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    Budgeting and Cost Cutting in Healthcare clinic

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    Details: Dr. Stephanie White, the Chief Administrator of Uptown Clinic, a community mental health agency, is concerned about the dilemma of coping with reduced budgets next year and into the foreseeable future, but increasing demand for services. In order to plan for reduced budgets, she must first identify where costs can be cut or reduced and still keep the agency functioning. Below are some data from the past year.

    Program Area Costs
    Two Secretaries
    Supplies $35,000
    Advertising and promotion $9,000
    Professional meetings/dues $14,000
    Purchased Services:
    Accounting and billing
    Community Mental Health Services
    Salaries (two social workers) $46,000
    Transportation $10,000
    Outpatient mental health treatment
    Two Social Workers

    Give a dollar range of costs to reduce budgets (worst and best case analysis).

    You need to cut $94,000 in cost. Prioritize those cuts that can be made without impacting the operation or quality care of the organization.

    How would you advise Dr. White to prepare for reduced budgets? For more information on creating Excel Spreadsheets, please visit the Excel Lab.

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    Solution Preview

    The first thing that I did was reorganizing the categories. I placed the expenses under salaries, fixed costs and overhead.

    Fixed costs include things that should not be cut as a first resort such as transportation. You need to have transportation to get patients to and from locations.

    The second area is salary. Perhaps a budget could be cut from the salary. If you notice, there are 2 secretaries and 2 social workers. Perhaps things can be cut there.

    Finally there is overhead - items that include advertising and promotion, accounting, billing - these are all ...

    Solution Summary

    This problem is presented with a budget for a medical clinic, and you are told to cut $94,000 for the budget. The solution examines the budget and makes recommendations on what to cut. The solution is presented in excel.