Columbia Memorial Hospital Case Study

1. Using the historical data as a guide (Exhibit 6.1), construct a pro forma (forecasted) profit and loss statement for the clinic's average month for all of 2010 assuming the status quo. With no change in volume (utilization), is the clinic projected to make a profit?

With no change in volume of 45 patient visits per day, the clinic is not projected to make a profit.

45 patient visits per day x 30 days in a month = 1,350 visits per month x 12 month =
16,200 visits per year
Using the average data given (2010) of 45 patients per day, average $130 revenue per patient, and a cost of $3.50 per patient. The Forecasted P&L Statement is shown below.

Forecasted Columbia Walk in Clinic P&L Statement (For Year 2010)
Total Revenues ($44.157 x 16,200) $715,356
Total Variable Costs ($3.50 x 16,200) $56,700
Total Contribution Margin ($40.657 x 16,200) $658,656
Fixed Costs $696,708
Profit $(38,052)

Columbia Walk in Clinic Estimated Financial Data (For Year 2010)
Number of Visits 16,200
Net Revenue $658,656
Net Revenue Per Visit $40.66
Salaries and Wages $162,504
Physician Fees $216,000
Malpractice Insurance $38,580
Travel and Education $7,224
General Insurance $10,116
Subscriptions $0
Electricity $12,924
Water $1,668
Equipment Rental $1,260
Building Lease $150,000
Other Operating Expenses $96,456
Total Operating Expenses $696,708
Net Profit (Loss) $(38,076) Gross Margin (%) -5.8%

2. Now consider the clinic's situation without the new marketing program. How many additional daily visits must be generated to break even? Construct a break-even graph that can be included in your report.

USING JAN/FEB 2010 MONTHLY AVERAGE DATA
Without the new marketing program, there should be an additional 21.7 ≅ 22 visits per