Hidaat Alem

Lone Star Hospices Budget Report for 2013

University of Maryland University College

Good Morning Board of Directors,

We (Management) have called this meeting to discuss our prospective budget plan for the

next fiscal year beginning on January 1, 2013 and ending on December 31, 2013. We continually

want Lone Star Hospice to be the premier program in the state of Maryland. To do this, we have

created a budget proposal that highlights the goals that you (The Board of Directors) have set for

the year of 2013. The key goals are to: Provide State of the Art service to patients; Achieve

improvements in productivity of at least 2%; Produce at least 5% Net Margin from Operations

and; Grow the number of patients admitted by 6%. With these standards set firmly into place let

us now discuss our plan to accomplish these statistics and the reasoning behind it.

Our budget for year 2013 is based upon data that was submitted from this year as well as

two previous years. We took the percentage of each annual difference and compared it to the next

following year. We then saw the trend that Lone Star had followed and calculated our future

numbers against the same scale. There were some tweaking with numbers to get the right

percentages but in the end they all worked out. Management has attached the key financial

information as an Excel file and has sent an e-mail to every board member to review the entire

budget project as a whole. If there are any concerns about our suggested budget please make a

note of it and we will gladly satisfy them.

In 2010 (2 years ago) total patient admission was 700 with 60% receiving home care and

40% receiving long term care. From year 2010-2011, the rate of admission increased by 3%

being that total patient admission was 720. From 2011-2012, the rate of admission decreased by

1% to 2% but this still allowed 734 patients to be admitted which is still an increase.
 So for the next following year, we project the rate of admission will fall to 1% increasing

the total number of patients to be admitted to be 741 for the year of 2013, with 53% of patients

receiving home care and 47% receiving long term care. This brings us back to one of the key

goals that were established for Lone Star Hospice. With a total patient admission reaching 741

for next year, this has accomplished the goal of increasing total patient admission by 6%.

When calculating, use our next years total patient number 741 and subtract the year 2010

patient number of 700. Divide by 2010s patient number of 700 and multiply by 100. This will

give the patient admission increase of 6%. One goal has already been accomplished and this is a

reason that our budget should be taken into consideration.

With gross charges by Lone Star, there was a slight increase at each designated level of

care. This proves that our facility is one of the top performing institutions not only for care but

also financially. For routine care there was a decreasing slope of one dollar per year beginning in

2011. From 2010-2011 the charges increased three dollars to $178 per one day of service. From

2011-2012 the charges increased two dollars to $180 per one day of service. For the year of 2013

we project the routine care charge would increase one dollar to $181 per one day of service

which is the highest amount that we would receive from patients so far, and if we continue with

this budget there will be an additional increase every year.

For inpatient care there was a consistent two dollar grade per year with each year. From

2010-2011 the charges increased two dollars to $762 per one day of service. From 2011-2012 the

charges increased two dollars to $764 per one day of service. For the year of 2013 we project the

inpatient care charge would increase by the same two dollars to $766 per one day of service

which is also the highest amount we would receive from patients getting inpatient care.
 For respite care there was a decreasing slope of one dollar per year beginning in 2011.

From 2010-2011 the charges increased three dollars to $185 per one day of service. From 2011-

2012 the charges increased two dollars to $187 per one day of service. For the year of 2013 we

project the respite care charge would increase one dollar to $188 per one day of service. This

decreasing slope would still be greater than previous years and we will observe the respite care

unit for the future two years to see if changes in charging begin to reverse.

For continuous care there was a constant level of five dollars per year with each year.

From 2010-2011 the charges increased five dollars to $985 per one day of service. From 2011-

2012 the charges increased two dollars to $990 per one day of service. For the year of 2013 we

project the inpatient care charge would increase by the same two dollars to $995 per one day of

service. These increases may change because of the current modification of the health care bill.

We will continuously watch for updates that the government presents to the hospice community

assuring that we follow strictly under legislative policy.

Our income statement indicates a total of $542,963 in net income for next years goal.

This takes into account the net operating revenue and the total operating expenses. This makes

for a 5.1% net margin from operations that fulfill another one of our boards goal for Lone Star

to produce at least a 5% net margin from operations.

According to the balance sheet the net assets for Lone Star are also increasing and next

years total exceeds all previous years net assets. With our budget plan, next years net assets

will total $4,346,162 which is a 64% increase from year 2010s net assets of 2,643,146.

Our productivity schedule improves next years long term care unit by three percent. This

exceeds the goal of achieving productivity of at least 2% which is great. With every goal
accomplished within our proposed budget, it is fair to say that approval would be in the best

interest of Lone Star Hospice. We look forward to receiving your analysis and critiques of this

budget and are certain that this plan will be operated for the fiscal year of 2013.

Thank you all for attending

Hidaat Alem

Budget Director