Financial Management Plan
Table of Contents
Purpose 3
Balance Sheet and Statement of Operations 4
Operating Indicators 5
Identification of Set Charges 5
Working Capital 6
Inventory 8
Planning 9
Budgeting 18
Summary 19
References 20
Purpose
The main purpose of healthcare financial management is the provision of accounting and finance information that aids healthcare managers in achieving the purpose of the organization. Significantly, healthcare financial management aids in the supervision and monitoring of numerous measurements. FMP is pivotal in guaranteeing coordination amongst the various functional and departmental areas within SLC through the allocation of funds for different activities concerning the financial objectives, policies, and procedures. In the past year, ASU Hospital acquired a local small rehabilitation center and renamed be Sentinel Life Center, which is a non-profit organization. As the director of this center, this report provides a limited financial management plan to show the current financial position of the center. Based on the plan, it is ascertained that the charge per modality that is necessary to recover the total cost from SLC is $11.11. Secondly, based on the 2 percent in a ten net 20 provision, about the Podiatry Whirlpool purchased, as the director, I would prefer the second option of paying on day 30 because the annual interest rate is lower at 37.23% compared to the option of paying on day 11, which has an excessive annual rate of 745%.
Furthermore, concerning the repayment of the loan used to purchase the beds, it is expected that the interest paid on loan at the end of October will be $642.91. Concerning inventory, the economic order quantity for Item X as the single most used item is 582 units. Finally, taking into consideration that there is a projection of a 6.1 increase in the usage of physical therapies, the projected volumes for pediatric, orthopedic, and vestibular physical therapies are 1,325, 795, and 530, respectively.
Balance Sheet and Statement of Operations
The balance sheet displays the financial status of the organization at a precise time, normally towards the end of an accounting period. The financial statement provides a presentation of the firms assets, liabilities, and net assets and its relationships (Nowicki, 2018). The following is a balance sheet that contains two years, the previous year, and the current year of Sentinel Life Center.
Last Year
Current Year
ASSETS
Current Assets
Cash
10,000
15,000
Temporary Investments
450
600
Receivables, net
5,400
7,200
Inventory
9,000
10,100
Prepaid Expanses
1,200
1,600
Total current assets
26,050
34,500
Non-Current Assets
Land, Plant, and equipment
45,000
53,000
Accumulated depreciation
4,500
5,300
Plant and equipment, net
40,500
47,700
Long-term investments
10,000
44,530
Total noncurrent assets
50,500
92,230
Total assets
76,550
126,730
LIABILITIES AND NET ASSETS
Current Liabilities
Accounts payable
6,700
7,800
Notes payable
4,300
6,200
Accrued expenses payable
3,700
3,900
Deferred revenues
5,400
6,200
Estimated third-party adjustments
500
760
Current portion of long-term debt
7,400
8,300
Total current liabilities
28,000
33,160
Non-current liabilities
Long-term debt, net of current portion
14,000
15,600
Total liabilities
42,000
48,760
NET ASSETS
Unrestricted net assets
18,600
32,900
temporarily restricted net assets
10,450
20,570
Permanently restricted net assets
5,500
24,500
Total net assets
34,550
77,970
Total liabilities and net assets
76,550
126,730
Operating Indicators
The average length of stay (ALOS) is derived through the division of the number of inpatient days by the number of admissions. In SLC, the number of admissions is 2,500, whereas the average number of patient days is 22, and the discharges are 5.
Therefore, ALOS is 22/5
= 4.4
Identification of Set Charges
Several influences have an impact on the decision for setting charges. Therefore, the initial charge, before comparisons to other facilities and prior discounts, ought to mirror the true cost of product or service providers for the healthcare organization. One of the methods is the hourly rate method, which is employed in the departments that charge per hour for the services provided (Nowicki, 2018). The following is the charge per modality necessary to recover the total cost from SLC:
The total projected cost per year of physical therapy = $1,800,000
Total projected hours of use per year = 54,000
Modality = 20 minutes
Charge per modality = Total projected cost / total projected modality in hours
In this case, hours multiplied by 3,...
…by the various department managers.
i. Routine visitation times to be regulated to guarantee sufficient rest and therapy for patients
ii. Specialty departments within the center may have more detailed visitation rules based on the conditions and needs of the patient.
iii. Visitors to the rehabilitation center must adhere to all rules of the facility
iv. Evade hospital visitation if you are sick
v. Visitors are heartened to ask questions. Nonetheless, owing to issues about privacy and confidentiality aspects, it is imperative for the patients first to grant permission before the release of personal health information.
Budgeting
Calculate the projected volumes for three most used physical therapies at SLC, given that the finance committee projects a 6.1 increase in the use of these physical therapies
Within SLC, the most used physical therapies in the current year include:
2,500 admissions
50 percent were Pediatric Physical Therapy (which takes 10 minutes)
30 percent were Orthopedic Physical Therapy (which takes 15 minutes)
20 percent were Vestibular Physical Therapy (which takes 20 minutes)
There is an expecte 6.1 increase in the use of these physical therapies. Therefore admissions should be 2,500 * 1.06 = 2,650
Procedure Admissions Volume
Pediatric Physical Therapy 2,650 * 0.5 1,325
Orthopedic Physical Therapy 2,650 * 0.3 795
Vestibular Physical Therapy 2,650 * 0.2 530
Therefore, the projected volumes for pediatric, orthopedic, and vestibular physical therapies are 1,325, 795, and 530, respectively.
Summary
In summary, financial management planning plays a significant role in the general success of SLC. First, the FMP facilitates the organization with financial control through the specification of standards of performance, assessment of the performance, and comparison of such activities with the standards. Secondly, FMP is pivotal in guaranteeing coordination amongst the various functional and departmental areas within SLC through the allocation of funds for different activities about the financial objectives, policies, and procedures. Moreover, financial management planning is important for SLC as it…
