Using the following information ... to forecast theincremental expected Profit or Loss from the newclinic.
Generic Hospital is contemplating the opening of a clinic in anunderserved rural community. The marketing people project 5,000office visits in year one with an average charge of $100 per clinicvisit. The consensus is that half of the visits will be Medicarepatients with an average payment of $50 per visit. Thirty percent(30%) of the visits are expected to be from patients insured withBC with the expectation for payment set at 80% of the averagecharge. Another 15% of the patients will have some form of Medicaidcoverage with an expected payment of $20 per visit. The remainingpatients are expected to be bad debt and charity care with nopayment. The expenses consist of $120,000 for salary and benefits.This covers one nurse practitioner and one all purpose assistant.The office lease, insurance, and other fixed costs are projected tobe $60,000 per year. The hospital would borrow $20,000 (Debt) fromthe Bank to buy used Equipment to outfit the office. The intereston the loan would be $1,500 in year one. The equipment to outfitthe space cost $20,000 and has an expected useful life of 5 years.The variable cost for such items as supplies, forms, and postage isestimated at $10.00 per visit. Assuming no allocation of anycorporate overhead, compute the forecasted year 1 profit orloss.
(do not to confuse Balance Sheet items with those needed toprepare a forecasted P&L)
