Health Care Budget
Based upon a review of the Patton-Fuller Community Hospital 2009 operating budget variances, the long and short-term plans of the various hospital departments and an in-depth analysis of general economic conditions, the following assumptions have been concluded and will be used in the preparation of the 2010 operating budget projections.
In general, Patton-Fuller Community Hospital should anticipate a 3% total “deflation rate” for prices in 2009; because of the weak economy, which is expected to continue into 2010. Net patient revenue will continue to increase, but at a decreased rate (3%) with little or no increase in patient volume, because of new managed care contracts. Other revenue is projected to increase by 15% based on marketing's plan to increase donations by 15%. Expenses salaries and benefits salaries will hold to a 1% total increase in cost due to price “deflation” nation-wide with no increase in labor hours (due to no increase in patient volume). This assumption could be affected by a board decision either to raise nursing wages by $1 per hour or to increase the nursing hour ratio.
The increase in assets in the year 2009 was 7%, which is caused by an increase in accounts receivable by 56%, inventories by 100% and increase in property plant and equipment by 41%. The hospital may have provided more credit to customers or consumers to raise the revenues and more investment in fixed assets and inventories to enhance the revenues. The Patton-Fuller Hospital organization seems successful, but not completely. The organization lacks in certain areas, as they were only able to raise their revenues by 10%. The increase in fixed assets and current assets have been financed by debt financing, which is evident from an increase in accounts payable and accrued expenses by 120% and net long term debt has increased by 114% as compared to the previous year. The decrease...