Running Head: Financial Management Plan

Financial Management Plan 9

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...

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 /

= 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…