Question

Answer the following by using the Excel sheet below:

1. Summarize the overall performance of the clinic to include:
   1. When comparing the projected performance with the actual financial performance, are the owners happy with the clinic’s financial performance?
   2. Which had a bigger impact on the actual overall financial performance of the clinic? Revenues or expenses?
   3. Which specific 2 budget items showed the biggest $$ variances? Comment on what you believe were some possible causes for these variances.
   4. Explain how you can use at % variances information?
2. What two changes to the budget process you followed would you make to improve the budget management of the clinic?
3. Provide two recommendations to the owners to try to improve the financial performance of the clinic.

4. 	Pro Forma		Actual Results
   	Year 2021		End of 2021		$ Variance	% Variance
   Revenues
   Private Insurance	$        610,000		$          552,750		$            (57,250)	-9.4%
   Medicare	$        240,000		$          257,040		$              17,040	7.1%
   Medicaid	$          30,000		$            58,950		$              28,950	96.5%
   Self-pay	$          62,500		$            32,520		$            (29,980)	-47.9%
   Total revenue	$        942,500		$          901,260		$            (41,240)	-4.4%
   Expenses
   Salaries and Benefits	$        702,000		$          707,109		$              (5,109)	-0.7%
   Medical Supplies	$        140,000		$          140,216		$                  (216)	-0.2%
   Administrative Supplies	$             8,000		$               7,526		$                    474	5.9%
   Rent and Utilities	$          52,000		$            52,620		$                  (620)	-1.2%
   Total expenses	$        902,000		$          907,471		$              (5,471)	-0.6%
   Income/Loss	$          40,500		$            (6,211)		$            (35,769)

Answer 1

			Pro Forma		Actual Results
			Year 2021		End of 2021		$ Variance	% Variance
		Revenues
		Private Insurance	$610,000		$552,750		($57,250)	-9.39%
		Medicare	$240,000		$257,040		$17,040	7.10%
		Medicaid	$30,000		$58,950		$28,950	96.50%
		Self-pay	$62,500		$32,520		($29,980)	-47.97%
		Total revenue	$942,500		$901,260		($41,240)	-4.38%
		Expenses
		Salaries and Benefits	$702,000		$707,109		$5,109	0.73%
		Medical Supplies	$140,000		$140,216		$216	0.15%
		Administrative Supplies	$8,000		$7,526		($474)	-5.93%
		Rent and Utilities	$52,000		$52,620		$620	1.19%
		Total expenses	$902,000		$907,471		$5,471	0.61%
		Income/Loss	$40,500		($6,211)		($46,711)
	a)	Owners were NOT happy with the actual performance
		Compared to projected Income of $40500, there is actual loss of $6211
	b	Revenue had a bigger impact
		Total expense is higher by $5471, but Total Revenue is lower by $41240
	c)	Biggest $$ variance
		Private Insurance	($57,250)
		Self-pay	($29,980)
	d)	Percentage Variance indicates the variance relative to the Planned
		An item may have a lower $ variance but higher % variance
		% Variance indicates action required to correct
		Self Pay and Private insurance had the highest negative Percentage Variance
		Management should predict these two revenues accurately