Question

CHAPTER 8: FINANCIAL PLANNING & BUDGETING
Homework 3.4, Chapter8
Chelsea Clinic projected the following budget information for 2021:
Total FFS Visits Volume	70,000	visits
Payer Mix:
Blue Cross	60%
Highmark	40%
Reimbursement Rates:
Blue Cross	$45	per visit
Highmark	$50	per visit
Variable Costs
Resource Inputs:
Labor	0.7	total hours
Supplies	1.3	total units
Resource Input Prices:
Labor	$22.00	per hour
Supplies	$1.25	per unit
Fixed Costs	$800,000
Using Exhibit 8.3 as a guide (excluding the capitated numbers since payers in this homework problem are all FFS) construct Chelsea Clinic's operating budget for 2021, including projections for volume, revenues, costs, and a P&L statement

Answer 1

Requirement:- Chelsea clinic's operating budget - Year 2021

(A) Volume:

Blue Cross FFS (70,000 * 60%)	42,000 Visits
High Mark (70,000 * 40%)	28,000 Visits
Total Budgeted Visits	70,000 Visitis

(B) Revenues:

Blue Cross FFS (42,000 * $45	$1,890,000
High Mark (28,000 * $50)	$1,400,000
Total Budgeted Revenues	$3,290,000

(C) Costs:

Variable Costs:
Labor (0.7* $22)	$15.4
Supplies (1.3 * $1.25)	$1.625
Total Variable Costs	$17.025
Variable Cost per Visit (17.025 / 70,000)	0.0002
Fixed Costs:	$800,000
Total Budgeted Costs	$800,017.025

(D) Profit and Loss Statement

Revenues:
FFS	$3,290,000
Total Revenue	$3,290,000
Costs:
Variable	$17.025
Contribution margin	$,289,982.975
Fixed Costs	$800,000
Budgeted Profit	$2,489,982.975

There is some error in Resource input for Labor and Supplies. Please comment me correct values of Labor and Supplies. I will definitely help you.

Thank you!!