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Patton - Fuller Community Hospital Operating Budget 2009 (In Thousands) (Projection) 2008 Budget % Based on these 2008 assumptions: a 3% overall 2009...


I need to review the 2009 Operating Budget Projections and the assumptions following the projected numbers in the Budgets tab under Chief Financial Officers in the Patton-Fuller Community Hospital Virtual Organization attached.

Assume the 2009 projections were realized.

Use the 2010 Operating Budget Projections.

Develop a budget for Patton-Fuller Community Hospital based on the 2009 Operating Budget and the 2010 Operating Budget Assumptions.

Write a 700- to 1,050-word paper in which you do the following:

• Discuss which financial management practices are most effective in creating and monitoring an operating budget.
• Discuss which financial management practices are least effective in creating and monitoring an operating budget.

2008 Budget % Change from 2008 2009 (Projection) Based on these 2008 assumptions: a 3% overall "inflation rate" in 2009, with the cost of oil disproportionately affecting some expense items. Revenues Net Patient Revenue $418,509 7% $447,805 Patient revenue will increase with little or no increase in patient volume, due to new managed care contracts Other Revenue $2,805 15% $3,225 Marketing's plan to increase donations by 15% Total Revenues $421,314 7% $451,030 Expenses Salaries and benefits $214,129 3% $220,553 Salaries will hold to a 3% overall increase in cost, no increase in labor hours due to no increase in patient volume. Supplies $71,346 3% $73,487 Supplies cost will increase more due to the rising cost of oil and its effect on the cost of plastics and transporation Physician and professional fees $107,065 3% $110,277 contracts for fees have a built-in 3% increase Utilities $1,164 5% $1,222 Utilities cost will increase more due to the rising cost of oil. Other $1,784 3% $1,838 Depreciation & Amorization ("non-cash" expenses) $24,955 20% $29,946 Some high-cost equipment (air conditioning, telephone system, all patient beds and headwalls) will have to be replaced this year, and "depreciation" will rise sharply. Patton - Fuller Community Hospital Operating Budget 2009 (In Thousands) (Projection)
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Interest $3,597 3% $3,705 The repayment plan for any monies borrowed in 2009 will not come due until 2010. Provision for doubtful accounts $13,383 10% $14,721 The renegotiation of Managed Care plans could make collections less certain. Total Expenses $437,424 4% $455,749 Total expenses will rise 4% Operating Income ($16,110) ($4,719) Operating Income will improve, with the hosptial's loss reduced by 2/3 Non-operating Income (Loss) Investment Income $264 15% $304 The Market has been going up for years, the "bull market" should continue in 2009. Net Income ($15,846) ($4,416) The hospital's loss will be further reduced by good returns on investment income.
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Accounting-8203176.doc

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An operating budget may be defined as any estimate of the future direction in terms of overall
running of the company. The management of any company makes an operating budget to
determine...

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