Phase 4 DB

HCM410-1303B-02
September 14, 2013
Operational Budget with addition of 4 new areas

Introduction
The Krona Community Hospital, established in 1977, is a 60-bed, acute care hospital located in Banconota County. They currently offer a full range of health care services and maintain a staff of almost 100 physicians and specialists, 400 employees, as well as numerous volunteers. They are currently fully accredited by The Joint Commission.

A private, not-for profit health care chain called Nouveau Health has taken over the management of Krona Hospital. The new facility that has been proposed to the state officials for approval, will include 74 acute care beds, all of which will be private. It will also include four
Another way to look at it, is that for every dollar you spend on a quality staff, you make a dollar of revenue. According to my calculations, the increase over last year will be around 56% or somewhere in the ballpark of $23 million in revenue. Please refer to the attached exhibit.

Fixed and Variable costs
A fixed cost does not vary in total when activity levels of operations changes. Variable costs are varying in direct proportion to change in activity level of operations (Baker, 2013). When making the decisions as to how I was going to allocate the $3 million dollars to the expenses, I had to first determine which expenses would increase in direct relation to the increased level of operations, such as the additional hospital beds, be it acute level private beds, recovery unit, surgical unit, maternity unit, etc. Those kinds of increases in operations have a direct impact on expenses, which is why approximately 50% of the $3 million was spent adding payroll and benefits for new staff. The remaining budget was increased at a fixed level based on an overall increase in expenses of approximately 10% per service.

Project Inpatient and Outpatient Visits Based on Trends
In order to determine the current trends for inpatient and outpatient services, you should pull the information from credible resources. These information shows a definite decrease in the