JWI533 Strayer Leveraging Flexible Budgeting to Manage Revenue Cycles The financial well-being of Healthcare providers is highly dependent on building and

JWI533 Strayer Leveraging Flexible Budgeting to Manage Revenue Cycles The financial well-being of Healthcare providers is highly dependent on building and managing operating budgets that clearly identify the relationship between fixed and variable costs, and which can accommodate variances in patient load and billing JWI 533: Saving Money, Saving Lives
Assignment 2
Leveraging Flexible Budgeting to Manage Revenue Cycles
Due: Sunday, Midnight of Week 6 (20% of Course Grade)
Background
The financial well-being of Healthcare providers is highly dependent on building and managing operating
budgets that clearly identify the relationship between fixed and variable costs, and which can
accommodate variances in patient load and billing. Over the last several weeks we have examined how
costs are categorized and charged, and we have studied the relationship between “money out”
(expenses) and “money in” (revenue). As we have seen, managing revenue cycles is critical in ensuring
the financial sustainability of Healthcare organizations. This assignment presents an opportunity to
explore the importance of having a well-designed operating budget that can accommodate variances in
operating expenses and minimize revenue-cycle risks.
Instructions
You have been asked by your supervisor to analyze your division’s past financial performance and create
a new budget that minimizes revenue-cycle risks through the application of flexible budgeting techniques.
The objective is to allow the organization to remain profitable under as wide a range of scenarios as
possible, without unduly compromising services.
Previous budgets have been “static” in assigning costs, and have been inaccurate predictors of actual
performance. This has led to difficulties in managing the revenue cycle. There have been periods when
the organization appears to be beating expectations and periods where it is underperforming.
Your professor will be present you with a scenario outlining revenues and expenses over a fixed period of
time. This scenario will include a combination of fixed and variable expenses as well as information on
patient loads.
To complete this assignment:
1. Review the current budget provided by your professor, and answer the following questions:
a. How did the organization perform on an annual basis?
b. When comparing the static budget versus actual results, which line items in the income
statement are Favorable (F) or Unfavorable (U)?
c. What are the per-unit costs and contribution margins?
d. Which line items presented the greatest variances?
© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be
copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. This
course guide is subject to change based on the needs of the class.
JWMI 533 (1178)
Page 1 of 3
JWI 533: Saving Money, Saving Lives
Assignment 2
2. Redraft the current budget in the provided in the template using flexible budgeting techniques to
better accommodate variances in patient loads and create a budget that is a more accurate
predictor of actual performance. After redrafting the budget, address the following:
a. Identify which line items are now Favorable (F) or Unfavorable (U).
b. What should have been the target operating income?
c. Which line items should be further explored for inefficiencies?
d. For the line items identified in (c), makes recommendations for change.
3. Identify key profitability loads
a. Using budgeted data, how many patients and revenue dollars would the health system
need to break even?
b. Using budgeted data, how many patients and revenue dollars would be required to
achieve a target profit of $100,000?
4. Summarize your argument for why this model is the most appropriate type for operational
budgeting for your organization and explain the operational changes that would need to be
implemented to use flexible budgets if the organization is used to working with static budgets.
Submission Requirements
Your assignment will be submitted in Word and Excel.
•
In no more than 2 pages in Word, present your responses to items. Your written work should be
succinct and direct.
•
In Excel, you will perform the necessary calculations to answer the questions in item 2. This will
allow you to present a flexible budgeting illustration that demonstrates where the true variances
lie within your Income Statement line items based on the flexible budget framework.
© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be
copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. This
course guide is subject to change based on the needs of the class.
JWMI 533 (1178)
Page 2 of 3
JWI 533: Saving Money, Saving Lives
Assignment 2
RUBRIC: Assignment 2
CRITERIA
1. Budget review and
answers to the 4
questions
Unsatisfactory
Low Pass
Pass
High Pass
Provided correct
answers to 1 or
fewer of the 4
questions.
Correctly answered
2 questions.
Correctly answered
3 questions.
Correctly answered
4 questions.
Correctly answered
4 questions plus
provided clear and
detailed comments
on the variances
and their impact.
Did not complete
budget using
flexible budgeting
techniques;
answered 1 or few
questions correctly.
Re-drafted budget
using flexible
budgeting
techniques;
answered 2
questions correctly
and/or with unclear
or incomplete
recommendations for
change.
Re-drafted budget
using flexible
budgeting
techniques;
answered 3
questions correctly
and/or with unclear
or incomplete
recommendations
for change.
Re-drafted budget
using flexible
budgeting
techniques;
answered all 4
questions correctly
but with unclear or
incomplete
recommendations
for change.
Re-drafted budget
using flexible
budgeting
techniques;
answered all 4
questions correctly
plus clear and
compelling
recommendations
for change.
Did not answer the
questions or answer
provided was off
topic or unclear.
N/A.
Answered 1
question correctly.
N/A.
Answered 2
questions correctly.
Did not answer the
question or answer
provided was off
topic or unclear.
Weak or overly
general argument
with little substance
on rationale for use
of flexible budgeting
and process
changes needed to
implement.
Basic argument on
rationale for use of
flexible budgeting
with some
explanation of
process changes
needed to
implement.
Well-reasoned
argument on
rationale for use of
flexible budgeting
with good
explanation of
process changes
needed to
implement.
Exemplary
presentation of
argument on
rationale for use of
flexible budgeting
with detailed and
well-thought-out
explanation of
process changes
needed to
implement.
Multiple mechanical
errors; much of the
text is difficult to
understand or the
text does not flow;
and fails to follow
formatting
instructions.
Several mechanical
errors; text does not
flow; the discussion
fails to justify
conclusions and
assertions; or fails to
follow formatting
instructions.
A few mechanical
errors; text flows but
lacks conciseness
or clarity; assertions
and conclusions are
justified and well
explained; follows
formatting
instructions.
Minor mechanical
errors and text flows
well; clearly
explains the
recommendation in
a logical and
convincing manner;
follows the
formatting
instructions well.
No mechanical
errors; text flows
well’ exemplarily
explanation of
recommendation in
a coherent manner;
fully follows all
formatting
instructions.
Weight: 25%
2. Budget re-draft and
answers to the 4
questions
Weight: 30%
3. Identify key
profitability loads
Honors
Weight: 10%
4. Argument for
applicability of flexible
budgeting model
Weight: 25%
5. Clarity, logic, writing
mechanics, and
formatting.
Weight: 10%
© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be
copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. This
course guide is subject to change based on the needs of the class.
JWMI 533 (1178)
Page 3 of 3

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