Assignment Exercise 18–2: Three-Level Revenue Forecast
Three eye-ear-nose-and-throat physicians decide to hire an
experienced audiologist in order to add a new service line to their
practice.* They ask the practice manager to prepare a three-level
volume forecast as a first step in their decision making.
*Assume audiologists were designated as “eligible for
physician and other prescriber incentives.” Thus the new service
line was a logical move.
Assumptions: For the base level (most likely) revenue
forecast, assume $200 per procedure times 4 procedures per day
times 5 days equals 20 procedures per week times 50 weeks per year
equals 1,000 potential procedures per year.
For the best-case revenue forecast, assume an increase in
volume of one procedure per day average, for an annual increase of
250 procedures (5 days per week times 50 weeks equals 250). (The
best case is if the practice gains a particular managed care
contract.)
For the worst case revenue forecast, assume a decrease in
volume of 2 procedures per day average, for an annual decrease of
500 procedures. (The worst case is if the practice loses a major
payer.)
Required
Using the above assumptions, prepare a three-level forecast
similar to the
example in Figure 18–5 and document your
calculations.