has a lot of room to grow. Secondly, there is a high diversity in the specialization among its current staff. As a result, a larger majority of patients will access their desired specialist. To the hospital, the diversity implies more revenue if the resources are well managed. From the tables provided, Webster’s revenues are increasing due to the different services they provide. For instance, both outpatient and number of births increased by 2.8% and 11%, respectively. Other factors that have increased the hospital’s revenue, and corresponding positive financial health, include a general increase in its outpatient services, ER admission, and decreased inpatient admissions. 

However, such activities are not an accurate gauge of the facility’s liquidity. According to Pham et al. (2018), the liquidity of an asset is the easy through which it can be acquired or disposed of in the market with insignificant impact on its price. Table 4.7 shows that Webster Hospital’s current assets and liabilities to be worth $26,562,536 and $9,352,497, respectively. The corresponding quick ratio and acid test ratio are 2.84 and 2.3, respectively. Furthermore, Webster hospital has a cash ratio of 0.646, days cash on hand of 114 days, and accounts receivable in 39.3 days. In other words, the hospital has a positive revenue cycle process. 

On the other hand, the depreciation of the hospital’s fixes assets has been dropping. As of 2017, the hospital’s operating margin was at 4%, which is lower than 24 months earlier. Furthermore, the hospital’s debt load was $22.6 million by 2017, which represents a $12.7 million drop from 24 months earlier. As a result, it is clear that Webster hospital has prioritized on clearing its debts as fast as they can. When the debt asset ratio is compared to the total net assets, it is clear that the hospital can safely borrow up to $10 million even after deducting its long-term debts. All the information and data was derived from the table below. 

Table 1 . Webster Hospital financial data 

WEBSTER HOSPITAL
TABLE 4-5 Revised 5/18/18
BALANCE SHEET ($) AS OF DECEMBER 31
			2017	2016	2015
CURRENT ASSETS
Cash			3,005,494	2,324,303	2,439,495
Short Term Investments			3,035,445	2,224,383	893,247
Accounts Receivables - Gross			33,458,282	34,292,554	36,595,230
Allowances for Uncollectables			18,563,987	19,393,554	19,937,554
Accounts Receivables - Net			14,894,295	14,899,000	16,657,676
Due from Third Party Payers			607,255	443,420	103,450
Inventories			4,866,345	4,995,395	5,394,129
Prepaid Expenses			153,702	176,872	162,508
TOTAL CURRENT ASSETS			26,562,536	25,063,373	25,650,505
NON-CURRENT ASSETS
Property, Plant and Equipment - Gross			107,353,474	104,393,556	100,384,345
Less Accumulated Depreciation			67,334,262	62,014,154	56,122,952
Property, Plant and Equipment - Net			40,019,212	42,379,402	44,261,393
	Other Investments		14,997,675	14,349,292	8,530,204
TOTAL ASSETS			81,579,423	81,792,067	78,442,102
CURRENT LIABILITIES
Accounts Payable			5,334,675	5,539,564	5,420,787
Accrued Salaries and Wages			767,056	828,349	792,414
Accrued Interest			107,342	72,204	70,245
Other Accrued Expenses			279,474	261,584	270,654
Due to Third Party Vendors			705,613	702,461	582,491
Long Term Debt Due Within One Year			2,158,337	1,345,965	945,229
TOTAL CURRENT LIABILITIES			9,352,497	8,750,127	8,081,820
Long Term Debt			20,456,294	28,500,704	34,357,411
TOTAL LIABILITIES			29,808,791	37,250,831	42,439,231
NET ASSETS
Restricted			6,128,484	6,034,292	6,203,445
Unrestricted			45,642,148	38,506,944	29,799,426
TOTAL NET ASSETS			51,770,632	44,541,236	36,002,871

Part 2: Budget Analysis 

After studying the Proposed Operational Budget for 2018, it is clear that the Alpha and Beta Centers will not generate the same profit margins. For instance, Alpha center’s 3.2% margin will be equivalent to $35,643 while Beta center’s 5% margin will be equivalent to $55,704. Note the 1.8% difference in the profit margins for the two centers. Though not all information is available to adequately create a comprehensive budget, what is available points that though Alpha center had more patients than Beta center, its fees were lower. As a result, its revenues fell behind. Note that though Alpha center could have reduced the differences by processing more patients, it is clear that the fees it charged were too low to fill the difference. Furthermore, the center’s other obligations, like employee salaries and operating costs reduced the operating margin further. 

It should be noted that though the Beta center received fewer visits, its revenues were high due to the fees they charged. Therefore, the management should reconsider their strategy for the Alpha center and increase the fees per visit if they want to equalize the profit margins for the two centers. However, implementing the strategy will be difficult due to the existence of the fee schedule. According to Berenson & Goodson (2016), the fee schedule is released by the Centers for Medicare & Medicaid Service (CMS) as the framework for calculating how the providers and physicians will be reimbursed on a fee-for-service basis. 

Table 2 . Profit margins for Alpha and Beta centers 

Proposed Operational Budget for 2018		TYPE COST	ALPHA	BETA	ALLOCATIONS
Patient Revenue	2,424,000	VARIABLE	1,200,000	1,224,000	VISIT VOLUME
Deductions	198,768	VARIABLE	98,400	100,368	GROSS VOLUME
Net revenue	2,225,232		1,101,600	1,123,632
Expenses
Salaries and wages	1,181,200	VARIABLE	584,752	596,448	GROSS REVENUE
Staff benefits	425,230	FIXED	210,510	214,720	GROSS REVENUE
Administrative expenses	21,500	FIXED	10,750	10,750	EQUAL SPLIT
Advertising	3,000	FIXED	1,500	1,500	EQUAL SPLIT
Collection fees	1,800	VARIABLE	891	909	GROSS REVENUE
Consultants	3,750	FIXED	1,875	1,875	EQUAL SPLIT
Computer support	34,000	FIXED	17,000	17,000	EQUAL SPLIT
Equipment leases	4,100	FIXED	2,020	2,050	EQUAL SPLIT
Insurance	28,100	FIXED	14,050	14,050	EQUAL SPLIT
Laboratory	49,000	VARIABLE	28,639	20,361	1.4-OCCUPATIONAL 1.0- GENERAL MEDICINE
Laundry and housekeeping	13,500	FIXED	6,750	6,750	EQUAL SPLIT
Legal/audit	8,450	FIXED	4,225	4,225	EQUAL SPLIT
Medical supplies	64,750	VARIABLE	38,542	26,208	VISIT VOLUME
Printing and postage	11,000	VARIABLE	16,365	11,635	VISIT VOLUME
Professional fees	28,000	VARIABLE	16,800	11,200	1.4 OCCUATIONAL 1.0-GENERAL MEDICINE
Rent	78,500	FIXED	39,250	39,250	EQUAL SPLIT
Repairs	3,500	FIXED	1,750	1,750	EQUAL SPLIT
Telephone	11,000	FIXED	5,500	5,500	EQUAL SPLIT
Utilities	19,200	FIXED	9,600	9,600	EQUAL SPLIT
Depreciation	73,000	FIXED	36,500	36,500	EQUAL SPLIT
Bad debt expenses	10,400	VARIABLE	5,149	5,251	GROSS REVENUE
Total expenses	2,072,980		1,042,195	1,030,785
Income (loss) before taxes	152,252		59,405	92,847
Taxes	60,901	VARIABLE	23,762	37,139	BASED ON INCOME
Income (loss) after taxes	91,351		35,643	55,708
PROFIT MARGIN			3.20%	5.00%
NOTE:
Budget parameters	Alpha	Beta	Total
Visits, budgeted	7,500	5,100	12,600
Average revenue per visit ($) with no increased basic visit fee	160	240

The table above summarizes all the available information. It should be noted that as the health care system increasingly continues to adopt and use a value-based model where the pay-per-performance schemes are used to reimburse both health care providers and physicians, the above strategy would not work (Scott et al., 2018). Instead, management would have to focus on minimizing operating costs and maximize desired metrics if they are to take advantage of the different financial incentives. 

Part 3: Monthly Cash Budget 

Monthly cash budgets are an essential tool for using information about an organization’s monthly expenses to perform any short-term financial planning with a focus on meeting the company’s cash needs. For instance, the cash budget can help a health care facility accurately plan and budget for future activities like securing funding to fulfil the organization’s obligations to its employee benefit programs like professional training. Furthermore, the monthly cash budgets provide shareholders and management adequate information about the organization’s cash flow as it reflects its financial health, which is essential when making investment decisions ( Süer, 2020) . Below is a simple chart that uses aging analysis to estimate timelines for revenues per source. 

Table 3 . Estimated aging analysis 

	30 OR LESS	31-60	61-90	91-120	121-150
ITEMS						TOTAL
MEDICARE	206,766.45	87,065.80	1,240,598.70	1,654,131.60	206,766.45	4,135,329.00
MEDICAID		79,890.54	79,890.54	79,890.54	79,890.54	3,195,062.20
COMMERCIAL	53,845.75	53,845.75	53,845.75	21,538.30	32,307.45	215,383
PRIVATE	41,787.60	41,787.60	41,787.60	13,929.20		139,292
SELF-PAY	58,176.40	43,632.30	29,088.20		14,544.10	145,441.00
VETERANS (VA)	24,323	14,593.80	9,729.20	43,781.40	4,864.60	97,292
	384,899.20	320,815.79	1,454,939.99	1,813,271.04	338,373.14	7,927,799.20

If budget, especially monthly cash budgets are to be used effectively, operating cash flow and cash budgets should be combined. Unfortunately, accounts receivable become difficult to collect as time increases. Furthermore, the delays impact outstanding debts, which not only increase in interest (when applicable), but also raises doubt on whether the organization can repay them in the near future ( Kuznetsova, 2019) . In the case above, age analysis is an important tool that shareholders can use to determine the ROI. It also allows the management to adequately plan for months where the predicted revenues drop. 

Part 4: Webster Hospital – Long-term Debt Financial Analysis 

A bond rating is an essential metric that quantifies an entity’s credit quality. Not only does the bond rating evaluate the issuer’s financial strength, but also assures the buyer that the issuer will pay the principal and interest in the specified time. As a result, investors use the bond rating to decide their desired interest rates, pricing, and appetite for investing in a particular bond (Campbell et al., 2016). Investment grade bonds are grades AAA and are often tied to governments through agencies like the US Treasury and corporations. 

Lower grade bonds rated BBB are tied to organizations without positive outlooks or futures. Webster’s bond rating is an example of a BBB rating for the following reasons. First, as of December 2017, its day’s cash on hand was 114. Secondly, its cash to debt ratio was 63.2. A deeper look, however, reveals that the hospital’s bond rating is closer to AA than BBB for the following two reasons. First, its accounts receivable is low. Secondly, its day’s current liability is 26.06, which clearly makes it an AA rating. 

Other data provided show that Webster can safely borrow $10 million to give a total debt load of $40 million, which would lower its bond rating to BBB. Should the health care provider continue implementing its construction project, the costs will exceed the funds set aside in the organization’s operational expenses. Therefore, it is infeasible to proceed with the construction plan as Webster will not be able to safely handle its debt. it should be noted that the analysis above was conducted using the available information. There are other extraneous factors involved that would have to be considered. Without access to further information, any analytical discussion on the subject matter will rely on reasonable assumptions. Furthermore, such a discussion is beyond the scope of this paper. 

Part 5: Surgery for Middleboro 

From the five-year schedule provided, the total return on the investment will be $290,000. The internal rate of return for Middleboro will amount to 3.06%. As a result, I would not advise Middleboro to continue with the investment as it is not favorable. The table below summarizes the yearly calculations for the cash flow as evidence. 

Table 4 . Fiscal implications of new ambulatory surgery service 

Year	Cashflow ($)
0	-450,000
1	20,000
2	40,000
3	60,000
4	100,000
5	290,000

Part 6: Hospital Discounts 

Such a change has numerous implications that hinder the making of an optimal decision. On the one hand, if the hospital fails to consider giving its employees the discount, they risk losing them, their families, and potentially their social networks as customers. As a result, the hospital could stand to lose an indeterminate amount of revenue. On the other hand, if the hospital accepts the new demand, they stand to increase their revenues from their newly acquired customers. The extra revenue would add more financial resources that could be used to service current debts or increase profit margins. Unfortunately, such a decision comes with its drawbacks. 

For instance, if the hospitals use the prospective payment system, the payments for stays would be predetermined and set for each discharge. Therefore, the cost for health care for non-employee patients will increase to account for the difference. If the non-employee patients notice the increased cost or know of the reason, they would feel taken advantage of and revert to other affordable health care providers. MCH and WH would then lose more revenue than before. Furthermore, if MCH and WH accept the demand from the few key employees, they open themselves up for further demands from other employee groups that want similar or more privileges and using favoritism as their key argument. 

The decision, therefore, lies in deciding what the hospital can afford to lose: their employees as customers who will inevitably go to their competitors or accept the demands, considering the drawbacks outlined above. Once the hospital’s executives decide the acceptable losses, they can adequately give a response to the coalition of key area employees. 

Part 7: Medicaid Expansion 

Due to the Affordable Care Act, groups that were left behind without access to quality health care like those who live above the federal poverty level could afford medical coverage. Health care providers have also benefited from the increased revenues. If a state’s legislature refuses to fund Medicaid expansions, Webster will have no choice but to lower its prices. Eventually, the lack of revenue will result in the hospital’s closure due to the lack of funds to support continued operations. 

Part 8: New Primary Care Practices in Jasper 

Opening a new primary care practice will be challenging for MCH. Though the information from tables 6.7 and 6.8 is incomplete, it is clear that the following would be required before opening the new practice. First, MCH would have to rent a facility in the first few years of operation. The decision on where to rent should consider the availability of new space to purchase in the future. As a result, the relocation would not be difficult and costly. Secondly, MCH will have to spend a lot of financial resources in recruiting the best staff, especially physicians. It would be advisable if MCH pays above market prices to entice and attract skilled and highly qualified staff. Lastly, MCH would have to invest significantly in their medical equipment, office and medical supplies, ACA and HIPAA compliant information technology systems, communication and networking systems, licenses, and permits. 

Conclusion 

In conclusion, operating an organization dedicated to providing health care services requires rigorous budgeting and execution if it is to be profitable. Furthermore, the facility’s leaders and managers would not only have to be familiar with the relevant medical knowledge but also financial planning skills. As a result, budgets are the first tool to use to plan and evaluate the hospital’s performance. This paper has reviewed different hospital operations from a financial perspective to provide deep insights into the role budgets play in determining the financial success of a health care organization. 

References 

Berenson, R. A., & Goodson, J. D. (2016). Finding value in unexpected places — fixing the Medicare physician fee schedule. The New England Journal of Medicine , 374(14), 1306- 1309. 

Campbell, T. C., Chichernea, D. C., & Petkevich, A. (2016). Dissecting the bond profitability premium.  Journal of Financial Markets ,  27 , 102-131. 

Kuznetsova, O. N. (2019). Accounting and Control of Doubtful Debts Reserves.  Finansovyj žhurnal—Financial Journal , (4), 88-101. 

Pham, L. T. M., Van Vo, L., Le, H. T. T., & Le, D. V. (2018). Asset liquidity and firm innovation.  International Review of Financial Analysis ,  58 , 225-234. 

Scott, A., Liu, M., & Yong, J. (2018). Financial incentives to encourage value-based health care.  Medical Care Research and Review ,  75 (1), 3-32. 

Süer, S. (2020). Essential Financial Management Skills for Tourism Enterprises: An Application Case of a Tourism Enterprise in Izmir. In  Industrial and Managerial Solutions for Tourism Enterprises  (pp. 147-164). IGI Global.