Bridgestone Behavioral Health Center: Cost-Volume-Profit (CVP) Analysis INTRODUCTION
In June of the current year Dr. Thomas Russell, Executive Director, and Susan Smyth, Accountant, at the Bridgestone Behavioral Health Center were discussing the necessity of gaining a better understanding of how to monitor the Center’s operating and financial performance. Located in Cleveland, Ohio, Bridgestone provides prevention, intervention, and treatment services for individuals with substance abuse problems. Bridgestone’s management is concerned about its financial performance after realizing a loss in the prior year although a small profit was projected. Despite management’s concern and attention of Bridgestone’s profitability troubles, the Center’s annual budget once again contains a projection for a meager profit of $6,300 (see Exhibit 1).
Thomas: According to the financial reports that you have prepared, we have been fighting to reach breakeven over the past three years. We have been able to just get past breakeven recently, but I am worried—it seems like only a slight variation in our operations could throw us into an operating loss. I’ve been actively involved in managing the Center, and I don’t understand how we avoid showing a loss!
Susan: Unfortunately, I have no oversight with respect to monitoring performance since my job is to input the financial and units of service numbers into the accounting system as they occur. I am currently working more than 40 hours a week so I am not sure what else I could do. Maybe we can hire someone like a consultant to help us? Thomas: In reality, securing some outside assistance seems to be a good option to avoid future losses. Since my training is in psychology, I don’t have the accounting background to take the task on myself. We need someone who specializes in financial management for nonprofit human service organizations. BRIDGESTONE BACKGROUND
History and Mission
Bridgestone is a comprehensive outpatient substance abuse treatment center located in the Midwest United States. Since 1985, Bridgestone has offered a continuum of outpatient services, including counseling, crisis intervention, detoxification, and methadone maintenance. The Bridgestone mission is to be a leader in healing and changing lives by providing high quality behavioral health care and rehabilitation to all individuals in need. With this mission, the Center promises to advance behavioral healthcare through the creation of innovative services and enriching the lives of patients one by one. Executive Director and Supporting Staff
Dr. Thomas Russell, Executive Director, has over 30 years of behavioral health addiction experience and holds a Masters of Social Work from Ohio University and a Ph.D. in Clinical Psychology with a specialization on Addiction Counseling from Northwestern University. He is a fellow of the American College of Addiction Examiners and is a former faculty member of the Ohio University Department of Psychology. Dr. Russell is the author of numerous papers in the field of addictions and presents frequently at major conferences.
In addition to a highly qualified Executive Director, Bridgestone has an outstanding support staff. They consistently maintain a low client-to-staff ratio with highly trained professionals who are well prepared to support patients in a large array of circumstances. The staff members at Bridgestone are like a family and are defined by their integrity and expertise. They are the key reason for the Center’s success in terms of the thousands of lives that they have changed. Patient Testimonials
Patient and family member testimonials include:
“ I wanted to say thank you for helping my daughter! I know of lots of therapists…in fact I am one. After 20 years of practice I was very frustrated sending my daughter to treatment until Bridgestone. Yes there are therapists…but your folks are THERAPISTS, with a capital T.” “ Today is my one year anniversary of sobriety, which...
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