21 Aug Create an operational budget including utilization, expenses, revenue, profit, and loss projections
As you begin to work through your Applied Budget Exercise, if you receive the #REF error, you must email your spreadsheet to me so I can correct this, as you cannot correct it on your own. I will take #REF correction emails up until Sunday, August 23rd at noon. Any corrections received after this date and time will not be applied. If you have #REF errors on your Canvas submission you will get significant point deductions especially if the #REF error affects your profit/loss summary numbers.
Assignment: Budget Exercise
Create an operating budget for your proposed service line, project, or practice. “Formulate, document, and disseminate the return on investment for improvement initiatives with an interdisciplinary team” (7.2j AACN essentials).
We know this is a tough assignment and there truly is no “one-size fits all” rubric, so please know we grade this based on how well you anticipate the financial impact of your plan. Details matter, but so does context. Every cell of the spreadsheet will not necessarily need data, but your spreadsheet should contain all the numbers needed for your proposal.
Assignment Objectives
Create an operational budget including utilization, expenses, revenue, profit, and loss projections.
Evaluate the proposed initiative’s potential financial impact and feasibility based on the budget.
Connecting the Dots: Count the cost, measure the margin! Explore the financial feasibility of your proposed solution! This assignment will explore all the associated revenue and expense for your proposed solution. Most decision-makers and stakeholders will weigh the financial impact more heavily than other criteria. BUT…sometimes solutions break even, or even lose money in some instances, but the proposal is still considered because of the value measures in patient outcomes or satisfaction. Dig deep here. Consider all associated costs and potential revenue streams with your proposed solution. And…reach out if you have any questions!
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Instructions
Utilization: Project (forecast) the volume of encounters, procedures, diagnostic tests, and/or medications administered per annum. Utilization drives the budget equation and is estimated using your community needs assessment data.
You are not alone if you are anxious about this assignment! We understand that financial plans and spreadsheets are likely not part of your skillset. It can be uncomfortable to venture into this territory. Work ahead a little at a time, and you will be successful. The first thing we want you to know is that we are here to help you if you need it. Do not hesitate to reach out to course faculty for one-on-one assistance if needed, after watching the BBBs/videos.
You need to choose one of the following for this assignment and your project must involve billable visits with associated CPT codes:
1. Start a Practice
2. Starting or Joining a birth center (DNP students already employed in a birth center cannot choose to join that birth center)
3. Start a program within an existing practice
4. Join a practice (DNP students cannot choose to join a practice where they are already employed)
Click “File” then “Download as.” Once the spreadsheet downloads to your computer, open the file and click “Enable editing”, then “Save as.” The spreadsheet will walk you through options that will be specific to your project plan.
The options above are all contained in the following spreadsheet:
Budget Worksheet (Version 6.1).xlsx
5. Starting or Joining a Psych Mental Health Practice or program is contained in the following spreadsheet:
Budget Worksheet Psych Mental Health (Version 6.0).xlsx
Encounters
Enter the description(s) of the encounter type(s) under “Patient Encounters” using standard accepted terminology, e.g. “Established patient office or other outpatient visit, 30-39 minutes”
Enter the appropriate CPT code for the encounter, e.g. “99214”
Enter the anticipated annual volume for each CPT code under “Year 1” and “Year 2”
Provide a brief justification with assumptions for the anticipated volume, e.g., “An APRN in XXX setting working four days/week and 48 weeks/year, will likely conduct ## 99214 encounters based on community assessment, and (insert other supporting information or data.”
Procedures
Enter the description(s) of procedure(s) under “Procedures” using standard accepted terminology, e.g. “Insertion of an intrauterine device”
Enter the appropriate CPT code for the procedure, e.g “58300”
Enter the anticipated annual volume for each procedural CPT code under “Year 1” and “Year 2”
Provide a brief justification with assumptions for the anticipated volume, e.g., “The CDC (2020) estimates 10.4% of women of reproductive age use IUDs for contraception, which equates to 60 out of 600 patients in our panel per year (insert other supporting information or data).”
Diagnostic Testing
Enter the description(s) under “Diagnostic Testing” using standard accepted terminology, e.g. “Urine pregnancy test, by visual color comparison methods”
Enter the appropriate CPT code for the procedure, e.g “81025”
Enter the anticipated annual volume for each procedural CPT code under “Year 1” and “Year 2”
Provide a brief justification with assumptions for the anticipated volume, e.g., “Based on three-year average annual testing with anticipated 10% increase due to new service line.”
Medications
Enter the description(s) under “Medications” using standard accepted terminology, e.g. “Injection, dexamethasone sodium phosphate, per 1 mg”
Enter the appropriate HCPCS code for the medication, e.g “J1100”
Enter the anticipated annual volume for each medication under “Year 1” and “Year 2”
Provide a brief justification with assumptions for the anticipated volume, e.g., “Forecasting
Revenue: Project (forecast) the revenue generated by the anticipated utilization.
Enter the payer mix percentages (based on your assessment data) for your area under “Payer Mix”, e.g. Medicaid 35%, Medicare 20%. Commercial 42%, Self Pay 2%, Other 1% (Note: The payer mix must equal 100%)
Enter your proposed charge and the corresponding reimbursement rate for each encounter type and CPT code, e.g. 99214, Charge $208, Medicaid $73, Medicare $121, Commercial $210, Self Pay $225, Other, $225″
Enter your proposed charge and the corresponding reimbursement rate for each procedure and CPT code, e.g. for “Insertion of an intrauterine device, 58300, Charge $225, Medicaid $76, Medicare N (not covered), Commercial $210, Self Pay $225, Other, $225”
Enter your proposed charge and the corresponding reimbursement rate for each diagnostic test and CPT code, e.g. for “Insertion of an intrauterine device, 58300, Charge $225, Medicaid $76, Medicare N (not covered), Commercial $210, Self Pay $225, Other, $225”
Enter your proposed charge and the corresponding reimbursement rate for each medication type and CPT code, e.g. for “Insertion of an intrauterine device, 58300, Charge $225, Medicaid $76, Medicare N (not covered), Commercial $210, Self Pay $225, Other, $225”
List source data for reimbursement rates, e.g. “Charge = highest commercial payer + $15, Medicaid-“(professional fee schedule, 2022)
Pro Tip: Use the “Control” + “F” find feature (for PC users) or the “Command” + “F” (for Mac users) and enter the CPT code you are searching for, e.g., “99213”
Medicare-not covered, Commercial-$210, based on average of BC/BS, United, and Cigna in Maryland (office manager, WFM, Inc., Self Pay and Other = charge (less discount for same day cash payments)
Personnel Expense: Estimate the annual cost of human resources required for the initiative, including wages and salaries, withholding of tax, social security contributions, statutory and voluntary personal insurance contributions, and pension/retirement expenses.
Equipment/Furnishing Expense (capital expenditure/CAPEX): Estimate the cost of equipment, furniture, and fixtures necessary for the proposed initiative.
Operating Expense (OPEX): Estimate the indirect costs (not directly linked to revenue) incurred in the day-to-day operations of the business, e.g. rent, inventory costs, marketing, payroll, insurance, etc.
Operational Budget Summary: The cumulative projected revenue, expense, and profit for an entity, program, or project over a given period (usually a fiscal year).
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