Health Information Technology
Week 6: Assignment – Budget Variance*
Review the following case study. Using an Excel spreadsheet budget, calculate variances as indicated in the scenario. Use the spreadsheet template and assumptions to complete the proposed FY2020 budget. Include formulas for calculating all affected columns in the spreadsheet. Write a budget justification for presentation to a budget committee.
As the director of HIM at University Hospital, you are responsible for developing the annual operating budget for the HIM department. You have met with your coding and transcription supervisors to discuss their area needs and get input on projected volume statistics for the upcoming fiscal year. In addition, you have access to the past two years of budget data. It is now time to develop the operating budget for FY2020. You have been instructed by the budget department to use the Excel spreadsheet provided to submit your FY2020 budget. You will attach a written justification of your finalized budget to the University Hospital Budget Review Committee.
Part I. Budget
Complete the FY2020 budget using an Excel spreadsheet. All totals must be completed.
• Over the past two years, the HIM department coding section has been centralizing coding within the facility. The HIM coding section implemented a new CAC product in FY2019. Now that the CAC product is fully operational, the coding section is taking over the remainder of coding for the entire hospital. By the end of FY2020, all hospital and physician coding will be performed by the HIM coding section.
• University Hospital went live with an EHR for ambulatory and inpatient medical records on March 1, 2018. Prior to this, all records were scanned into a document imaging product by HIM staff. In addition, all progress notes and history and physicals are now completed within the EHR.
• All employees will receive a flat 2.5 percent increase in salary or wage for FY2020.
• The total cost for benefits for all employees is 24 percent, which is added after the 2.5 percent increase in salary and wage for FY2020.
One new coding supervisor will be hired.
• Two additional coders for each level—coder I, coder II, and coder III—will be hired for a total of six new coders.
• The CAC product requires that organizations designate specific individuals to receive a CAC specialist certification. The two coding supervisors and three data quality specialists will receive this certification. The cost per year, per individual is $225. Add this as a line item to the budget.
• The number of electronic management clerks will be reduced by two.
• Outsourced coding expenses are expected to increase by 15 percent from FY2019.
• Outsourced transcription services are expected to decrease by 10 percent from FY2019.
• Travel to national and state meetings will be reduced by 5 percent from FY2019.
• Office supplies expenses will increase by 10 percent from FY2019.
• University Hospital pays AHIMA dues for the HIM director, all HIM coding managers, and all data quality specialists. The level of dues is Active Membership with credential. This includes four CEU credits. Research this cost.
• The HIM department will purchase six AHIMA live webinars to provide CEUs for employees. Research this cost.
• All CAC licensing fees will increase by 10 percent from FY2019.
• Apply the percentage of increase calculated for the ROI copying fees and the physician office coding contract from FY2018 to FY2019 to FY2020.
• The HIM director, all coding managers, and all data quality specialists will need a set of ICD-10-CM, ICD-10-PCS, and CPT code books for hospital billing and coding. Coders do not need a set of books as coding resources are available within the encoding system. Research this cost. Assume the basic AHIMA membership price for books, and find the most economical way to purchase the books. Use the most recent price available.
To complete the FY2020 budget using an Excel spreadsheet, you can follow these steps:
Open a new Excel spreadsheet and create columns for the various budget items such as personnel expenses, benefits, outsourcing expenses, travel expenses, office supplies, AHIMA dues, licensing fees, etc.
Use the assumptions provided in the case study to determine the budget amounts for each category. Apply the specified percentage changes to the corresponding expenses from FY2019. For example, if the office supplies expenses in FY2019 were $10,000, you would increase it by 10% to calculate the budget amount for FY2020.
Incorporate the changes in staffing levels by adding the costs of new hires and subtracting the costs of reduced positions. Take into account the 2.5% salary increase for all employees and the 24% benefits cost.
Add the cost of CAC specialist certification for the two coding supervisors and three data quality specialists as a separate line item.
Calculate the expected increase or decrease in outsourced coding and transcription services based on the provided percentages.
Adjust the budget for changes in travel expenses, AHIMA dues, CAC licensing fees, ROI copying fees, and physician office coding contract, as specified in the assumptions.
Research and include the cost of AHIMA live webinars for CEUs as a separate line item.
Research and include the cost of ICD-10-CM, ICD-10-PCS, and CPT code books for the HIM director, coding managers, and data quality specialists.
Calculate the total budget for each category and summarize the overall budget for the HIM department.
Once you have completed the budget spreadsheet, you can proceed with writing the budget justification for presentation to the budget committee. In the budget justification, explain the rationale behind each budget item and the assumptions used to calculate the amounts. Highlight any significant changes from the previous year and provide supporting data or research to justify the budget amounts.
Include information on the department’s goals and objectives for FY2020 and how the proposed budget aligns with those goals. Emphasize any cost-saving measures or efficiencies that have been implemented. Finally, address any potential concerns or risks associated with the budget and provide mitigation strategies.
Remember to present the budget justification in a clear and concise manner, focusing on key points and providing relevant supporting details. Use tables, graphs, or charts if necessary to enhance the visual presentation of the budget information.