FINANCIAL MANAGEMENT OF HEALTHCARE ORGANIZATION.

The first part is based on question 19 from page 549 in your textbook.

The second part is based on question 11 on page 573 in your textbook.

ADAPTED FROM PROBLEM 19 ON PAGE 549 OF TEXT:

THE GIVENS

  • THE ORIGINAL BUDGET NUMBERS
    • HMO would have 100,000 members.
    • 1 in 4 of these members would use the dermatologic services per month (100,000 divided by 4 = 25,000 visits)
    • Budgeted Revenue was $360,000 per month.
    • Budgeted Expenses were $300,000 per month.
  • ACTUAL NUMBERS:
    • HMO members increased by 5% to a total of 105,000.
    • 1 in 3 of these members used the dermatologic services per month (105,000 divided by 3 = 35,000 visits).
    • Actual Revenue was $550,000 per month.
    • Actual Expenses were $370,000 per month.
 BUDGETEDACTUALVARIANCE
HMO MEMBERS100,000105,0005,000
# of VISITS per month25,00035,00010,000
REVENUES per month$360,000$550,000$190,000
EXPENSES per month$300,000$370,000$70,000
NET INCOME per Month$60,000$180,000$120,000

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