Operating Budget Proposal

Part 1
Use the Sample
Operating Budget template located in the Resources to complete this assignment.
The information represents
the clinic’s operating budget for 2018 and 2019.
You will fill in the 2020
column.

Remember to account for the
new billing software and MRI machine in your proposed numbers. Also keep
in mind those costs beyond the purchase price, such as staff training,
staff additions, and maintenance. You may find it helpful to refer to the
cost-benefit analysis assignment you completed in Unit 6.

You may insert your 2020
proposed budget numbers as a table into your operating budget proposal.
Alternatively, you may
attach the sample operating budget separately in the assignment submission
area.
Part 2
Based on your 2020
proposed budget, write a 4–5-page, double-spaced operating budget proposal that
explains and justifies your proposed numbers. Include all of the following
headings and address all of the bullets underneath each heading:
Explanation of 2020 Budget Numbers
What are the highlights of
the proposed 2020 budget numbers that you want the clinic’s senior leaders
to be aware of?
What areas of concern do you
want to bring to senior leaders’ attention?
What assumptions did you
make as you prepared these numbers?

Note: Be sure to consider the environmental forces that are likely
to affect the 2020 budget. Consider such environmental forces as:
compliance changes, changes in insurance claims processing, changes in
laws and regulations, and so on.

What variances exist between
the 2020 proposed numbers and the 2018 and 2019 numbers?

Note: If you plan to insert the 2020 numbers as a table into your
proposal, insert them here. Otherwise, you may include them as a separate
attachment.

Proposed 2020 Budget’s Alignment With Target
Profit Margins
How closely does this budget
align with the clinic’s target profit margins?
What variances, if any,
require explanation?
Financial Performance Tracking
How will you evaluate
financial performance?
What measures will you use
to track actual financial performance against projected financial
performance over the next year?
How frequently will you
report on financial performance?
How will you communicate
financial performance to the clinic’s senior leaders?
Addendum: 10% Budget Reductions
As you are putting the
finishing touches on your operating budget proposal, your boss stops by your
desk. You have been keeping her informed about the information included in the
proposal. She indicates that the 2019 financials are falling 10% short of
projections. As a result, she has asked you to add a final section to your
proposal labeled Addendum: 10% Budget Reductions. She informs you that you
don’t have to recalculate the numbers, but she wants you to develop a strategy
to reduce the overall budget by 10%. In the narrative, she asks you to explain
how you would approach such a request from senior leaders:
Would you reduce each line
item by 10%? Why is this the best approach? Also, how do you intend to
handle fixed costs with this approach?
Would you select specific
line items to reduce by 10%? Why is this the best approach? If so, how
would you pinpoint which line items to reduce?
Would you put a freeze on
all hiring, training, travel, and purchasing? Why is this the best
approach?

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