Essay Example: Achieved and Projected Expenses and Revenues

Revenues and expenses of all organizations should match the target of the firm (Brazle, 2019). Expenditures should always be less than the revenue collected to increase profitability level. Mid-year analysis of organizational performance aids in the development of strategized responses to ensure the fiscal year targets are met. The firm's current financial progress is reflected by the first annual half, hence determining if the operations are on the losing end or the positive management. UMUC Health operations are not stable and are posing risks of recording a deviation of millions towards their budget of receiving $1.2 billion as their total patient revenue.

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In the current year (2019), the financial report has shown a deficit of $5 million under the total patient revenue, with expected revenue being $612 million and obtained income being $607 million. The variance of the overall patient services is $4,961,254, which is a considerable loss margin. Deductions from revenue also record loss of $274,588 under the charity, and uncompensated care as the total loss under net patient service revenue, a loss of $6,229,881, is marked. Other operating revenues to the hospital are still recording a loss of $1,500,000 hence the total operating revenue loss being $7,729,881

To ensure the next half of the financial year recovers the $5 million deficit and the revenues meet the targeted range, the operating revenue has to be increased by 5% as the operating expenses get a $5% reduction. Since half of $1.2 billion is $600 million, a 2% increase in the target revenue is margined to reduce the risks of recording any loss. The 2% increase from the target revenue calls for a rise in the target total patient revenue to be $12 million.

The wages paid on the employees are way too high. Towards achieving a reduction in the operating expenses, salaries and payments have to be reduced by 5%. The constant charges of other costs fuel the selection of salaries and wages reduction. Insurance, rental, and leases and supplies are not controlled by the hospital but by the renting organizations. (Sanberg, 2017) It is just among other expenditure segments that have the hospital with no control except for salaries and wages, which the organization decides.

A strategy of $5% reduction of operating expenses made demands the operating costs to reduce to $21,311,887 in the next six months of the financial year. It will send the total annual revenue to $38,850,250, which is less than the projected annual expenses. The results are increased net revenues for the fiscal year. When the planned financial operations are initiated effectively, the loss margin will move to the positive hence a profit record.

The hospital strategy to introduce a saving opportunity can effectively adopt a revamp of the chilled water system and install solar panels to reduce electricity bills expenses. It is towards ensuring patients are in a sterile and safe environment under the chilled water system, which is the primary source of air condition in medical centers. As a result, the hospital will save approximately $1.3 million alongside the benefit of returns on investment for CFO's cost-consciousness. Installation of solar panels can take a total installation fee or $300,000, which can be catered for by the grants received at the hospital of $280,000. The hospital will undergo an expense of $20,000 to feed for an extra cost. The solar panel will provide lighting in all rooms of the hospital with electricity used in the other electric machines.

Since many rooms in the wards and workers rooks require adequate lighting all through, each month will have a saving of $15,000 on power bills. Solar energy reduces power funds used on generator energy when there is a power shortage in the medical Centre (Brazle, 2019). When sinks, toilets, and bathrooms that are not often used can be removed from the hospital, closing them temporarily is a way of increasing a saving opportunity. These areas have water being used; hence their closure attracts an annual saving of $257,000 for the 2020 fiscal year. Adhering to these recommendations will lead to the achievement of the 2019/2020 financial year budget and increase the profit level.

References

Brazle, F. C. M. (2019). The Adoption of Big Data in Case Management for Health Care (Doctoral dissertation, University of Maryland University College). https://search.proquest.com/openview/252008fe50effeae3dad26282012348b/1?pq-origsite=gscholar&cbl=18750&diss=y

Sandberg, D. S. (2017). Medical tourism: An emerging global healthcare industry. International Journal of Healthcare Management, 10(4), 281-288. https://www.tandfonline.com/doi/abs/10.1080/20479700.2017.1296213