The assignment requires a cover page, table of contents, executive summary, brief demo analysis, financial analysis, and summary & recommendations.
You are an intern at Nittany Lion Health System (NLHS). Your preceptor, Michelle Smith, has noted that you have excellent analytical/critical thinking and Excel skills listed on your resume. To fully take advantage of your experience and ability, she has asked you to prepare a statement of projected revenues and expenses about a proposed project currently under consideration. After you have completed your analysis, she asked you to develop a brief APA formatted modified business plan to include the following information: 1. A brief 1-page executive summary providing an overview of the purpose for the report, your initial financial analysis, and your recommendations to hit a break-even, or positive operating margin for the clinic. 2. A brief demographic overview of the service area 3. A brief evaluation of the local competition, (use Centre County Demographics, https://datausa.io/profile/geo/centre-county-pa) or you could go to https://www.census.gov/quickfacts/fact/table/centrecountypennsylvania/PST045216), and how will the new location fit into that environment. 4. A brief narrative reflecting your financial analysis and referring it to 2 financial spreadsheets. The first one illustrating your initial analysis and the second illustrating your recommendations for improvement 5. A brief summary of your overall analysis, and final recommendations Scenario: NLMS, like many hospitals, owns a number of primary care physician practices. To take advantage of some possible economies of scale, NLHS is considering the consolidation of their out-patient practices and relocating them to a single building close to the hospital. The building under consideration is a 20,000 square foot existing facility and will be more that adequate to accommodate the physician practices. At a rental cost of $20 per square foot, the total annual rent will be $400,000. (This rent payment is considered a “fixed cost.”) There will be three (3) physicians located in the facility on a daily basis. On average, each physician will see approximately 15 patients per day, with each patient generating an average of $110 per visit. Additionally, there will be two (2) Physician Assistants (PAs) in the facility. The PAs are averaging ten (10) patients per day, and according to CMS rules, they can only bill at 85% of the physician’s fee. In addition to the above patient care provider’s, there will be one (1) nurse (LPN), and two (2) Medical Assistants’ (MA’s) in the facility to assist the doctors and the PAs. Because NLHS cannot bill for non-provider staff, their salaries are part of the overhead for operating the clinic. https://www.census.gov/quickfacts/fact/table/centrecountypennsylvania/PST045216 The base physician salary is $185,000, with an additional 35% for taxes and benefits. The P.A.’s salary is $80,000, with an additional 30% for taxes and benefits, the LPN salary is $35,000, and the 2 MA salaries are $21,500 each. Both the LPN and the MA’s also have an additional 30% for taxes and benefits. The physicians and PA’s are exempt employees, and they all just renewed a 5-year employment contract. Both the LPN and MAs are non-exempt employees under the FLSA act, and earn $16.82/hr. are making $10.33/hr. respectively. The facility is open 235 days/year, and has a general operating cost (electricity, water and sewer, medical waste disposal, and supplies) which averages 40% of total payroll, including taxes and benefits. Said another way, this cost is 40% of everything NLHS will spend on the payroll in this project. (Just as a note, operating costs are typically considered “variable costs,” however for the purposes of this exercise, they are constant as described here.) The question NLHS needs to answer is, how much revenue must the clinic produce to cover the operating cost of the clinic, including the facility fees. For this, you must prepare an Excel spreadsheet to assist Michelle with her report to the hospital CEO to determine if the project is viable. Financial Analysis: Create a spreadsheet that evaluates, and clearly illustrates, your analysis using the following inputs: 1. Projected revenue from the physicians 2. Projected revenue from the physicians’ assistant’s 3. Projected total revenue 4. Projected cost of the physician payroll? 5. Projected cost of the physician assistant payroll 6. Projected cost of the nursing payroll? 7. Projected cost of the Medical Assistants’’ payroll 8. Given debt service of $400,000, operating costs of 40% of total payroll, the total projected expense of operating the clinic, including all payroll costs? 9. Projected profit/loss for this proposed clinic Your second spreadsheet should include all of the above with your recommendations being inputted as appropriate. Other Assignment Deliverables: Now that you have completed the Excel portion of the assignment (financial analysis), it is now time to prepare your modified business plan. Your modified business plan should then be completed as follows: 1. In your Executive Summary, provide a brief overview of the purpose for the report, your initial financial analysis, and your recommendations to hit a break-even, or positive operating margin for the clinic. 2. Your analysis and thought process will impact on your grade, so be specific in your approach. For example, except for fixed-costs, you might recommend changes to any 1 or more of the variables impacting your revenue or expenses. Including; days of operation, patient’s seen/day, average charge/patient, and/or payroll costs. Feel free to be creative in this regard. Be sure to document your choice(s) by quantifying how your proposed change(s) would improve the clinic’s financial performance. In other words, if you propose reducing salaries to improve the bottom line, explain that choice by describing how much the salaries would need to be reduced and the effect that would have on the P & L of the clinic. Also, remember that your providers (doctors and PA’s) are under contract, so if you make changes to those agreements, it would require a renegotiation of all terms and conditions. Because the nurses are non-exempt (hourly waged), you must adjust their salaries if you going to make any recommendations that may affect their work hours/days. Market and Demographic Analysis: How will local competition play a role (Demographic Analysis) How will population changes play a role (Demographic Analysis) If you elect to proceed with the move, do you think the new location will have any impact on the financial projection? (Demographic & Competitor Analysis) Any other recommendations you might want to consider Assignment Layout & Formatting Details: APA Format Proper citations Cover Page Table of Contents Executive Summary Brief Demographic Analysis Financial Analysis with associated spreadsheets including proper labels and formulas Summary & Recommendations