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Budget Analysis II | ABC Facility This is your second budget analysis, but more detailed to review a skilled nursing facility based on a prior year budget. As a health care administrator/manager it will be your responsibility to analyze your current year's budget based on your prior year's budget. You will review what changes are projected for revenue and expenses as well as provide a sound, precise reason for those changes. Healthcare organizations must set rates at levels sufficient to maintain their financial viability. Prices must be set to cover the following individual areas: 1. Average costs 2. Losses on third-party fee- schedule payments 3. Medicaid 4. Medicare 5. Other 6. Discounts on billed- charge patients 7. Self-pay 8. Commercial 9. Reasonable return on investment 10. Sustainable growth Failure to develop pricing to cover all these areas results in eventual failure. Prices must also be set to recover any losses from third- party fee schedule payment. This is referred to as cost shifting, which is pervasive in health care organizations. For example, Medicaid may pay a nursing home $90 per day when the cost of one day of care is $110. Any price that is set must cover the cost of providing the service at $110 and must also include the loss from Medicaid patients of $20 per day. It is not just governmental programs that may have payment rates below cost. A number of major health plans may have contracts that call for payment at levels below full cost, such as MCO, HMO and PPO providers. Instructions: You will also be using a Microsoft Excel Spreadsheet that contains all of the data already completed (there are two spreadsheets that you view, one is blank and the other is completed; the one that is completed is where you will gather information for your written summary). Please be sure to save your progress. When finished reviewing the spreadsheet, you will submit a minimum one-page analysis of your findings with the ABC facility. You DO NOT have to complete the spreadsheet, it is already completed.
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