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This material focuses on the various methods and choices faced by healthcare professionals along with the ramifications of the various choices using the financial statements.

Executive summary that details your project analysis and why you chose the option you do.

Excel workbook that details the budget, the lease vs buy analysis, and the project analysis.

		Budget		Actual
Number of Patients		14,800		13,200
Revenues		2,100,000		1,820,000
Variable & Fixed Expenses
Clinician Labor Expenses		620,000		500,000
Admin Labor Expenses		110,000		160,000
Employee Benefits - Clinicians		20,200		26,400
Employee Benefits - Admin		11,000		13,500
Medical Supplies		380,000		560,000
Purchased Services		280,000		320,100
Medical Fees		48,000		38,000
Utilities		16,800		14,200
Bad Debt Expense		26,000		28,000
Pension Expenses		12,000		12,000
Leases and Rentals		170,000		170,000
Insurance		34,900		34,900
Interest Expense		130,000		130,000
Depreciation & Amortization		86,000		86,000

Scenario

You are the principal owner in a Weight loss clinic that has 4 providers. Using the data points above:

Design a flexible budget

Determine favorable/unfavorable of each item in the budget

Determine the contribution margin to include the per unit cost and percentage

Determine the break-even point in revenue and number of patients

Determine the target profit in revenue and number of patients

Discuss the organizational performance as a whole

Discuss which items need to be explored for inefficiencies as well as your recommendations for change

Leveraging your understanding of the financial position of the organization, now reflect on the following points and determine if the Weight loss clinic should lease or buy a bigger space to expand to 6 clinicians.

The estimated costs are $1.2 million

You can obtain a bank loan for 100% of the purchase

The bank loan terms:

$300 k payments at the end of the next 5 years

Interest payments only for years 1-5, with interest plus the principal amount at the end of year 5

You must still pay insurance, property taxes, and maintenance regardless of the choice (fixed expense)

You do have the option to lease a space

You will leverage Present Value in this part of the process

You will need to defend your choice to lease a space or buy a new one.

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