Organisational Management in Health Care Assessment task: Financial management-
Question 1 -
You are asked to do a cash flow budget for 12 months for a new baby health clinic. The budget must be done on a month-by-month basis and the clinic will open on 1 January 2017. As the clinic will open for the first time in January 2017, there is no historical accounting data. The clinic is allowed to treat both private fee paying and public patients. The government has agreed to pay a fixed fee for each consultation provided to public patients. The clinic will need to rent the premises from which it will operate.
a. Outline the steps you would take and the type of questions you would need to ask to develop the cash flow budget.
b. Identify important assumptions you would need to make in order to develop this budget.
c. Highlight the main areas of concern you would have about the accuracy of your forecasts - for example would you be more confident about your revenue or expense forecasts?
Question 2 -
It is now May and you have been asked to do a budget for The Flu Shot clinic as the flu season will soon begin. The clinic will operate for the months of June and July. As the hospital has no spare space it will rent a room in a nearby shopping centre for the clinic. The clinic will also employ a nurse to give the injections and a receptionist to assist with arranging interviews. Vaccines are expected to cost $10 per patient. In addition, the clinic will give each patient either regular or glow-in-the-dark band aids. A regular band aid is budgeted at $1, while a glow-in-the-dark band aid is budgeted at $2. Children always request glow-in-the-dark band aids. It is anticipated that the clinic will receive $40 for each child and $30 for each adult. During last year's flu season, the clinic saw 400 adults and 700 children each month and operated for 2 months.
The nurse is paid $5 per child and $3 per adult and the receptionist is paid $500 per month. Rent and utilities are $300 per month.
a. Using this information do a budget for the clinic for June and July.
b. The actual results for this clinic are shown below. Management want to know why the budgeted result and actual results for each month are different. Do a budget variance analysis for each month to identify what caused the actual and budgeted amounts to be different. You are told that in June the clinic actually saw 500 adults and 900 children, and in July the clinic saw 200 adults and 500 children.
c. Write a brief report to your manager summarising your findings and give recommendations for how to prepare the budget for next year.
Actual Results:
|
|
June
|
July
|
|
Revenue
|
51,000
|
26,000
|
|
Costs
|
|
|
|
Vaccines
|
16,800
|
8,400
|
|
Band aids
|
2,750
|
1,450
|
|
Rent
|
400
|
400
|
|
Receptionist
|
500
|
600
|
|
Nurse
|
6,000
|
3,100
|
|
Total cost
|
26,450
|
13,950
|
|
Profit
|
24,550
|
12,050
|