Financial Plan and Operational Budget-Nouveau Health

Financial Plan and Operational Budget-Nouveau Health

As a staff member working in the finance department of Nouveau Health, the financial plan and operational budget presented in the next sections are prepared. According to Ho (2018), financial planning and forecasting play an important role in driving a business toward achieving its objectives. The financial plan for Nouveau Health focuses on activities that are performed to improve the organization’s financial performance and to implement the recommendation by the company’s CEO to open a new facility and incorporate its financial needs into the operational budget. The finance plan specifically takes into account changes in revenue, improvements and professional partnerships, nursing home and healthcare services, salary increments, and funding sources. On the other hand, the operational budget focuses on the current budget and the budget for the next year after incorporating the recommendations made by the CEO. Our assignment writing services will allow you to attend to more important tasks as our experts handle your task.

Financial Plan

Nouveau Health’s financial plan is based on the organization’s projected operating budget. Spending and income projections need to be grounded on the most up-to-date trends in service provision and regular cash flow in the population. Financially, the hospital benefits from the new facility as well. The optimum financial strategy for the hospital may be determined with the help of a solid financial plan that considers all relevant factors (Prayag et al., 2019). Some of the factors are discussed below.

Change in Revenue

There has been a lot of speculation about the potential for a surge in inpatient income. The overpopulation of the hospital forced the physicians to release patients who still needed close care. Patients then had to independently arrange for in-home medical attention. The new facility has more beds and other amenities for inpatients. So, some people may start spending significantly more time on their therapy than they used to. Therefore, certain patients may require a longer-than-usual stay to receive adequate nursing and medical attention.

Improvements and Professional Partnerships

The present facility will maintain its utilization of contract labor and third-party expert services. Until the conclusion of the fiscal year, the present partnership contracts will remain in place; thus, changes are unlikely. The next year will be affected by any new agreements. The hospital’s administration will be dedicated to the successful opening of the new facility. That’s why no improvements would be made to the new facility.

Nursing and Home Health Care

In the future, the hospital will maintain its partnerships with other healthcare facilities, such as retirement communities and home health organizations. Compared to the existing hospital, the new hospital will demand more cooperation with home and nursing healthcare professionals. The new facility will ultimately cause a decline in revenue from these sources. It is, nevertheless, reasonable to assume that income will continue growing steadily for the next 12 months.

Salary Increment

There will be a 10% increase in the allocated funds for payroll. Increases in pay and benefits have resulted from renewed contract discussions and hiring more staff at the old location. Although the inpatient dynamics will change, more personnel will still be required at the venerable old hospital. It is possible that a number of the more senior employees may move to the new location to mentor the up-and-coming workers. It will cost more to find a replacement workforce with comparable skills. Therefore, it would be fair to increase pay by 10%.

Funding Sources

The new facility’s $3 million price tag will be covered by the previous year’s net income allocation. The new facility will have more than enough funds to operate smoothly. Another advantage of the funding option is that minimal risks will be expected since funding will be internal (Hung & Hager, 2019). The medical center can get by without taking out any loans or other forms of external funding right now.

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

Nouveau Health’s financial condition is stable based on the analysis conducted above. The recommendation to open a new facility that will enhance the number and nature of services provided is prudent because it will enhance the revenues for the organization. However, caution should be taken in the expenses made to avoid huge expenses that can result in losses.

References

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

Hung, C., & Hager, M. A. (2019). The impact of revenue diversification on nonprofit financial health: A meta-analysis. Nonprofit and voluntary sector quarterly, 48(1), 5-27.

Prayag, G., Hassibi, S., & Nunkoo, R. (2019). A systematic review of consumer satisfaction studies in hospitality journals: Conceptual development, research approaches, and prospects. Journal of Hospitality Marketing & Management, 28(1), 51-80.

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Nouveau Health, whose sole responsibility is to advance the success of the organization through assisting in planning, forecasting, and finance management.

Complete the following:

Prepare next year’s financial plan and operational budget.
Note: Use the budget you 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 in to 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.