Monthly cash budget and cash flow for a medical center
Discuss about the Organisation Management in Health Care for Cash Income.
|
Particulars |
January |
February |
March |
|
Cash Income |
|||
|
Non-bulk-billed patients |
$ 22,200.00 |
$ 23,700.00 |
$ 26,400.00 |
|
Bulk-billed patients |
$ 24,000.00 |
$ 31,200.00 |
$ 28,800.00 |
|
Non-Medicare patients |
$ 16,500.00 |
$ 15,000.00 |
$ 19,500.00 |
|
Total Cash Income |
$ 62,700.00 |
$ 69,900.00 |
$ 74,700.00 |
|
Cash outgoing |
|||
|
Doctors |
$ 12,000.00 |
$ 12,000.00 |
$ 12,000.00 |
|
Electricity bill |
$ – |
$ 2,500.00 |
$ – |
|
Car lease |
$ 10,000.00 |
$ 10,000.00 |
$ 10,000.00 |
|
Insurance |
$ 5,000.00 |
$ – |
$ – |
|
Other expense |
$ 100.00 |
$ 100.00 |
$ 100.00 |
|
phone bill |
$ 1,500.00 |
$ – |
$ – |
|
Motor vehicle running cost |
$ 1,000.00 |
$ 1,000.00 |
$ 1,000.00 |
|
Cleaning and cost centre |
$ 500.00 |
$ 500.00 |
$ 500.00 |
|
Mobile plans |
$ 300.00 |
$ 300.00 |
$ 300.00 |
|
Mortgage repayments |
$ 3,000.00 |
$ 3,000.00 |
$ 3,000.00 |
|
Receptionists |
$ 6,000.00 |
$ 6,000.00 |
$ 6,000.00 |
|
New medical and office equipment |
$ – |
$ 85,000.00 |
$ – |
|
Total Cash outgoing |
$ 39,400.00 |
$ 120,400.00 |
$ 32,900.00 |
|
Monthly Cash Balance |
$ 8,500.00 |
$ 31,800.00 |
$ (18,700.00) |
|
Closing balance |
$ 31,800.00 |
$ (18,700.00) |
$ 23,100.00 |
The above calculation relevant indicates the monthly case budget of the Medical Centre, which could help in making adequate decision for curbing the negative cash flow for the period of February. From the evaluation, it could be identified that only $27,200 will be needed for the purchasing of a new equipment, as the month of February has negative balance of -$18,700. Therefore, the loan of $27,200 will help in securing the equipment purchase and allow the Medical Centre to maintain $8,500 as the monthly cash balance for the period.
|
Particulars |
January |
February |
March |
|
Cash Income |
|||
|
Non-bulk-billed patients |
$ 12,000.00 |
$ 15,600.00 |
$ 14,400.00 |
|
Bulk-billed patients |
$ 24,000.00 |
$ 31,200.00 |
$ 28,800.00 |
|
Non-Medicare patients |
$ 16,500.00 |
$ 15,000.00 |
$ 19,500.00 |
|
Total Cash Income |
$ 52,500.00 |
$ 61,800.00 |
$ 62,700.00 |
|
Cash outgoing |
|||
|
Doctors |
$ 12,000.00 |
$ 12,000.00 |
$ 12,000.00 |
|
Electricity bill |
$ – |
$ 2,500.00 |
$ – |
|
Car lease |
$ 10,000.00 |
$ 10,000.00 |
$ 10,000.00 |
|
Insurance |
$ 5,000.00 |
$ – |
$ – |
|
Other expense |
$ 100.00 |
$ 100.00 |
$ 100.00 |
|
phone bill |
$ 1,500.00 |
$ – |
$ – |
|
Motor vehicle running cost |
$ 1,000.00 |
$ 1,000.00 |
$ 1,000.00 |
|
Cleaning and cost centre |
$ 500.00 |
$ 500.00 |
$ 500.00 |
|
Mobile plans |
$ 300.00 |
$ 300.00 |
$ 300.00 |
|
Mortgage repayments |
$ 3,000.00 |
$ 3,000.00 |
$ 3,000.00 |
|
Receptionists |
$ 6,000.00 |
$ 6,000.00 |
$ 6,000.00 |
|
New medical and office equipment |
$ – |
$ 85,000.00 |
$ – |
|
Total Cash outgoing |
$ 39,400.00 |
$ 120,400.00 |
$ 32,900.00 |
|
Monthly Cash Balance |
$ 8,500.00 |
$ 21,600.00 |
$ (37,000.00) |
|
Closing balance |
$ 21,600.00 |
$ (37,000.00) |
$ (7,200.00) |
The relevant changes in demand and pricing of the Medical centre has mainly increased the loan amount to $45,500, as the Medical Centre is not able to accumulate high end revenue from operations. The Opening of new centre in the area has increased competitiveness and forced the Medical Centre to cut down on its prices for their services. This has mainly increased the cash outflow and closing balance to a new amount of -$37,000, where $8,500 is needed for the as the closing balance for the Medical Centre. These restrictions have mainly increased the loan amount to $45,500, which is needed by the Medical Centre for purchasing the intended equipment (Baal, Meltzer and Brouwer 2016).v
The calculation relevantly represents the overall cash flow of the Medial Centre for the period of three months, where adequate changes in the operations needs to be conducted by the management to continue its operations. Under normal circumstances the Medical centre will require a loan amount of $27,200 for the purchase of a new equipment. In addition, without the loan amount the purchase of the new equipment will not commence for the Medical Centre. The situation under adverse condition will mainly increase the loan amount from $27,200 $45,500. The adverse situation includes the opening of a new GP practice centre close of the Medical Centre, which is directly affecting its sales. Moreover, to increase competitiveness the Medical Centre is reducing its prices, which is directly affecting the sales figures of the Centre. Therefore, a minimum loan amount of $45,500 is needed, which could help in purchasing the equipment and supporting closing balance of $8,500 (Denny and Prendiville 2015).
|
Budget |
Units |
Charges |
Amount |
Amount |
|
Procedure 1 |
40 |
4000 |
$ 160,000.00 |
|
|
Procedure 2 |
40 |
5000 |
$ 200,000.00 |
|
|
Revenue |
$ 360,000.00 |
|||
|
Expenses |
||||
|
Surgical Supplies |
||||
|
Procedure 1 |
40 |
800 |
$ 32,000.00 |
|
|
Procedure 2 |
40 |
3500 |
$ 140,000.00 |
$ 172,000.00 |
|
Doctors’ Fees |
$ – |
|||
|
Salaries |
$ 20,500.00 |
|||
|
Occupancy costs |
$ 18,200.00 |
|||
|
Communication |
$ 1,200.00 |
|||
|
Total Expenses |
$ 211,900.00 |
|||
|
Net Cash Flow |
$ 148,100.00 |
The rising expenses and reduced procedures is the main reason behind the difference between the Actual and budgeted figures. The anticipated expenses have relatively increased during June, while the anticipated procedures have declined. The anticipation of cost is also the main reason behind the difference in actual and budgeted profits. Moreover, expenses such as occupancy cost, communication, and equipment have relatively increased during the period of June. Therefore, it could be detected that the rising expenses and lower procedures conducted by the centre is the main reason behind the astonishing difference in profit between actual and budgeted values (Dunk and Carville 2016).
|
Alternative Budget |
Units |
Charges |
Amount |
Amount |
|
Procedure 1 |
81 |
4000 |
$ 324,000.00 |
|
|
Procedure 2 |
47 |
5000 |
$ 235,000.00 |
|
|
Revenue |
$ 559,000.00 |
|||
|
Expenses |
||||
|
Surgical Supplies |
||||
|
Procedure 1 |
81 |
1000 |
$ 81,000.00 |
|
|
Procedure 2 |
47 |
3600 |
$ 169,200.00 |
$ 250,200.00 |
|
Doctors’ Fees |
$ – |
|||
|
Salaries |
$ 20,500.00 |
|||
|
Occupancy costs |
$ 24,000.00 |
|||
|
Communication |
$ 4,200.00 |
|||
|
Equipment |
$ 240,000 |
|||
|
Total Expenses |
$ 538,900.00 |
|||
|
Net Cash Flow |
$ 20,100.00 |
For generating the overall profit of 20,000 changes in number of procedures needs to be conducted by the centre. Therefore, procedure 1 needs to conduct 81 procedures, while procedure 2 needs to conduct 47, which will eventually increase the profit and provide a net positive cash flow of $20,000. The management needs to alter the pricing structure for procedure 2, where maximum of the expenses is conducted on supplies. Hence, increasing the charges could help the centre improve its profitability. In addition, focusing on only procedure 1 could eventually allow the centre to generate the highest revenue due to low charges applied to the procedure (Leong 2017).
Reference and Bibliography:
Ahadiat, N., 2017. Public Attitudes Toward Healthcare Fraud: Reasons to Commit Fraud and Common Schemes.
Baal, P., Meltzer, D. and Brouwer, W., 2016. Future costs, fixed healthcare budgets, and the decision rules of cost?effectiveness analysis. Health economics, 25(2), pp.237-248.
Denny, L. and Prendiville, W., 2015. Cancer of the cervix: Early detection and cost-effective solutions. International Journal of Gynecology & Obstetrics, 131, pp.S28-S32.
Dos Santos, R.F., Alves, F., Urbich, M., Villa, G. and Farsky, P.S., 2017. Budget Impact Analysis Of Adopting Evolocumab In The Brazilian Private Healthcare System For Patients With Uncontrolled LDL-C And High Cardiovascular Risk. Heart failure, 2(1.9), pp.0-5.
Dunk, A.M. and Carville, K., 2016. The international clinical practice guideline for prevention and treatment of pressure ulcers/injuries. Journal of advanced nursing, 72(2), pp.243-244.
Farré, N., Vela, E., Clèries, M., Bustins, M., Cainzos?Achirica, M., Enjuanes, C., Moliner, P., Ruiz, S., Verdú?Rotellar, J.M. and Comín?Colet, J., 2016. Medical resource use and expenditure in patients with chronic heart failure: a population?based analysis of 88 195 patients. European journal of heart failure, 18(9), pp.1132-1140.
Leong, T.D., 2017. The cost-effectiveness of influenza vaccination of pregnant woman in the South African public healthcare setting (Doctoral dissertation, University of Pretoria).
Trautmann, S., Rehm, J. and Wittchen, H.U., 2016. The economic costs of mental disorders: Do our societies react appropriately to the burden of mental disorders?. EMBO reports, p.e201642951.
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