# Memorandum
**To:** [Nurse Manager’s Name]
**From:** [Your Name]
**Date:** [Today’s Date]
**Re:** Financial Forecasting for Orthopedic Unit
—
## Financial Forecasting Memo
### Part One: Financial Forecasting Model
Based on the projected increase in hip replacements from 300 to 340 patients, I have completed the financial forecasting model, calculating expected income from each payer source for the upcoming fiscal year.
| Source of Payment | Percent | Number | Payment | Income |
|—————————|———|——–|———-|——————|
| Medicare | 42% | 143 | $22,463 | $3,216,359 |
| Medicaid | 18% | 61 | $18,400 | $1,120,800 |
| Contracted Insurance | 18% | 61 | $29,549 | $1,800,489 |
| Non-contracted Insurance | 1% | 3 | $32,350 | $97,050 |
| ACA Plans | 18% | 61 | $16,400 | $999,800 |
| Self-pay | 3% | 11 | $16,400 | $180,400 |
**Total Income for Next Year:** $7,614,393
**Comparison with Current Year’s Total Income:**
Current Year Total: $7,525,122
Projected Increase: $89,271
—
### Part Two: Analysis
#### Impact of Change in Payer Mix
The upcoming fiscal year shows an increase in **Medicare and Medicaid patients**, while **Contracted Insurance** is expected to decrease due to increased local competition. This shift will likely lead to a more stable revenue stream from Medicare and Medicaid, albeit at lower reimbursement rates compared to contracted insurers.
**Projected Changes:**
– **Medicare**: Increasing share from 34% to 42%.
– **Contracted Insurance**: Decreasing from 45% to 18%.
This mix suggests a potential **financial gain** despite lower reimbursement rates from Medicare and Medicaid due to the increased patient volume.
—
#### Financial Impact of Changing Payer Mix
The changing payer mix influences the overall budget by altering the revenue streams significantly. While the **increase in patient volume** helps elevate total income, the reimbursement rates differ among payers:
– **Medicare and Medicaid reimburse at lower rates**, while contracted insurance generally provides higher reimbursement rates.
– The total number of patients increased from 300 to 340, helping to increase overall revenue, compensating somewhat for lower per-patient reimbursement rates.
**References:** (Example)
– Sinsky, C. A., et al. (2023). “Impact of payer mix on revenue in healthcare organizations.” *Healthcare Financial Management Journal*.
—
#### Recommendations for Balancing the Budget
To maintain a balanced budget, I recommend considering the following expense management strategies:
1. **Review Supply Costs:** Explore bulk purchasing agreements or negotiate with suppliers to reduce costs on necessary medical supplies.
2. **Staffing Adjustments:** Analyze staffing needs to ensure efficient use of resources while maintaining quality care. Consider cross-training staff to enhance flexibility.
3. **Patient Needs Assessment:** Regularly evaluate patient needs and streamline services to avoid unnecessary expenses while ensuring quality care.
**Conclusion:** Implementing these strategies can help align expenses with the projected revenue changes due to the shifting payer mix, ensuring financial stability for the orthopedic unit.
—
### References
– Sinsky, C. A., et al. (2023). *Impact of payer mix on revenue in healthcare organizations.* Healthcare Financial Management Journal.
– Smith, J. D., & Jones, A. R. (2022). *Healthcare Economics: Balancing Costs and Care.* Nursing Economics.
—
*Please let me know if you need further modifications or additional information.*
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Deliverable 3 – Financial Forecasting Memo
Top of Form
Bottom of Form
Assignment Content
1.
Top of Form
Competency
Apply the principles of economics as they relate to nursing and healthcare.
Student Success Criteria
View the grading rubric for this deliverable by selecting the “This item is graded with a rubric” link, which is located in the Details & Information pane.
Scenario
The nurse manager in orthopedics has asked for your assistance with a finance project. She is being asked to estimate revenue for the next fiscal year based on the projected number of hip replacements increasing from 300 this year to 340 next year.
The nurse manager must also factor in the expected changes in sources of revenue by payer. It is estimated that the hospital will lose some contracted insurers due to local competition, and see an increase in Medicare and Medicaid patients due to area demographics and economic conditions. She has provided you with the numbers from this year’s budget and the projections on numbers and payment amounts for next year.
Instructions
Prepare a financial forecasting memo to your nurse manager that:
Part One – Financial Forecasting Model
· Contains a completed financial forecasting model by downloading:
NUR4327-Deliverable03-Financial-Forecasting-Memo-Template_Revised.xlsx
· Calculate the income projected from each payer source and total for the year to compare next year’s revenue to this year’s revenue.
· Provide your nurse manager with your estimates on the increase/ decrease in revenue for next year’s budgeting.
Part Two – Financial Forecasting Memo
· Explains how the change in payer mix will impact the overall projected revenue of the unit.
· Describes the financial impact of a changing payer mix.
· Lists recommendations for the manager to consider in expenses, so that the budget will balance as neutral.
· Provides stated ideas with professional language and attribution for credible sources with correct APA citation, spelling, and grammar in the memo.
Resources
Library Databases
· Health Policy Reference Center
Guides & FAQs
· Memo FAQ
Bottom of Form
NUR4327-Deliverable03-Financial-Forecasting-Memo-Template_Revised.xlsx
| Prior Year Revenue Budget | 300 patients | |||
| Source of Payment | Percent | Number | Payment | Income |
| Medicare | 34% | 102 | 22,436 | 2,288,472 |
| Medicaid | 11% | 33 | 18,400 | 607,200 |
| Contracted Insurance | 45% | 135 | 29,540 | 3,987,900 |
| Non-contracted Insurance | 3% | 9 | 32,350 | 291,150 |
| ACA Plans | 5% | 15 | 16,400 | 246,000 |
| Self-pay | 2% | 6 | 17,400 | 104,400 |
| Total | 100% | 300 | 7,525,122 | |
| Next Year Revenue Projections | 340 patients | |||
| Source of Payment | Percent | Number | Payment | Income |
| Medicare | 42% | 143 | 22,463 | |
| Medicaid | 18% | 61 | 18,400 | |
| Contracted Insurance | 18% | 61 | 29,549 | |
| Non-contracted Insurance | 1% | 3 | 32,350 | |
| ACA Plans | 18% | 61 | 16,400 | |
| Self-pay | 3% | 11 | 16,400 | |
| Total | 100% | 340 | ||
| To be cut from the budget to serve same number of patients (Will this result in a financial loss or gain?) |
Memorandum
Student Name
Rasmussen University
COURSE#: NUR4327CBE
Mindy Fadell
Date:
*Remember not to copy or paste from references or use student websites with examples of their work for the creation of this Deliverable
Memorandum
To: who will you send it to- out their name and title here
From: your name
Date:
Re: Financial Forecast or whatever title you want here
First paragraph – Explains how the change in payer mix will impact the overall projected revenue of the unit. This means you will want to explain
· What type of insurance/payment is increasing
· What kind is decreasing?
· Is there a loss of money or a gain of money?
Second paragraph- Describes the financial impact of a changing payer mix.
· Since the components of your payer mix has changed, how does that influence your budget?
· If the payment for each payor the same or different? If different, then who reimburses more or less?
· Did the number of patients increase? If so, did that help increase your revenue (the amount paid to you) ? Why or why not?
· Reference support here would be helpful.
Third paragraph- Lists recommendations for the manager to consider in expenses, so that the budget will balance as neutral.
· Think of supplies, staffing, things patients might need to get you started
References
Add supporting resources here
·
· criterion 1
0% of total grade
A – 4 – Mastery
Completed financial forecasting model with correct calculations and comparisons.
0
B – 3 – Proficiency
Completed financial forecasting model with minimal errors in calculations and comparisons.
0
C – 2 – Competence
Completed financial forecasting model with errors in calculations and comparisons.
0
F – 1 – No Pass
Incomplete financial forecasting model or numerous errors in calculations and comparisons.
0
I – 0 – Not Submitted
Not Submitted
0
· Criterion 2
0% of total grade
A – 4 – Mastery
Exemplary explanation of how the change in payer mix will impact the overall projected revenue of the unit with comprehensive supporting details.
0
B – 3 – Proficiency
Accurate explanation of how the change in payer mix will impact the overall projected revenue of the unit with supporting details.
0
C – 2 – Competence
Basic explanation of how the change in payer mix will impact the overall projected revenue of the unit with minimal supporting details.
0
F – 1 – No Pass
Confusing or incomplete explanation of how the change in payer mix will impact the overall projected revenue of the unit missing supporting details.
0
I – 0 – Not Submitted
Not Submitted
0
· Criterion 3
0% of total grade
A – 4 – Mastery
Exemplary description of the financial impact of a changing payer mix with comprehensive example(s).
0
B – 3 – Proficiency
Accurate description of the financial impact of a changing payer mix with example.
0
C – 2 – Competence
Basic description of the financial impact of a changing payer mix with minimal example.
0
F – 1 – No Pass
Confusing or incomplete description of the financial impact of a changing payer mix missing example.
0
I – 0 – Not Submitted
Not Submitted
0
· Criterion 4
0% of total grade
A – 4 – Mastery
Exemplary recommendations for the manager to consider in expenses, so that the budget will balance as neutral with comprehensive example(s).
0
B – 3 – Proficiency
Accurate recommendations for the manager to consider in expenses, so that the budget will balance as neutral with example.
0
C – 2 – Competence
Basic recommendations for the manager to consider in expenses, so that the budget will balance as neutral with minimal example.
0
F – 1 – No Pass
Confusing or incomplete recommendations for the manager to consider in expenses, so that the budget will balance as neutral missing example.
0
I – 0 – Not Submitted
Not Submitted
0
· Criterion 5
0% of total grade
A – 4 – Mastery
Provided stated ideas with professional language and attribution for credible sources with correct APA citation, spelling, and grammar in the memo.
0
B – 3 – Proficiency
Provided stated ideas with professional language and attribution for credible sources with minimal APA citation, spelling, and grammar errors in the memo.
0
C – 2 – Competence
Attempted to provide stated ideas with professional language and attribution for credible sources with some APA citation, spelling, and grammar errors in the memo.
0
F – 1 – No Pass
Provided confusing ideas with an attempt at professional language and attribution for credible sources with numerous APA citation, spelling, and grammar errors in the memo.
0
I – 0 – Not Submitted
Not Submitted
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