Bammel Health System

Miranda Achu
Baker College of Allen Park
Health System Finance
Final Exam
Bammel Health System consist of two branches, the Bammel Memorial Hospital (BMH)

which is the center piece with 10 primary care centers, 4corrections Health Services

clinics, multiple school-based clinics serving many elementary, middle and high schools,

a network of mental health facilities, 2 long-term care nursing facilities and another

Bammel South Community Hospital (BMCH) (Baker, 2010).

Looking all these numerous affiliations, one would immediately assume that, Bammel

Health System is doing really well or at least in good standing. But for the years 2002-

2005, Bammel Health System has had deficit of 7.4million, 47.4million, 85.2million, and

116million respectively.

Fiscal Year Deficit in dollar Difference of deficit from Deficit

amounts previous year in dollars increase/decrease

FY2002 7.4M* Data N/A N/A
FY2003 47.4M 40M + 40M
FY2004 85.2M 37.8M - 2.2M
FY2005 116M 30.8 -7M

M* = Million(s)

From the decreases in deficit over these years, it is clear that, someone is trying to do

something to bring the budget back. I will suggest that they keep doing whatever that

they are doing to reduce the deficit, and at the same time incorporate more way to contain

cost and bring in more revenue

Looking at the 2005 fact sheet, it is clear that, Bammel Health System is working into a

deficit. The fact that, their revenue alone is lower than their expenses, is already a

problem, especially when it is not the first year if business or the second. If they keep on

this way, they might end up in bankruptcy.

I will propose, maybe a little increase in their commercial insurance. Maybe add a small

aspect to it, and increase the premiums a little higher than what was added, that way,

people do not really notice the increase, they still enjoy the same benefits, but maybe at a

little more higher cost. Any form of wasteful spending should be eliminated. Be it general

supplies, office supplies, provisions, even the kitchen budget should be watched closely,

so any and all forms of wasteful spending are eliminated.

Organizing a fundraiser is also a very good idea. And maybe asking or requesting a little

more support from the county tax support is not a bad idea, given the fact that Bammel’s

doors are open to any one and their mission is to offer high-quality of care to any

resident, regardless of the ability to pay.

Another idea will be not to do any more investments or expansions until when the

Bammel’s Health System is at a break-even point or when they must have cleared all

their deficits and start making gain again. Decreasing length of stay at the hospital and

even during emergency visits. People should be referred to see their primary care

physicians, so there is no resources spent on doing extra test or diagnostic testing while

making sure that, patients do get the best possible care and avoiding lawsuits of any kind.

This way the expenses on doubtful accounts will be minimal. There should also be an

increase in half penny sales.

With all of that in place, the proposed budget or fact sheet for the nest fiscal year could

look like this:

Revenue $1,421,602,990 + $115M

Commercial Insurance $40,000,000 + $50M
Medicare $253,741,300 + $0
Medicaid $205,298,939 + $0
Other Patient Revenue $140,497,909 + $0
Non-Patient Revenue $79,799,127 + $0
County Tax Support (ad valorem) $173,066,006 + $50M
BMH Health Plan $98,191,619 + $10M
County Capital Contribution $60,200,000 + $5M
Expenses $1,405,611,537 - $10.6M
Employee/Medical Staff Compensation & Benefits $780.430.457 - $2M
Operational Expenses $214,253,467 - $.5M
Pharmaceutical,supplies &services for direct patient care $310,098,487 - $.1M
Provision for Doubtful Accounts $100,829,126 - $8M

Notice a difference in $10,600,000 in expenses when provisions for doubtful accounts are

reduced by $8M, and supplies reduced by $100,000 operational expenses reduced by

$500,000 and employees compensations reduced by $2M. By hiring new people at a

lower paying rate and getting rid of any excess staffing and not having too many contract

workers or staffing agencies involved in hiring or supplying of employees. Also trying to

allocate monthly allowance or weekly allowances if need be for each department and

making the department heads aware of the budget deficit, so that way, they know the

severity of the situation, and handle the budget with more efficiency and rid of wasteful

spending. An increase of $115 in the budget too could go a long way of getting rid of

loans, deficits and some other liabilities, like account payables and even go for some

lucrative investment deals and expansion when the time is right.

Baker and Baker in Health Care Finance stated in a case study of Metropolis Health

System in chapter 25, that one of the ways that Metropolis could raise money was to rent

television and vending gifts and other items at the hospital as auxiliary funds (Baker &

Baker, 2011). They may sound minute and trivial but could add up over time. Say the

television renting brings in $1000 a month multiplied by 12 months, will be $12,000, and
that is just an estimate. The actual revenue could be a lot more considering that BMH has

an average of 1,756 beds in use and admissions are about 51,139 excluding BMCH.

And also increasing affiliations with more medical schools or opening up more positions

for medical residency students, that could bring in revenue from tuition and fees paid by

the students. With all these Bammel’s Health System could very well be on their way not

only to a break-even point, but also to making profits and even expanding in the near

future. As long as there is a close watch on the budget and some policing agents to make

sure every one is in compliance.

Make better use of volunteer workers, and reduce number of employees. I am sure there

are always people willing to volunteer for educational purposes, like medical school

applicants, Physician assistants, nurses etc. Improve volunteer policies to attract more

volunteers, by not just writing that they volunteered, but maybe writing referral letters,

and maybe include small stipend for scholarship. These will attract more volunteers and

thus more volunteer hours.

Current # on Reduced # of Current # of Estimated # after

payroll employees volunteers new policies

BMH 8453.3 8353.3 703 1103
BMCH 839.4 819.4 167 207
Total 9292.7 9172.7 870 1310

Difference 9172.7 –9292.7 = -120 1310 – 870 = + 440

Average # of volunteer hours for BMH = 96.4hrs a year,

= 8hrs per month

Average # of volunteer hours for BMCH = 117.8hrs a year

 = 9.8 hours a month

Average # of hours for BMH & BMCH =8.9hrs a month

From above table estimated # of volunteers gained = 440

# of hours gained in total for both BMH & BMCH will be

= 440 x 8.9 = 3916 hours a month

But if average volunteer hours is increased to 12 hours a month which is 4 hours a week,

then the average hours gained will be = 440 x 12 = 5280hours a month

= 63360 hours per year

That should be able to cover the 120 employees laid off and even more. Expenses will go

down and if this trend continues and more volunteers are added as time goes on and the

volunteer policy gets better, even more income will be saved, as well as bringing

exposure to Bammel Health Systems.

Reference:

Baker, J. J. & Baker, R. W. (2011). Health care finance: basic tools for nonfinancial

managers (3rd ed.). Sudbury, MA: Jones and Bartlett Publishers.

Baker College. (2010, Fall). HSC403R Health System Finance [Final Exam]. Available

from Blackboard Web site: https://ol.baker.edu/courses/1/hsc403-f2010-

9558.001/content/_8026859_1/HSC%20403R%20Case%20study%20-%20Final

%20exam.pdf?

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Miranda Achu (December, 2010) Based on Personal Assumptions, Prediction, Skills and

Knowledge.