Financial Forecasting Memo
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Apply the principles of economics as they relate to nursing and healthcare.
Student Success Criteria
View the grading rubric for this deliverable by selecting the “This item is graded with a rubric” link, which is located in the Details & Information pane.
Scenario
The nurse manager in orthopedics has asked for your assistance with a finance project. She is being asked to estimate revenue for the next fiscal year based on the projected number of hip replacements increasing from 300 this year to 340 next year.
The nurse manager must also factor in the expected changes in sources of revenue by payer. It is estimated that the hospital will lose some contracted insurers due to local competition, and see an increase in Medicare and Medicaid patients due to area demographics and economic conditions. She has provided you with the numbers from this year’s budget and the projections on numbers and payment amounts for next year.
Instructions
Prepare a financial forecasting memo to your nurse manager that:
Part One – Financial Forecasting Model
o Contains a completed financial forecasting model by downloading:
NUR4327-Deliverable03-Financial-Forecasting-Memo-Template_Revised.xlsx
o Calculate the income projected from each payer source and total for the year to compare next year’s revenue to this year’s revenue.
o Provide your nurse manager with your estimates on the increase/ decrease in revenue for next year’s budgeting.
Part Two – Financial Forecasting Memo
o Explains how the change in payer mix will impact the overall projected revenue of the unit.
o Describes the financial impact of a changing payer mix.
o Lists recommendations for the manager to consider in expenses, so that the budget will balance as neutral.
o Provides stated ideas with professional language and attribution for credible sources with correct APA citation, spelling, and grammar in the memo.
Prior Year Revenue Budget 300 patients
Source of Payment Percent Number Payment Income
Medicare 34% 102 22,436 2,288,472
Medicaid 11% 33 18,400 607,200
Contracted Insurance 45% 135 29,540 3,987,900
Non-contracted Insurance 3% 9 32,350 291,150
ACA Plans 5% 15 16,400 246,000
Self-pay 2% 6 17,400 104,400
Total 100% 300 7,525,122
Next Year Revenue Projections 340 patients
Source of Payment Percent Number Payment Income
Medicare 42% 143 22,463
Medicaid 18% 61 18,400
Contracted Insurance 18% 61 29,549
Non-contracted Insurance 1% 3 32,350
ACA Plans 18% 61 16,400
Self-pay 3% 11 16,400
Total 100% 340
To be cut from the budget to serve same number of patients (Will this result in a financial loss or gain?)
Memorandum
Student Name
Rasmussen University
COURSE#: NUR4327CBE
Mindy Fadell
Date:
*Remember not to copy or paste from references or use student websites with examples of their work for the creation of this Deliverable
Memorandum
To: who will you send it to- out their name and title here
From: your name
Date:
Re: Financial Forecast or whatever title you want here
First paragraph – Explains how the change in payer mix will impact the overall projected revenue of the unit. This means you will want to explain
• What type of insurance/payment is increasing
• What kind is decreasing?
• Is there a loss of money or a gain of money?
Second paragraph- Describes the financial impact of a changing payer mix.
• Since the components of your payer mix has changed, how does that influence your budget?
• If the payment for each payor the same or different? If different, then who reimburses more or less?
• Did the number of patients increase? If so, did that help increase your revenue (the amount paid to you) ? Why or why not?
• Reference support here would be helpful.