Finance Outline

GRANT CLINIC, INC.

Financial Plan and Presentation

Grant Clinic, Inc. serves a suburban community with a population of about 24,000, of which 25% are expected to become patients of the clinic. Approximately 6 miles from Grant Clinic, Inc., a new residential community targeted for young families is scheduled to complete construction next year with full occupancy within three years. A major hospital system has just announced plans to build a medical center with physician office space in a nearby community.

Grant Clinic, Inc. physician salaries average $11,000 per month. The current practice is all fee-for-service and includes both Medicare and Medicaid patients. After adjustments and allowances, the net average charges are expected to be $50 per visit.

The current flexible budget for the clinic is as follows:

Variable Expenses per Visit Fixed Expenses per Month

Nurses’ salaries 0 $18,000

Administrative and technical salaries 0 $19,000

Medical supplies $6.00 0

Rent 0 $4,000

Service bureau for medical and financial records $1.00 $2,000

Other operating expenses $3.00 $6,000

Planned purchases of medical supplies are $16,000 per month. Supplies are paid in the month following purchases. Service bureau expenses are paid in the month following service; all other expenses are paid in the month of incurrence.

The clinic has already made plans to purchase equipment that will be depreciated on the straight-line basis over 5 years. A $75,000 line of credit has been arranged at the bank in the event it is needed. Assume a desired minimum cash balance of $10,000. You may assume that interest on any amounts borrowed is already considered in other operating expenses.

The statement of financial position at the end of the previous fiscal year is as follows:

GRANT CLINIC, INC.

STATEMENT OF FISCAL POSITION, DECEMBER 31, XXXX

Assets

Cash $20,000

Patient Receivables 240,000

Supplies 8,000

Total...