Managerial Accounting Final Refers to PPT slide # 3 MBA Program - May 2009

1. Post Office Square
P&L Comparison (FY07 & FY08) of Key Variances (>10%)
FY 2008 FY 2007
YTD YTD YTD YTD
Year To Date Year To Variance Variance Year To Year To Date Variance Variance
Actual Date Plan Amount Percent Total Plan Date Actual Plan Amount Percent Total Plan
Revenue Revenue
35006 - Rent Income $ 42,911 $ 56,400 $ (13,489) -23.9% $ 56,400 35006 - Rent Income $ 50,853 $ 41,858 $ 8,995 21.5% $ 41,858
Expenses Expenses
41112 - Overtime $ 67,946 $ 23,046 $ (44,900) -194.8% $ 23,046 41112 - Overtime $ 71,930 $ 22,958 $ (48,972) -213.3% $ 22,958
42507 - Temp Help Agency $ 77,961 $ - $ (77,961) 0.0% $ - 42507 - Temp Help Agency $ 50,346 $ - $ (50,346) 0.0% $ -
43055 - Cleaning Services $ 134,852 $ 105,600 $ (29,252) -27.7% $ 105,600 43055 - Cleaning Services $ 94,910 $ 89,760 $ (5,150) -5.7% $ 89,760
44054 - Events for Employees $ 20,285 $ 12,000 $ (8,285) -69.0% $ 12,000 44054 - Events for Employees $ 12,008 $ 7,200 $ (4,808) -66.8% $ 7,200
45450 - Parking $ 75,122 $ 28,328 $ (46,793) -165.2% $ 28,328 45450 - Parking $ 71,977 $ 70,439 $ (1,538) -2.2% $ 70,439
45810 - Postage $ 14,042 $ 8,180 $ (5,862) -71.7% $ 8,180 45810 - Postage $ 11,406 $ 8,180 $ (3,226) -39.4% $ 8,180
46003 - Maint. & Repairs Bldg $ 54,692 $ 26,700 $ (27,992) -104.8% $ 26,700 46003 - Maint. & Repairs Bldg $ 21,744 $ 25,326 $ 3,582 14.1% $ 25,326
46004 - Maint. & Repairs Equip $ 64,822 $ 54,296 $ (10,526) -19.4% $ 54,296 46004 - Maint. & Repairs Equip $ 65,970 $ 54,496 $ (11,474) -21.1% $ 54,496
46101 - Medical Supplies $ 235,984 $ 158,528 $ (77,456) -48.9% $ 158,528 46101 - Medical Supplies $ 161,638 $ 136,218 $ (25,420) -18.7% $ 136,218
46110 - Office Supplies $ 58,291 $ 33,460 $ (24,831) -74.2% $ 33,460 46110 - Office Supplies $ 47,595 $ 33,074 $ (14,521) -43.9% $ 33,074
Total Net Gain/(Loss) w/ Overhead (2,803,762) (2,205,719) (598,043) -27.1% (2,205,719) Total Net Gain/(Loss) w/ Overhead (1,949,671) (3,344,846) (1,395,176) -41.7% (3,344,846)
Interview Notes with POS Site Administrator
35006 - Rent Income Rental income for '08 was $13k less than plan and $8k less than LY actual. Why? Is anyone using space at POS for free or reduced rate?
Planned higher. Increased over 07. Rent is from Acupuncture and Massage 2 small Businesses. Variance due to bookkeeping error per Administrator.
41112 - Overtime Why was this line item planed for $23k when $72k were used in '07? Inaccurate planning?
Typical in Health Care Operations not budgeted/run perfectly. Budget is based on historical staffing shortages. If staff are out, need to make a decision can we live without them
and how this will affect patient care. Decided to replace based on patient care. Target typically is prior year total plus inflation. Majority of variances from IM and OB/GYN.
42507 - Temp Help Agency What work necessitated hiring temp staff. No plan for two consecutive years. Why no plan in '08 if $50k spent in '07?
Similar to OT. Not budgeted. Recognize need to run variance.
43055 - Cleaning Services $5k above plan in '07 and although increased plan in '08 still $29k above plan ($40k above LY actual). Why? Increase cost? Add. Staff?
Utilize an outside vendor. Budgeted centrally by Purchasing Department - not always exact. 2008 needed cycle cleaning (4-5x) of the carpets, beyond the cleaning contract.
Based on square footage in building.
44054 - Events for Employees $8k increase from '07 actual and '08 plan. Why? Employee Satisfaction results?
Even though POS had 2nd or 3rd highest EOS score in the company, Administrator felt it was important to raise spending to maintain high satisfaction scores. Hosted off-site
holiday party for the first time in many years despite $3,000 greater expense.

2. 45450 - Parking Significantly under planned in '08 compared to LY actual and plan. Why?
Provide parking to all physicians. ($30.00/day for downtown parking) allocated to the specialty dept of the physician. POS did not transfer expenses to specialty departments
45810 - Postage Plan reduced in '08 by $3k compared to '07 actual, then cost overrun by $6k compared to plan. Why?
Due to low MyHealth enrollment, practice generates large volume of patient letters.
46003 - Maintenance & Repairs Bldg Significant (double) cost overrun in '08. Explain.
Planned every year with Real Estate. Roll over cost year-to-year, some costs can not be predicted.
46004 - Maintenance & Repairs Equip FY'08 actual is same as FY'07 actual. Why was it budgeted the same as '07? Ran $10k deficit in same line two sequential years.
Planned every year with Real Estate. Roll over cost year-to-year, some costs can not be predicted.
46101 - Medical Supplies Significant increase in line item compared to plan and '07 actual. 7th floor renovation?
Budgeting has not kept up with actual cost of supplies. Excess inventory can result in waste [e.g. expired supplies].
46110 - Office Supplies Same $ budgeted in both '07 and '08. Both years ran overrun. $24k in '08. Why? '07 actual was $48k - why was this not '08 plan figure?
Budgeting has not kept up with actual cost of supplies.
1. What is the demographic breakdown Younger patient base than HVMA on average. 3-4% over 60 years old. 30's and 40's and 50's. Small Medicare population, diverse ethnic population, varied zip code-very
for POS? scattered. Most pts walk or take the T, very few patients drive. The busiest BH and booming Allergy and same day primary care-pts see own doctor on the day they call. Busy
OB/GYN practice. Less inclined to offer weekends and more inclined to get more appointments during the day. How do we keep our current pts healthy, higher level education,
asking more questions. More anxious. Patients requires different orientations. Large BH practice because of this.
2. What types of services do the Don’t have some of the procedural specialties. Not ready to move on to the second place for Cosmetic Dermatology. Would like more robust Ortho and Sports medicine, Hand and
patients want? I.e.: urgent care, O.T. and more P.T. BUT 3/4 million build out not option at this time.
allergy, cosmetic dermatology.,
3. Specifically are there departments or Negative contribution to HVMA. 3 services money losers-IM, OB/GYN and BH. Contributors are Med and Surgery Specialty, except Dermatology, none at POSQ. IM as stand
specialties that contribute to the alone service loses money. Kenmore, Wellesley, Somerville and Braintree are money makers. POS also has high rent. No high end specialties, imaging or endoscopy. Look at
variances? performance against budget. On cap basis, making more $, younger, healthier population. Want a presence (opened in 1984, area was under served medically-biggest competitor
is MGH who is closed for new business.)
4. What are the major concerns of the
POS Management Team? Don't pay much attention to the P&L.
5. POS is budgeted for a net loss?
Why? See #3.
6. What future changes (adding or
closing a department) are you
anticipating in the near future for your
site? See #2.