Carroll Clinic: Operating Budget

Carroll Clinic: Operating Budget
I. Volume
A.FFS 36,000 visits
B. Capitated Lives 30,000 members
Number of member-months 360,000
Expected Utilization per member-month 0.15
Number of vists 54,000
C. Total expected vists 90,000II. Revenues Assumptions
A. FFS 25 per vists x 36,000 actual visits= $900,000
B. Capitated lives $3 PMPM x 360,000 actual member-months= $1,080,000
C. Total actual revenues $1,980,000III. Costs Assumptions
A. Variable Costs
Labor $1,200,000 (48,000 hours at $25/hour)
Supplies 150,000 (100,000 units at $1.50/unit)
Total Variable costs $1,350,000
Variable cost per vist $15 ($1,350,000/ 90,000)B. fixed costs
Overhead, plant, and equipment $500,000
C. Total Actual Costs $1,850,000IV. Profit and Loss statement
FFS $900,000
Capitated 1,080,000
Total $1,980,000Costs
FFS $540,000
Capitated $810,000
Total $1,350,000Contribution margin $630,000
Fixed costs 500,00
Projected profit $130,000

8.4 Gapenski Healthcare Finance 280-281
A. Construct Carroll's flexible budget for 2011
B What are the profit variance, revenue variance and cost variance
C. Consider the revenue variance. What is the component volume variance? the price variance?
D. Bread down the cost variance into volume and management components.
E. Bread down the management variance into labor, supplies and fixed costs variance?
F. interpret your results. In particular, focus on the differences between the variance analysis here and the Carroll Clinic illustration presented in the chapter

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