1. ON TARGET Preparing Departmental Clinical Budgets CLINICAL BUDGET PRESENTATION

2. Learning Objectives Discussion Items Discussion Item One – Understanding Budgeting Discussion Item Two – How to Budget Discussion Item Three – Types of Budgeting Approaches Discussion Item Four – Applying Budget Approaches Discussion Item Five – Inputting Department data into the Budget Module Discussion Item Six – Capital Budget Process/Budget Projections

3. Understanding Budgeting DISCUSSION ITEM ONE

4. What is a Budget? It is a list of all Planned Expenses & Revenue. A Budget is an organizational plan stated in monetary terms What is budgeting? The process of making the list is Budgeting The purpose of Budgeting is to provide a forecast of revenues and expenditures This is a model of how a business might perform financially speaking if certain strategies, events and plans are carried out

5. How To Develop A Budget DISCUSSION ITEM TWO

6. How to Develop a Budget Information Gathering Good goals are specific, measurable, realistic and timely. Specific goals are clearly defined. “Make money” is not a specific goal. “Make 100K profit” is specific. Set measurable goals defined in terms where you can easily see whether you have attained them, and check your progress. “increase clinic time” is not measurable” “Increase clinic time to 55 Percent” is. Realistic goals are things you can reasonably reach given the resources and realities of your department situation. “adding 20 plastic surgeons” is not realistic” “adding 2” is. Timely goals are set with a specific timeline for progress. Without a timeline; It’s difficult to gauge how much money to put into your budget for any given quarter. Review any existing financial documents for our department Take time to review documents from your department as it is today, including your income statement, outstanding debts, assets, liabilities and a projections of immediate cash flow. Pull out any current budgets you use for your department, as they can serve as a starting point for your new budget What are the specific costs associated with each of your goals. This is where you would break down each goal into an annual tangible amount of money, and then break it down by month. Budget estimation is a complex practice, with potentially disastrous consequences if you guess wrong.

7. Types Of Budget Approaches DISCUSSION ITEM THREE

8. Types of Budgeting Approaches Incremental Budgeting Incremental budgeting is the simple approach to building a budget. You start your budget with what you did last year and amend it for the changes that you expect for this year. Administrators like this approach because it is quick and easy. However, it can be that last year’s workload or activity is actually quite different from this year’s An example of a Incremental budgeting mistake An Administrator estimates the budget for building maintenance by reviewing the expenditure from the previous year. What he/she misses is the fact that a new contract with a different supplier at a different price has been awarded, and that a different program of maintenance has been planned for the year

9. Applying Budget Approaches DISCUSSION ITEM FOUR

10. Revenue Budget From Scratch Projecting Physician Charges Meth odology

11. CPT – Codes with explanations and times Example of gathering data to build your physician revenue template 90801Psych Diagnostic Interview Exam, no time listed in CPT manual 9080420-30 mins 90805w/ Medical Eval and Mgt. 20-30 mins 9080645-60 mins 90807w/ Medical Eval and Mgt. 45-60 mins 9080875-80 mins 90809w/ Medical Eval and Mgt. 75-80 mins 90862CPT manual does not list time but per psych encounter 20-30 mins 90846Family Psychotherapy w/o pt, no time listed in CPT manual 90847Family Psychotherapy w/ pt, no time listed in CPT manual 90870Electroconvulsive therapy

12. Regression Analysis to Project Budget Line Items

13. Contract Template Example of gathering contract information by physician to later input into budget module

14. Inputting Department Data into the Budget Module DISCUSSION ITEM FIVE

15. Practice Plan Budget 1.Select PP Budget from top menu 2.Sort list by Unit Name 3.Sort list by Account number 4.Sort list by Department Name 5.Sort list by Net Revenue Amount 6.Sort list by Total Expenditure Amount 7.Sort list by Net Income Amount 8.Name of the Unit 9.Account number 10.Name of Department 11.Quick access to reports related to a department Budget Report Income Statement

16. Practice Plan Budget – Clinical Revenue 1.Tab for Clinical Revenue screen12. Office Charges 2.Tab for Other Revenue screen13. Hospital Visits 3.Tab for Income Statement screen14. Hospital Rate 4.Click +Revenue to add a revenue line15. Hospital Charge 5.Doctor’s Name16. Contract Revenue 6.Comment17. Drug/Product Sales 7.Collection Rate Office18. Save Button 8.Collection Rate Hospital 9.Collection Rate Contract 10.Office Rate 11.Office Visits

17. Practice Plan Budget – Clinical Revenue 1.Sort by Doctor Name 2 – 11 Summary of data entered by physician 12. Edit the physician revenue line 13. Deletes the revenue line

18. Practice Plan Budget – Other Revenue 1.Click on Other Revenue tab 2.Click +Other Revenue to add a revenue code 3.Select Revenue code from drop down menu

19. Practice Plan Budget – Income Statement 1.Click on Income Statement tab 2.Click on +Expenditure to add an Expenditure code 3.Select expenditure code from drop down menu

20. Salary – Practice Plan employees 1.Select Salary from top menu options 2.Select tab for Practice Plan to load list of Practice Plan employees

21. Salary – Practice Plan employees Add/Edit Employee Info

22. Salary – Add/Edit Employee Info 1.Select the Home Department/Unit 2.First Name 3.Last Name 4.Hire Date 5.Employee number – must be 9 characters 6.Position number – must be 5 digit position number 7.Comment section – 8.Select correct Practice Plan Job Title 9.Employee Type – select PP (Practice Plan) 10.Position Type 11.Contract Type 12.Rank – does not apply to PP employees 13.Specialty – not required 14.Select Tenure option 15.Supervisor name 16.Base salary 17.Contract Salary – includes: time period budgeted; annual cell phone allowance; annual stipend 18.Pay rate – includes monthly stipend and cell phone allowance 19.Annual FTE 20.Grade/Step - applies to Classified 21.Merit Step - default to 0 22.Seniority Date - default to 1/1/1901 for all other employee types 23.Annual Stipend section: include BOTH annual stipend and annual cell phone allowance amount 24.Enter FICA code – select Y 25.Health Insurance – select appropriate Health Insurance plan for employee 26.Retirement Plan – select 5 27.SAVE/Update all entered data

23. Salary – Add Pay lines 1.Click +Payline to add a pay line 2.Account number – Enter the 11 digit account number – no dashes (xxxxxxxxxxx) 3.Earn Code – Select appropriate Earnings code for account line Note: Only the Earning codes applicable to the Employee Type will appear in the drop-down 4.Start Date – Enter the account line start date (mm/dd/yyyy) 5.Stop Date – Enter the account line end date (mm/dd/yyyy) 6.FTE – Enter the account line FTE 7. Acct Amount - Enter the monthly amount to be paid on that account 8. Comment – enter comments if you wish 9. Save – click to save pay line information 10. Edit or Delete an account line

24. Salary – Data Checks 1.Verify the Total FTE for all pay lines equal the FTE in the employee information 2.The total monthly amount for all pay lines must EXACTLY equal the employee pay rate. 3.The total annual amount must be within.12 cents of the employee Contract Amount.

25. Earning Codes by Employee Type PP – Practice Plan – PM1: Practice NFPRP – PM2: Practice NFPRP Hourly – PN1: Practice North – PN2: Practice North Hourly – PS1: Practice South – PS2: Practice South Hourly

26. Health Insurance Plans Practice Plan employees {PP} – HMO: Employee only – HMO1: Employee + 1 dependent – HMO2: Employee + 2 or more dependents – PPO: Employee only – PPO1: Employee + 1 dependent – PPO2: Employee + 2 or more dependents

27. Conclusion Budgets should be understandable and attainable. Flexibility and innovation is needed to allow for unexpected contingencies. Budgeting enhances flexibility through the planning process because alternative courses of action are considered in advance rather than forcing less-informed decisions to be made on the spot. As one factor changes, other factors within the budget will also change. Internal factors are controllable by the departments whereas external factors usually cannot be controlled. Budgeting is planning for a result and controlling to accomplish that result. Budgeting is a tool, and its success depends on the effectiveness to which it is used by staff. A department may fail from sloppy or incomplete budgeting. For any questions or concerns on Clinical Budgeting contact: Kimberli Quinn Email: Kquinn@medicine.nevada.edu Phone: 775-784-6214