Paper Example on Gentiva Health Services

Paper Type:  Report
Pages:  5
Wordcount:  1157 Words
Date:  2022-06-04
Categories: 

Introduction

This report intends to come up with an analysis of how an increment in RN services would affect revenues and costs incurred. In the analysis I will show the units amounts and how whether the affect the profit and loss figures positively or negatively. In the end, I will provide recommendations that will be backed up by the analysis I will come up with.

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Visits Generated and Analysis

According to the available data, the company would provide services to an estimated number of 6,000 patients throughout the year. Rolling out the service by the new RNs would lead to an anticipatory increase in the number of patients who visit the facility by 15%. As a fraction of 6000, this number turns out to be 900 patients visiting the facility every year. Considering that the amount of service charge is $45 for every patient visit and the RNs charge an amount of $35 for every hour that they are in service, the contribution margin translates to 10*(45-35) for every patient visit. A calculation of this amount translates to $9,000 as the contribution margin. The figure 10,000 which is the additional fixed cost is greater than the contribution margin. This means that during the year there will be a net loss amounting to $1,000 as a result of the newly introduced RN service. The findings are provided clearly in the table shown below:

Budget 6,000
RN visits increment 900
Amount of revenue 40,500
Variable Cost 31,500
Contribution Margin 9,000
Additional fixed Charges 10,000
Net Loss 1,000

Recommendations

Analysis of the data provided shows an apparent red flag for concerning the proposed new project, that at 900 patient visits, it should not take place because there will be a loss incurred amounting to $1,000. On the other hand, there could be a positive result if the management makes a future decision to provide for more than 900 RN visits to patients or more than 15% of the prevailing number of patient visits (Horngren et al., 2010). From the table below, there is an indication that no profits or losses would be incurred by the company if the management team made a decision to provide for 1,000 patient visits. However, other visits that are greater than 1,000 can yield an additional income of $10 for every RN visit (Baicker, 2018).

Fixed Costs 10,000
Additional income per visit 10
Patient visits 1,000

Assuming an increment in the number of visits by RNs by 20%, it would mean 0.2*6000 which produces an increase in RN visits by 1,200. At the same time, the per annum profits would be $2,000. The findings are as shown in the table below:

Increase in RN visits 1,200
Revenue 54,000
Variable cost (42,000)
Additional Fixed Cost 10,000
Profit 2,000

Further recommended is that the company seriously considers how the RN service would affect their present revenues prior to making the final decision (Stevens, 2017).

Business Plan

The business plan for Gentiva Health Services is composed of both financial and non-financial elements. The development of any business plan puts into consideration the amount of support needed to finance the company operations going forward, past company information, and future projections. As much as no business plan is perfect, it is imperative for the management to come up with plans that are sophisticated scientifically for us to arrive at a deviation of the actual from the expected results (Hansen, Mowen & Madison, 2010).

The following steps need to be adhered to before coming up with Gentiva Health services business plan:

  1. Find out the revenue from the expected service delivery by making forecasts of monthly and daily visits.
  2. Inflation should be among the factors to be considered, for instance, the amount of profit needed and the cost that is incurred is what determines the amount that patients are to be charged.
  3. Create a record prior to the commencement of the project that lists all costs. This allows for such costs to be charged to patients in proper time.
  4. The preparation of the cash budget needs to be in such a manner that it acts as a solid foundation for any other budget that would arise, there needs to be a distribution of suitable sources in case need for funding arises due to any deficiencies, and there should be investment of any funds that are not currently in use.
  5. There should be thorough enforcement of marketing and operational strategies to allow the company to develop as anticipated.

The situation of Gentiva is in Georgia, and it has entered into an alliance with Kindred Health Care facility to build the United States' most extensive Health Hospice System. The operation of this company is basically divided into two distinct fields. They are home, health, and hospice. They are distinct to ensure a distribution of resources as well as divide strategies in an effort to acquire the most benefit. The section of Home and Health involves home nursing and therapy service, this is one of the largest divisions covering 38 states. There is a further division of this one with 5 distinct subdivisions whose basis is the geographical locations. The number of clinical personnel who have been included in the payroll, some of them get hourly payments hour while the rest receive payment for every visit.

Patients with the incurable diseases are accommodated in the Hospice division. The divisions amount to 165 in the 30 states. There are 4 geographical locations which accommodate the medical teams of the Hospice division. Each of the locations has a branch where it conducts its operations. There is an ongoing plan by the Hospice division to come up with a specialized program for memory care in which illnesses including dementia and Alzheimer's disease will be taken care of hence enabling better management of the patients by the caregivers. There will be more programs introduced in the Hospice and home health divisions in order to increase the benefits to individuals and the company.

Conclusion

At the moment, Medicare patients are the majority in number in both hospice and home health divisions. The organization has come up with bumper plans to add to the numbers and according to the way I have analyzed the data, it would result in a loss to the company hence it is important that the company stays away from pursuing this initiative. My suggestion is that the company should stick to the improving the healthcare conditions which will enable the company to keep the expenditures low but at the same time there will be a boost in revenue. The number of Medicare patients allowed by the management should not be increased because there will be a net loss.

References

Baicker, K., Allen, H. L., Wright, B. J., Taubman, S. L., & Finkelstein, A. N. (2018). The Effect of Medicaid on Management of Depression: Evidence From the Oregon Health Insurance Experiment. The Milbank Quarterly, 96(1), 29-56.

Hansen, D. R., Mowen, M. M., & Madison, T. (2010). Cornerstones of cost accounting. Issues in Accounting Education, 25(4), 790-791

Horngren, C. T., Foster, G., Datar, S. M., Rajan, M., Ittner, C., & Baldwin, A. A. (2010). Cost accounting: A managerial emphasis. Issues in Accounting Education, 25(4), 789-790

Stevens, R. A. (2017). Welfare medicine in America: A case study of Medicaid. Routledge.

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Paper Example on Gentiva Health Services. (2022, Jun 04). Retrieved from https://proessays.net/essays/paper-example-on-gentiva-health-services

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