Pressure from insurance companies

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Reference no: EM13953058

Modern Healthcare, a group practice clinic with 10 physicians, had the following income in 2014:

Revenue $3,350,000 Less operating expenses:

Salaries Physicians $1,250,000 Nurses 150,000 Nursing aide 71,500 Receptionist 46,000 Accounting services 48,000 Training 113,000 Supplies 258,000 Phone and fax 3,500 Insurance 272,000 Depreciation 245,000 Utilities 22,000 Miscellaneous 63,000 Total operating expenses 2,542,000 Income before taxes 808,000 Less taxes on income 282,800 Net income $525,200 The following changes are expected in 2015:

1. The clinic is expecting a 2 percent decline in revenues because of increasing pressure from insurance companies.

2. Physicians are planning to hire a physician assistant at a salary of $51,000 per year.

3. Training costs are expected to increase by $18,000.

4. Supplies are expected to increase to be 10 percent of revenue.

5. Phone, fax, and insurance amounts will stay the same.

6. Depreciation expense will increase by $23,000 per year, since the clinic is planning to purchase equipment for $125,000.

7. Utilities and miscellaneous expenses are expected to increase by 5 percent next year.

8. Taxes on income will be 35 percent. Prepare a budgeted income statement for Modern Healthcare for the year 2015.

Reference no: EM13953058

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