Financial Performance
Re: 2010 Operating Budget Assumptions
Based upon a review of the 2007, 2008 and 2009 Operating Budget variances, the long and short-term plans of the various hospital departments and an in-depth analysis of general economic conditions, we have arrived at the following assumptions that will be used in the preparation of the 2010 Operating Budget projections.
In general, we anticipate a 3% overall “deflation rate” for prices in 2009 – due to the weak economy – will continue into 2010.
Revenues
Net Patient Revenue
Patient revenue will continue to increase -but at a decreased rate (3%) - with little or no increase in patient volume, due to new managed care contracts.
Other Revenue
Other revenue is projected to increase by 15% based on Marketing's plan to increase donations by 15%.
Expenses
Salaries and benefits
Salaries will hold to a 1% overall increase in cost due to price "deflation" nation-wide, with no increase in labor hours (due to no increase in patient volume). This assumption could be affected by a board decision to either raise nursing wages by $1 per hour or to increase the nursing hour ratio.
22
010 Operating Budget Assumptions
Supplies
Supplies cost will decrease 3% due to the price deflation and our current over-stock purchased last year.
Physcian and Professional Fees
Contracts for fees have a built-in 3% increase.
Utilities
Utilities cost will increase 5% due to the rising cost of oil partially offset by the efficiency of the hospital's new heating and cooling systems.
Other
No net change in the cost or volume of these items.
Depreciation & Amortization (“non-cash” expenses)
Some high-cost equipment (air conditioning, telephone system, all patient beds and headwalls) were replaced in 2009, and "depreciation" rose sharply. Depreciation will remain at this level in 2010 so no projected increase.
Interest
The repayment plan for any monies borrowed in 2009 will come due in 2010, with a sharp increase (30%) in interest cost.
Based upon a review of the 2007, 2008 and 2009 Operating Budget variances, the long and short-term plans of the various hospital departments and an in-depth analysis of general economic conditions, we have arrived at the following assumptions that will be used in the preparation of the 2010 Operating Budget projections.
In general, we anticipate a 3% overall “deflation rate” for prices in 2009 – due to the weak economy – will continue into 2010.
Revenues
Net Patient Revenue
Patient revenue will continue to increase -but at a decreased rate (3%) - with little or no increase in patient volume, due to new managed care contracts.
Other Revenue
Other revenue is projected to increase by 15% based on Marketing's plan to increase donations by 15%.
Expenses
Salaries and benefits
Salaries will hold to a 1% overall increase in cost due to price "deflation" nation-wide, with no increase in labor hours (due to no increase in patient volume). This assumption could be affected by a board decision to either raise nursing wages by $1 per hour or to increase the nursing hour ratio.
22
010 Operating Budget Assumptions
Supplies
Supplies cost will decrease 3% due to the price deflation and our current over-stock purchased last year.
Physcian and Professional Fees
Contracts for fees have a built-in 3% increase.
Utilities
Utilities cost will increase 5% due to the rising cost of oil partially offset by the efficiency of the hospital's new heating and cooling systems.
Other
No net change in the cost or volume of these items.
Depreciation & Amortization (“non-cash” expenses)
Some high-cost equipment (air conditioning, telephone system, all patient beds and headwalls) were replaced in 2009, and "depreciation" rose sharply. Depreciation will remain at this level in 2010 so no projected increase.
Interest
The repayment plan for any monies borrowed in 2009 will come due in 2010, with a sharp increase (30%) in interest cost.