Description
Please show all work on excel: include the equations!! Case PDF is attached!
1.Use the Excel file for Exhibits 1 & 2. There are a few typos in the tables within the case, but the excel file is correct.
2.Add a 3rd tab to the excel file (change the name of the file to your last name + case 3) and you can provide your responses and prepare your calculations in the excel file.
3.Answer questions 1 – 8 in the case
4.Question 9 (new). What happens to Bridgestone BHC operating profit under the following scenarios:
a.Revenues increase 10% (FC remain same)
b.Revenues decrease 10% (FC remain same)
c.Fixed costs increase 5% (revenues remain same)
d.Fixed costs decrease 5% (revenues remain same)
5.Question 10: Using this case as an example, how can managers use CVP analysis for planning and control?
Unformatted Attachment Preview
ISSN 1940-204X
Bridgestone Behavioral Health Center:
Cost-Volume-Profit (CVP) Analysis for Planning and Control
A. Ronald Kucic
University of Denver
James E. Sorensen
University of Denver
Lisa M. Victoravich
University of Denver
INTRODUCTION
Thomas: In reality, securing some outside assistance seems
to be a good option to avoid future losses. Since my training
is in psychology, I don’t have the accounting background to
take the task on myself. We need someone who specializes
in financial management for nonprofit human service
organizations.
In June of the current year Dr. Thomas Russell, Executive
Director, and Susan Smyth, Accountant, at the Bridgestone
Behavioral Health Center were discussing the necessity
of gaining a better understanding of how to monitor the
Center’s operating and financial performance. Located
in Cleveland, Ohio, Bridgestone provides prevention,
intervention, and treatment services for individuals with
substance abuse problems. Bridgestone’s management is
concerned about its financial performance after realizing
a loss in the prior year although a small profit was
projected. Despite management’s concern and attention
of Bridgestone’s profitability troubles, the Center’s annual
budget once again contains a projection for a meager profit of
$7,000 (see Exhibit 1).
BRIDGESTONE BACKGROUND
HISTORY AND MISSION
prepared, we have been fighting to reach breakeven over
the past three years. We have been able to just get past
breakeven recently, but I am worried—it seems like only
a slight variation in our operations could throw us into an
operating loss. I’ve been actively involved in managing the
Center, and I don’t understand how we avoid showing a loss!
Bridgestone is a comprehensive outpatient substance
abuse treatment center located in the Midwest United
States. Since 1985, Bridgestone has offered a continuum of
outpatient services, including counseling, crisis intervention,
detoxification, and methadone maintenance. The Bridgestone
mission is to be a leader in healing and changing lives
by providing high quality behavioral health care and
rehabilitation to all individuals in need. With this mission, the
Center promises to advance behavioral healthcare through
the creation of innovative services and enriching the lives of
patients one by one.
Susan: Unfortunately, I have no oversight with respect to
EXECUTIVE DIRECTOR AND SUPPORTING STAFF
monitoring performance since my job is to input the financial
and units of service numbers into the accounting system
as they occur. I am currently working more than 40 hours a
week so I am not sure what else I could do. Maybe we can
hire someone like a consultant to help us?
Dr. Thomas Russell, Executive Director, has over 30 years
of behavioral health addiction experience and holds a
Masters of Social Work from Ohio University and a Ph.D.
in Clinical Psychology with a specialization on Addiction
Counseling from Northwestern University. He is a fellow
Thomas: According to the financial reports that you have
IM A ED U C ATIO NA L C A S E JOURNAL
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VOL. 3, N O. 4, ART. 1, DECEMBER 2010
of the American College of Addiction Examiners and is a
former faculty member of the Ohio University Department
of Psychology. Dr. Russell is the author of numerous papers
in the field of addictions and presents frequently at major
conferences.
In addition to a highly qualified Executive Director,
Bridgestone has an outstanding support staff. They
consistently maintain a low client-to-staff ratio with highly
trained professionals who are well prepared to support
patients in a large array of circumstances. The staff members
at Bridgestone are like a family and are defined by their
integrity and expertise. They are the key reason for the
Center’s success in terms of the thousands of lives that they
have changed.
Lab Urinalysis – Laboratory urinalysis services are performed
for screening and intervention purposes. This is aimed
at helping the patient withstand urges to use drugs. Such
monitoring also can provide early evidence of drug use so
that the individual’s treatment plan can be properly adjusted.
Case Management – Case management serves to monitor
patient progress and compliance with recommended
addiction treatment plans. Reports to outside parties such as
courts, children’s protective services, licensing boards, and
employers are provided as needed.
Group Counseling – Groups are considered the most effective
method of breaking patterns of isolation, which is typical
of clients during their active addiction stage. During group
counseling, clients have the opportunity to examine their
thoughts through sharing, listening, and receiving feedback
from their peers. In a group setting, clients also learn to
develop social skills.
PATIENT TESTIMONIALS
Patient and family member testimonials include:
“I wanted to say thank you for helping my daughter!
I know of lots of therapists…in fact I am one.
After 20 years of practice I was very frustrated
sending my daughter to treatment until Bridgestone.
Yes there are therapists…but your folks are
THERAPISTS, with a capital T.”
Individual Counseling – Individuals with addictions often
consider their problems unique and, therefore, are best
understood in a one-on-one session with their counselor.
Individual counseling sessions focus on the patient’s
progress in the educational process, group participation, drug
monitoring, compliance, 12–step work, and identification of
areas for improvement to achieve long-term sobriety.
“Today is my one year anniversary of sobriety, which
would not have been possible without the help
of the counselors at Bridgestone. I can’t say thank
you enough!”
Crisis Intervention – Due to the volatile nature of the disease
of addiction, Bridgestone provides crisis intervention or
emergency counseling for stressful situations that may lead
to relapse or to help patients work through cravings or urges
that could lead to a relapse.
“I’m thankful to Bridgestone for the treatment I
received. The road to recovery was not an easy road
back. I still do the same elementary things today
that I had to do to achieve recovery. I realized that
honesty and open-mindedness was a must. I had to
surrender all—I wanted real success.”
Intensive Outpatient – Outpatient care focuses on education
and counseling in both individual and group settings to
achieve abstinence and to develop a self-responsible plan of
addiction recovery for each patient. The program lasts six to
eight weeks depending on individual progress and involves
three three-hour sessions per week.
BEHAVIORAL HEALTH AND ADDICTION SERVICES
Bridgestone offers 10 services designed to treat a large array
of substance dependencies from the point of detoxification
to supporting long-term sobriety and preventing relapses.
Medical Somatic – The service evaluates and monitors
the needs of adults, children, and adolescents exhibiting
symptoms associated with a Diagnostic and Statistical Manual
of Mental Disorders, Fourth Edition, (DSM-IV) diagnosis.
(DSM-V is expected in 2013.) This consists of evaluating a
patient’s need for psychotropic medications associated with
psychotic disorders, severe mood disorders, impulse control
disorders, bi-polar disorders, and other psychiatric conditions
impairing daily functioning.
Patient Assessment – Patient assessment is performed by
an addiction counselor who uses a number of methods to
determine if an alcohol or drug use problem truly exists. If
such a diagnosis is established, it is necessary to determine
the extent or severity of disease, if there is a need for
medical detoxification, and the services or level of care
required to safely and successfully achieve sobriety.
IM A ED U C ATIO NA L C A S E JOURNAL
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VOL. 3, N O. 4, ART. 1, DECEMBER 2010
SERVICE CONSULTING PLUS, LLC
Methadone Maintenance – Patients with an opiate addiction
are provided with individualized healthcare and medically
prescribed methadone to relieve withdrawal symptoms,
reduce the opiate craving, and bring about a biochemical
balance in the body.
As identified earlier, Bridgestone has experienced significant
financial stress, and the Executive Director, Thomas, was
inquisitive about how to stabilize financial operations above a
break-even level. As well, he would like to gain the ability to
measure and monitor the Center’s continuing performance.
Faced with the lack of internal personnel who could help
with this issue, Thomas contacted Service Consulting Plus,
LLC, a local consulting firm with a reputation for working
with nonprofit organizations. The firm is owned and operated
by Sheryl Marshall, who is also an accounting professor
at Cleveland State University. Her firm specializes in the
management of governmental and nonprofit organizations.
At the end of their initial meeting to discuss the situation at
Bridgestone, Thomas stressed that he didn’t simply want to hire
Sheryl to get the job done for the current year, but rather that
he wanted to learn how to measure and monitor the financial
performance of Bridgestone on an ongoing basis. With this in
mind, Sheryl explained that Cost-Volume-Profit (CVP) analysis
would be useful to Thomas after he gathered some basic
information about costs, revenues, and units of service. She
explained that CVP is a fundamental management accounting
tool that is useful for planning, control, and decision making.
It explores important relationships between costs, volume or
activity levels, and profit.
Sheryl asked Thomas to provide her with Bridgestone’s
annual budgetary income statement in a contribution margin
format. She explained that this format is the basic foundation
for CVP analysis since it presents revenues and expenses
based on their variable or fixed behavior in relation to service
activity (namely, volume of services). Sheryl’s understanding
of Bridgestone’s operating environment and the contribution
margin income statement will enable to provide suggestions
regarding how to increase profitability. The three key
suggestions include a focus on maintaining targeted service
volume, reducing discretionary fixed costs, and offering offcampus programs to companies and nonprofits.
Ambulatory Detoxification – Ambulatory detoxification (also
known as outpatient detoxification) is designed to safely
detoxify patients from drugs and alcohol without a hospital
admission. Ambulatory detoxification as an outpatient
treatment has the advantage of causing minimal disruption to
a patient’s normal day-to-day life.
MEDICAID FOR BEHAVIORAL HEALTH SERVICES
Ohio is one of the few states that includes behavioral health
services in its Medicaid benefits package, although it is not
required to do so by federal law. States that cover behavioral
health services must clearly define which services are
covered by Medicaid. To facilitate receiving payment for
Medicaid patients, the types of services Bridgestone offers
are consistent with those defined as covered services by the
state of Ohio.
When a Medicaid client receives mental health and/
or alcohol and drug addiction services, the local Alcohol,
Drug Addiction and Mental Health (ADAMH) Board,
Alcohol and Drug Addiction Services (ADAS) Board or the
Community Mental Health (CMH) Board pays the provider.
The Board is then reimbursed for 60% of the cost by the
federal government, which flows to the Boards through
the Ohio Department of Mental Health (ODMH) and the
Ohio Department of Alcohol and Drug Addiction Services
(ODADAS) via an interagency with the Ohio Department
of Job and Family Services (ODJFS). The remaining 40%
Medicaid match comes from both state and local sources.
The Medicaid reimbursement rates for each service
type and the respective level of service expected for the
upcoming year are used in preparing the Center’s annual
budget and quarterly budget as presented in Exhibit 1 and
Exhibit 2, respectively. Since there is modest fluctuation
in the demand for services from quarter to quarter, the
quarterly budget is 25% of the annual budget. Although
Medicaid reimbursement is the primary source of revenue
for Bridgestone, a minimal amount of revenue is generated
from private pay customers.
IM A ED U C ATIO NA L C A S E JOURNAL
SERVICE VOLUME
Sheryl’s prior experience consulting for health centers that
rely on Medicaid reimbursement for revenue has taught
her the importance of achieving projected levels of service
volume in order to maintain profit targets. Missing the
projected levels of service will cause centers to pass up
potential revenue and contribution margin. Service levels
underscore the importance of monitoring the volume of
delivered service and to ensure that it doesn’t fall behind
the planned volume when Medicaid is involved. Thus, it’s
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VOL. 3, N O. 4, ART. 1, DECEMBER 2010
Case
Management
Group
Counseling
Individual
Counseling
Crisis
Intervention
Intensive
Outpatient
Medical
Somatic
Methadone
Maint.
Ambul
Detox
Total
2,500
$ 32,500
Medications/Tests
Other
Total
40
$ 170,000
10,000
–
$ 160,000
4,000
100
11,550
$ 1,155,500
500
–
$ 1,155,000
$
80
6,000
$ 480,000
–
–
$ 480,000
$
30
28,000
$ 845,000
5,000
–
$ 840,000
$
90
12,000
$ 1,090,000
10,000
–
$ 1,080,000
$
140
1,500
$ 210,000
–
–
$ 210,000
$
110
2,000
$ 226,500
3,500
3,000
$ 220,000
$
800
200
$ 160,000
–
–
$ 160,000
$
15
8,000
$ 120,000
–
–
$ 120,000
$
260
1,300
29,000
208,000
$ 543,000 $ 5,000,000
–
205,000
$ 338,000 $ 4,763,000
$
$ 406,250
2,000
$ 10,000
$ 10,000
$ 404,250
$ 142,000
2,000
$ 140,000
$ 122,000
2,000
$ 120,000
$ 31,000
1,000
$ 30,000
$ 200,250
250
$ 200,000
$ 200,000
–
$ 200,000
$ 96,000
–
$ 96,000
19,750
1,480,250
$ 260,000 $ 1,500,000
–
$ 260,000
$ 137,500
$ 749,250
$ 470,000
$ 703,000
$ 968,000
$ 179,000
$ 26,250
$ (40,000)
$ 24,000
$ 283,000 $ 3,500,000
1,827,607
VOL. 3, N O. 4, ART. 1, DECEMBER 2010
Total Fixed Expense $ 3,493,700
Other
524,055
Depreciation
873,424
Office supplies
69,874
Transportation
104,811
Rent
419,244
Consulting Fees
174,685
Salaries & Benefits
Fixed Expenses
Contribution Margin
$ 30,000
Variable Costs
Total
Private Pay
State
Revenue
$
4
Units of Service
Rate
Medicaid
Revenue
Assessment
Urinalysis
Exhibit 1:
Bridgestone Behavioral Health and Addiction Center
Next Year’s Annual Budget
IM A ED U C ATIO NA L C A S E JOURNAL
Case
Management
Group
Counseling
Individual
Counseling
Crisis
Intervention
Intensive
Outpatient
Medical
Somatic
Methadone
Maint.
Ambul
Detox
Total
$ 42,500
$ 288,875
125
1,500
80
$ 120,000
–
–
$ 120,000
$
7,000
30
$ 211,250
1,250
–
$ 210,000
$
3,000
90
$ 272,500
2,500
–
$ 270,000
$
375
140
$ 52,500
–
–
$ 52,500
$
500
110
$ 56,625
875
750
$ 55,000
$
200
200
2,000
15
$ 30,000
$
$ 40,000
–
$ 30,000
–
–
$ 40,000
$
325
260
7,250
52,000
$135,750 $ 1,250,000
–
51,250
$ 84,500 $ 1,190,750
$
Medications/Tests
2,500
2,888
100
$ 288,750
$
$ 101,563
500
$ 101,063
$
$
2,500
2,500
$ 35,500
500
$ 35,000
$ 30,500
500
$ 30,000
$ 7,750
250
$ 7,500
$ 50,063
63
$ 50,000
$ 50,000
–
$ 50,000
$ 24,000
–
$ 24,000
$ 65,000
–
375,000
4,938
$ 65,000 $ 370,063
$ 34,375
$ 187,313
$ 117,500
$ 175,750
$ 242,000
$ 44,750
$ 6,563
$ (10,000)
$ 6,000
$ 70,750 $ 875,000
43,671
Consulting Fees
VOL. 3, N O. 4, ART. 1, DECEMBER 2010
17,469
Office supplies
Total Fixed Expense $ 873,425
Other
131,014
Depreciation
93,356
26,203
Transportation
Rent
104,811
456,901
Salaries & Benefits
Fixed Expenses
Contribution Margin
625
8,125
$
Total
7,500
Other
$
Total
Private Pay
State
$ 40,000
1,000
40
Variable Costs
Units of Service
Revenue
$
5
Rate
Medicaid
Revenue
Assessment
Urinalysis
Exhibit 2:
Bridgestone Behavioral Health and Addiction Center
Quarter 1 Next Year’s Budget
IM A ED U C ATIO NA L C A S E JOURNAL
not only important to focus on the achieved contribution
margin and bottom line, it’s also important to ensure that the
planned level of volume in achieved.
The importance of meeting the project volume is further
highlighted because Medicaid rates don’t increase and, as a
result, aren’t a means of increasing revenue. Further, annual
Medicaid funding is capped, so attempting to increase
volume over time to increase revenues isn’t possible.
In the Bridgestone Behavioral Health Center case,
depreciation or rent may be committed while others (such as
salaries and benefits, consulting fees, transportation, office
supplies, and other) may be discretionary. Sheryl encourages
Thomas to identify which fixed costs are discretionary and
which are committed. He then can make a modest reduction
in the discretionary fixed costs to achieve Bridgestone’s profit
objective. This will also give him an idea of how “discretionary”
the identified fixed costs are in reality and whether the level can
be reduced in the long-term or short-term.
DISCRETIONARY FIXED COSTS
Sheryl mentions that another area to focus on to achieve
profit targets is a reduction in discretionary fixed costs. In
order to use this avenue, it’s necessary to understand the
difference between committed fixed costs and discretionary
fixed costs. Every organization has some costs to which it is
committed, for example, costs for facilities, equipment, longterm debt arrangements, or organizational strategy. Lease
payments, interest payments on long-term debt, property
taxes, and salaries of key personnel may only change if a
major shift in the scope of operations occurs. These costs
are viewed as committed fixed. The lease payments or
interest payments, for example, have to be made in order
for the organization to stay in operation. A failure to pay a
lease payment may result in the loss of an asset or a failure
to pay interest to bondholders may result in the bondholders
taking over the business. Depreciation, while an allocation of
historic costs, usually follows a pattern set at the time of the
asset acquisition.
Discretionary fixed costs, on the other hand, are set
because management has decided to incur these costs to meet
organizational goals. These costs may vary at the discretion
of management. Managers, in the short-run for example,
could vary advertising, travel, employee training, office
supplies, or research and development costs. In dire times,
these costs could be decreased, and in abundant times they
could be increased. Usually the discretionary fixed costs may
be changed to meet short-run cost concerns, but it’s usually
unwise to reduce all discretionary completely or for long
periods of time. Who would want to work for an organization
that reduced its training costs to zero year after year just to
improve the bottom line? While reducing advertising costs in
the short-run might not hurt revenues, what about the longrun effects on revenues? Perhaps out-of-state travel could
be trimmed in the short-run, but would the failure to attend
national professional meetings out-of-state eventually have an
unfavorable effect on organizational performance?
IM A ED U C ATIO NA L C A S E JOURNAL
OFF-CAMPUS PROGRAMS
Other behavioral health centers that Sheryl has consulted
for have increased revenue by offering off-campus programs
to corporations, governmental departments, or other
nonprofit corporations. Possibilities include employee
assistance programs (EAP) to deal with alcohol or other drug
disorders or behavioral health counseling or other kinds of
programs. According to the United States Department of
Health and Human Services, mental illness causes more
days of work loss and work impairment than many other
chronic condition, such as diabetes, asthma, and arthritis.1
Approximately 217 million days of work are lost annually
due to productivity decline related to mental illness and
substance abuse disorders, costing Unites States employers
$17 billion each year.
To provide services such as these, the idea is to use
Bridgestone talent, but at the client’s premises or a location
selected by the client (to ensure anonymity). These
would be companies that could pay for these services.
If the services are used on a regular basis, they could be
a supplemental and steady source of revenue with high
contribution margins. Really large companies may be able to
afford EAP or counseling programs, but smaller ones can’t, so
this type of contract would be attractive to boost employee
benefits at a minimum cost. The cost to these companies
could be a variable one (based on usage) without incurring
the fixed cost of hiring permanent staff to do the counseling.
It could be an advantage to Bridgestone because the Center
is already incurring the fixed salary expense of the counselor.
1 U.S. Department of Health and Human Services. Mental Health: A
Report of the Surgeon General — Executive Summary. Rockville,
MD: U.S. Department of Health and Human Services, Substance
Abuse and Mental Health Services Administration, Center for Mental
Health Services, National Institutes of Health, National Institute of
Mental Health; 1999. Available online at: http://www.surgeongeneral.
gov/library/mentalhealth/home.html.
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VOL. 3, N O. 4, ART. 1, DECEMBER 2010
Various services that could be offered include:
• Support management in addressing issues of
productivity and absenteeism that may be caused by
mental health or substance abuse problems.
• Support effective supervisory practices
• Assist employees with deteriorating performance
relating to behavioral or other health problems
• Address work-related issues influencing disability or
return to work
• Assist in the identification of stress-related problems
that may be a result of work organization
• Assist the organization in its response to drug-free
workplace policies and regulations and disaster and
terrorism preparedness as it relates to psychosocial issues
• Serve as an internal consultant to management
regarding issues of employee behavioral health.
5.
Fixed costs can be discretionary or committed. Using
your judgment based on the discussion in the case,
identify which costs are likely to be discretionary.
Assuming that management is able to decrease
discretionary fixed costs by 10%, what would be the
impact on Bridgestone’s break-even point revenues?
6.
As Bridgestone operates during the next year, do some
services deserve more attention than others? (Hint: What
is their relative contribution to the WACM % and to the
total contribution margin? Which services?)
7.
How can the budgetary weighted average contribution
margin (WACM) percentage be used to help control the
actual operations of Bridgestone?
8.
If a budgetary weighted average contribution margin
(WACM) percentage has been developed with an
expected level of revenue and a planned fixed cost and the
budgetary WACM percentage is in fact achieved in the
next (future) time period, could the organization still face
losses if the total revenue drops below the budgeted level
or total fixed costs increase beyond the budgeted levels?
Can you explain how losses still might occur even though
the planned WACM percentage is being realized in the
future time period?
REQUIREMENT
In business memo format addressed to Dr. Thomas Russell,
Executive Director of Bridgestone Behavioral Health Center,
describe why the Center is appearing to barely break even
and what might cause decreases in financial performance.
What recommendations would you offer to Dr. Russell for
improving the current operation of the Center and how he
can effectively monitor the Center’s future performance?
Included in your memo should be a discussion about the
following points:
9.
Can you demonstrate with numeric examples how
financial losses might occur? Describe the effects of the
following three possible scenarios:
a.
What is the financial impact if Bridgestone’s group
ISSUES FOR DISCUSSION
counseling unit of service volume decreases by 10%
during the first quarter?
1.
What is the weighted average contribution margin (WACM)
percentage for Bridgestone’s next annual budget?
b. What is the financial impact if Bridgestone’s
reimbursement rate for group counseling service
decreases by 10% during the first quarter?
2.
What does a high weighted average contribution margin
(WACM) percentage mean for the management of
Bridgestone?
c.
What would be the financial impact, if any, if the total
quarterly revenue remains the same but the quarterly
Medicaid Revenue for Case Management decreases
by $48,000 (600 units of service at $80 per unit) while
quarterly Medicaid Revenue for Group Counseling
increases by $48,000 (1,600 units of service at $30
per unit)? Note the change in volume changes total
revenues, total variable costs, and contribution margin.
Assume the unit price of Private Pay services in Group
Counseling is the same as for Medicaid Services ($30
per unit of service).
3.
Is Bridgestone able to plan for breakeven or a modest
over-recovery of expenses (or profit) for the next year? If
the Center achieves breakeven or a modest over-recovery
and you are concerned about events that could cause a
potential loss, what would you try to change? (You may
consider both on- and off-campus programs.)
4.
A useful component of CVP analysis is the margin of
safety for service revenue that can be calculated as a dollar
amount ($) or as a percentage (%). What is Bridgestone’s
project margin of safety for next year? Interpret your
answer in terms of what it means to Dr. Russell.
IM A ED U C ATIO NA L C A S E JOURNAL
d. What is the financial impact if Bridgestone’s fixed costs
increase by 1% during the first quarter?
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VOL. 3, N O. 4, ART. 1, DECEMBER 2010
10. What are your overall recommendations for Bridgestone’s
management regarding the use of CVP analysis?
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11. As accountants, it is common to focus on quantitative
tools such as CVP analysis to increase the profitability of
a business. But it is important for accountants to think
outside of the box to identify avenues of increasing
profitability. What suggestions could you provide to assist
Bridgestone in increasing profitability?
IM A ED U C ATIO NA L C A S E JOURNAL
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VOL. 3, N O. 4, ART. 1, DECEMBER 2010
Exhibit 1
Assessment
Revenue
Medicaid
Rate
Units
Revenue
State
Private pay
Total
Variable Costs
Medications/Tests
Other
Total
Contribution Margin
Fixed expenses
Salaries & Benefits
Consulting fees
Rent
Transportation
Office supplies
Depreciation
Other
Total Fixed expenses
$
Urinalysis
Case
Group
Management Counseling
$
40 $
100 $
4,000
11,550
160,000 $ 1,155,000 $
80 $
30
6,000
28,000
480,000 $ 840,000
$
$
10,000 $
500
170,000 $ 1,155,500 $
$
5,000
480,000 $ 845,000
$
30,000 $
2,500
32,500
404,250
2,000
406,250
$ 140,000
10,000
2,000
10,000
142,000
$
137,500 $
749,250 $
470,000 $ 703,000
individual
Counseling
Crisis
Intensive
Intervention Outpatient
$
Medical
Somatic
Methadone
Maint.
Ambul Detox
Total
90 $
140 $
110 $
12,000
1,500
2,000
$ 1,080,000 $ 210,000 $ 220,000 $
$
3,000
$
10,000
$
3,500
$ 1,090,000 $ 210,000 $ 226,500 $
200 $
800
160,000 $
15 $
8,000
120,000 $
$
160,000 $
120,000 $
$
200,000 $
96,000 $
200,000
96,000
260,000 $ 1,480,250
19,750
260,000
1,500,000
(40,000) $
24,000 $
283,000 $ 3,500,000
$
120,000 $
2,000
122,000
30,000 $ 200,000 $
1,000
250
31,000
200,250
968,000 $ 179,000 $
26,250 $
260
1,300
338,000 $ 4,763,000
205,000
208,000
$
29,000
543,000 $ 5,000,000
1,827,607
174,685
419,244
104,811
69,874
373,424
524,055
3,493,700
Exhibit 2
Assessment
Revenue
Medicaid
Rate
Units
Revenue
State
Private pay
Total
Variable Costs
Medications/Tests
Other
Total
Contribution Margin
Fixed expenses
Salaries & Benefits
Consulting fees
Rent
Transportation
Office supplies
Depreciation
Other
Total Fixed expenses
$
Urinalysis
Case
Management
Group
Counseling
$
40 $
1,000
40,000 $
100 $
2,888
288,800 $
80 $
1,500
120,000 $
30
7,000
210,000
$
$
2,500 $
42,500 $
125
288,925 $
$
120,000 $
1,250
211,250
$
7,500 $
625
8,125
101,063
500
101,563
$
2,500
2,500
35,000
500
35,500
34,375 $
187,362 $
117,500 $
175,750
$
individual
Counseling
$
Crisis
Intervention
Intensive
Outpatient
Medical
Somatic
Methadone
Maint.
Ambul Detox
Total
$
90 $
3,000
270,000 $
$
$
2,500
272,500 $
140 $
375
52,500 $
$
$
52,500 $
$
30,000 $
500
30,500
7,500 $
250
7,750
50,000 $
63
50,063
50,000 $
24,000 $
50,000
24,000
65,000 $ 370,063
4,938
65,000
375,001
242,000 $
44,750 $
6,563 $
(10,000) $
6,000 $
70,750 $ 875,050
$
110 $
500
55,000 $
750
875
56,625 $
200 $
200
40,000 $
15 $
2,000
30,000 $
$
40,000 $
260
325
84,500 $ 1,190,800
51,250
52,000
$
7,250
30,000 $ 135,750 $ 1,250,050
456,901
43,671
104,811
26,203
17,469
93,356
131,014
873,425
S
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