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Communication Strategies

Financial plan and Operational Budget-Nouveau Health

Financial Plan and Operational Budget-Nouveau Health

The financial plan and operational budget for Nouveau Health for the next year are prepared in the next section. As a staff member in the finance department, the financial plan and operational budget preparation will focus on the activities undertaken to improve Nouveau Health’s financial performance. Notably, the two tools will be crucial in driving the organization toward attaining its set goals (Ho, 2018). After preparing the financial plan and operational budget, a recommendation will be made to the organization’s CEO regarding opening a new facility. In making financial plan recommendations, various factors are considered, such as professional partnerships, improvements, changes in revenue, and salary increments. Regarding the operational budget recommendation, the opening of the new facility is considered alongside the additional $3 million provided to support activities such as maintenance, services, and additional staffing.

Financial Plan

The financial plan for Nouveau Health relies on the forecasted operational budget. Revenue and expense projections must be based on the most recent developments in the surrounding demographics’ income levels and service provision. Developing a new facility will ensure more services are provided to the surrounding community. According to Hill et al. (2018), a solid financial plan must take into account all factors relevant to an organization’s financial strategy. The following factors will be considered for the case of Nouveau Health’s financial plan.

Revenue changes

The revenue generated from inpatient services is expected to rise in the future. Notably, this is so because inpatient services will get more demand as the population grows in the surrounding areas. The hospital may face pressure that may result in the premature release of patients. However, with the newly planned facility, more beds and amenities will be available for patients. Therefore, patients will be more satisfied with the services provided by the facility. Essentially, this has a positive influence on the hospital’s revenues.

Professional partnerships and improvements

The current facility will retain its use of third-party professional services and contract labour. Notably, this will run to the completion of the financial year, with the current partnership contracts remaining the same. However, new arrangements will be considered going into the next fiscal period. For instance, the opening of the new facility will require new professional partnerships to oversee the implementation of the planned targets. There will be no improvements made to the new facility as the primary focus will be directed toward professional partnerships.

Nursing and home healthcare

The hospital has maintained partnerships with other healthcare facilities, such as home health organizations and retirement communities. The partnerships will be maintained in the future. When the current hospital is compared to the anticipated facility, more cooperation between nursing and home healthcare professionals will be needed. Although this may be seen as having a negative impact on the company’s revenue, the overall revenue for healthcare will grow steadily in the next 12 months, especially with the new facility.

Salary increment

The wages paid to staff and payroll expenses will be increased by 10%. The plan to increase wages and benefits for workers results from new contract negotiations and the hiring of more staff to serve the increased number of customers due to the increased population and opening of the new facility. Even though the new facility will result in changes related to inpatient dynamics, staff will still be required in the old facility. Some senior staff from the old facility will move to the new one to mentor new employees. Also, since it is hard to find a replacement for staff with similar skills, the 10% increase in wages is justified.

Funding sources

Profits from the previous year’s financial period will be used as retained earnings to support the $ 3 million requirement for the new facility. Using this option of funding is less risky due to the use of internal resources (Setyawan, 2020). Notably, this funding source will ensure that healthcare does not acquire funding through risky options such as loans.

The current year’s operational budget

NOUVEAU HOSPITAL                             OPERATING BUDGET FOR THE CURRENT YEAR
Revenues
Inpatient  $      25,000,000
Outpatient 15,000,000
Emergency Room 10,000,000
Laboratory 5,000,000
Pharmacy 1,500,000
Home Health and Hospice 1,500,000
Ambulance Services 950,000
Substance Abuse 250,000
Other 850,000
Subtotal  $      60,050,000
Less Charity Care 18,000,000
Net Revenues  $      42,050,000
Expenses
Payroll (including nursing salaries)  $      12,500,000
Benefits 3,000,000
Contract Labor 100,000
Insurance 300,000
General Services (laundry, security, etc.) 3,000,000
Depreciation 1,500,000
Interest Expense 300,000
Professional Services 10,000,000
Total Operating Expenses  $      30,700,000
Net Income  $      11,350,000

Next year’s operational budget

NOUVEAU HOSPITAL                             OPERATING BUDGET FOR NEXT YEAR
Revenues
Inpatient  $      27,500,000
Outpatient 17,250,000
Emergency Room 10,000,000
Laboratory 5,000,000
Pharmacy 1,575,000
Home Health and Hospice 1,725,000
Ambulance Services 950,000
Substance Abuse 250,000
Other 850,000
Additional funding 3,000,000
Subtotal  $      68,100,000
Less Charity Care 18,000,000
Net Revenues  $      50,100,000
Expenses
Payroll (including nursing salaries)  $      13,750,000
Benefits 3,300,000
Contract Labor 100,000
Insurance 300,000
General Services (laundry, security, etc.) 3,000,000
Depreciation 1,500,000
Interest Expense 300,000
Professional Services 10,000,000
Total Operating Expenses  $      32,250,000
Net Income  $      17,850,000

Conclusion

Based on the above analysis, Nouveau Health’s financial situation is solid and promising. Opening a new facility is a viable recommendation by the institution’s CEO, which will play a part in improving revenue. However, recommendations to increase expenses should be made cautiously to ensure that the organization runs profitably.

References

Ho, A. T. K. (2018). From performance budgeting to performance budget management: theory and practice. Public Administration Review, 78(5), 748–758.

Hill, C. A., Zhang, G. P., & Miller, K. E. (2018). Collaborative planning, forecasting, and Replenishment & firm performance: An empirical evaluation. International Journal of Production Economics, pp. 196, 12–23.

Setyawan, I. R. (2020). Funding Sources Consideration in the Framework of Capital Structure Decision. International Journal of Innovation, Creativity, and Change. www. ijicc.  net, 12(8), 631-644.

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Question 

You are a staff member in the finance department at Nouveau Health, whose sole responsibility is to advance the success of the organization through assisting in planning, forecasting, and finance management.

Financial Plan and Operational Budge

Financial Plan and Operational Budge

Complete the following:

Prepare next year’s financial plan and operational budget.
Note: Use the budget from Unit 1; it did not take into account the growth of the new facility. The CEO has asked that you expand that budget and provide a finalized budget that will take into account the new services offered. The CEO has stated that there is $3 million that you can incorporate into the budget for additional staffing, services, maintenance, and so forth.

The use of APA style is expected. Students are required to reference at least 2 scholarly sources for this task.

Please submit your assignment.

For assistance with your assignment, please use your text, Web resources, and all course materials.

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