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1. A physician is considering opening a home health agency to serve her patients and others...

1. A physician is considering opening a home health agency to serve her patients and others in the community. She read the home health industry in 2015 is expected to earn $5.3 billion on $73 billion in revenues (IBIS World). Create a scratch budget for the physician based on the assumptions below. How is the agency expected to perform relative to the industry?

Total visits:   12,000

Reimbursement per visit:   $75

Management and support salaries: $120,000 (1 office manager and 1 clerical support)

Staff productivity:   2,000 patients per year (8 patients/day * 5 days/week * 50 weeks/year)

Staff wage:       $30 per hour for 2,080 hours per year

FICA:           7.65% of total salary

Health insurance:   $500 per month per employee

Retirement:       5% of total salary

Supplies:       $7.50 per visit

Travel:           10 miles per visit @ 50¢per mile

Rent:           $2,000 per month

Insurance:       $1,000 per month

Utilities:           $24,500

Other:           2% of non-salary and fringe benefit expenses

Total Revenue:           $_________

Management & clerical salaries:   $_________

Staff salaries:           __________

FICA:               __________

Health insurance:       __________

Retirement:           __________

Supplies:           __________

Travel:               __________  

Rent:               __________  

Insurance:           __________

Utilities:               __________

Miscellaneous expense:    __________

Total Expense:           $_________

Profit:               $_________

Margin:               __________

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