Essay on Case 6-Columbia Memorial Hospital

948 Words Mar 1st, 2014 4 Pages
Case Study #6
Managerial Accounting

#1 With no change in volume (utilization), is the clinic projected to make a profit?
Currently the clinic sees about 45 patients per day and they have capacity to handle 85. If they continue how they are operating the clinic is looking at a loss of $3,173. At this rate the clinic will not be able to make a profit in spite of inflation over the next couple years.
#2 How many additional daily visits must be generated to break even?
There is an average of 1,230 visits a month, bringing in 47,037 a month in net revenue. Figure one tells us that in order to breakeven without the new marketing program the clinic will need to see 22 more patients per day, which brings it to a grand total of 67
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By doing this he can be more accurate on staffing and volume. He is also going to need to do an assessment of the geographical area to see what the patients are in need of and how he can better assist them, therefore this will cut back on unnecessary supplies and equipment. The better he knows the population and their needs the more efficient the organization and staff will become.
#7 Please offer your final recommendation to the CEO regarding the fate of the clinic, including your response for doing so.
In conclusion, I think the clinic should implement the marketing plan because they will have a better chance of reaching the breakeven point with the marketing program than without the advertising efforts. Also being that they only 1 of the 3 walk in clinics and 2 clinics have recently shut down the have a good chance of increasing their patient census. They are also only a few minutes from the hospital and are part of a large profit making organization, so if they are able to get the word out about their strengths I think they will become more successful. Also by lowering the variable costs and semi-fixed costs, they can raise gross margin. If they are diligent about purchasing supplies, controlling inventory, and increasing productivity of labor by using cost effective scheduling or adding more efficient technology this would also be helpful in conserving and controlling costs. I think by

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