Rosemont Hill Health Center

Harvard Business School Case #178-189

Case Software #XLS-465

Copyright © 2010 President and Fellows of Harvard College. No part of this product may be
reproduced, stored in a retrieval system or transmitted in any form or by any means—electronic,
mechanical, photocopying, recording or otherwise—without the permission of Harvard Business
School.
Exhibit 1 Financial Statements for 1975

Balance Sheet
As of December 31,1975
Assets Liabilities and Fund Balances
Cash 30,934 Accounts Payable 32,754
Accounts Receivable 8,800 Accrued wages 3,466
Inventory 40,540 Total Current 36,220
Total Current 80,274
Bank Loan 27,550
Furniture & Equipment 21,700 Total Liabilities 63,770
Less: Accumulated
Depreciation 8,788 Fund Balances:
Total fixed 12,912 Designated by board for 25,000
Special Outreach Project
Total Assets 93,186 Purchases of new equip. 3,000
Undesignated 1,416
Total Fund balances 29,416
Total Liabilities and Fund
Balances 93,186

Income Statement
1975
Revenue from patient fees 345,450
Other revenue 5,000
Total Revenue 350,450

Expenses
Program services 235,000
Utilities 10,000
Laboratory 25,000
General and Administrative 92,000
Total Expenses 362,000
Surplus (Deficit) (11,550)
Exhibit 2 Costs and Patient Visits1 for 1975, By Department

Expenses
Number
Patient
Department Visits Salaries2 Others3 Total
Pediatrics 5,000.000 $20,000 $8,000 $28,000
Family Planning 10,000 5,000 15,000 20,000
Adult Medicine 2,100 30,000 16,000 46,000
Nursing 4,000 27,000 6,000 33,000
Mental Health 1,400 15,000 8,000 23,000
Social Services 1,500 32,000 8,000 40,000
Community Health 2,500 5,000 10,000 15,000
Dental 6,400 20,000 10,000 30,000
Sub-Total 32,900 154,000 81,000 235,000
Administration 38,000 2,000 40,000
Rent 36,000 36,000
Utilities 10,000 10,000
Laboratory Work 16,000 9,000 25,000
Cleaning 6,000 6,000
Record Keeping 7,000 3,000 10,000
Total $215,000 $147,000 $362,000
Number of Patient Visits 32,900
Average Cost per Visit $11.00

1
Patient visits rounded to nearest 100; Expenses rounded to nearest 1,000
2
Includes fringe benefits
3
Materials, supplies, contracted services, depreciation and other non-personnel expenses
Exhibit 3 Floor Space and Laboratory Usage1 by Department

Department Floor Space2 Laboratory Usage3

Pediatrics 1,000 1,000
Family Planning 1,300 200
Adult Medicine 1,800 2,400
Nursing 300 100
Mental Health 1,000 ---
Social Service 500 ---
Community Health 1,100 100
Dental 1,000 200
Administration 500 ---
Record Keeping 300 ---
Laboratory 1,200 ---
Total 10,000 4,000

1
Rounded to nearest 100
2
In Square Feet
3
In hours/year
 Rosemont Hill Health Center's Department Cost

Department
Pediatrics Family Planning Adult Medicine
Salary (WN3) 27642.8571428571 12642.857142857 42142.857142857
Others 8000.00 15,000.000 16,000.000
Utilities 1000 1300 1800
Rent 3600 4680 6480
Cleaning 600 780 1080
Admin 4813.5593220339 1203.3898305085 7220.3389830509
Laboratory 8772.71186440678 1754.5423728814 21054.508474576
Record Keeping 2012.87929524496 4025.7585904899 845.40930400289
Total 56442.0076245428 41386.547936737 96623.113904487

Number of Patients 5,000.000 10,000.000 2,100.000

Cost per visit=(total co 11.2884015249086 4.1386547936737 46.011006621184

Number of nurses
Salary per Nurse
Department
Adult Med
Family Planning
Pediatrics
Nursing Department

Worker
MSW
Bachelor degree S

Working Note 3
Calculation of salary
Department Pediatrics Family Planning Adult Medicine
Salary 20000.00 5000.00 30000.00
Reappropriation
Nursing (Working Note 4500 4500 9000
SSD (from Working No 3142.85714285714 3142.8571428572 3142.8571428572
Total $27,643 $12,643 $42,143
 Basis of allocation

Salary
Floor Space
Laboratory Usage
Patients visited
Cost Appropriated Cost
Rent 36000 Floor Space
Utilities 10000 Floor Space
Cleaning 6000 Floor Space
Total

Laboratory Usage 35090.847457627 Hourly rate

8.7727118644068
Administartion 42600 Salary
Record Keeping 13244.745762712 records
Center's Department Cost

Department
Nursing Mental Health Social Services Community Health Dental
12142.8571428571 18142.857143 13142.8571428571 8142.85714285714 20000
6,000.000 8,000.000 8,000.000 10,000.000 10,000.000
300 1000 500 1100 1000
1080 3600 1800 3960 3600
180 600 300 660 600
6498.30508474576 3610.1694915 7701.69491525424 1203.38983050847 4813.559322034
877.271186440678 0 0 877.271186440678 1754.542372881
1610.30343619597 563.60620267 603.863788573489 1006.43964762248 2576.485497914
28688.7368502396 35516.632837 32048.4158466849 26949.9578074288 44344.58719283

4,000.000 1,400.000 1,500.000 2,500.000 6,400.000

7.17218421255989 25.369023455 21.3656105644566 10.7799831229715 6.92884174888

Working Notes 1
Nursing Department

3
9000
Nurses working Cost allocated
1 9000
0.5 4500
0.5 4500
1 9000

Working Note 2
Social Service Department
Number Salary Time in SSD Time in Dental Other departments
2 24000 0.5 0 0.083333333333
1 8000 0.14285714285714 0 0.142857142857

Department Cost allocated Total

Social Service 13142.857143 13142.8571428571
Dental 0 0
Each department 3142.8571429 18857.1428571429

tion of salary
Nursing Mental Health Social Services Community Health Dental
27000.00 15000.00 32000.00 5000.00 20000.00

-18000 0 0 0 0
3142.85714285714 3142.8571429 0 3142.85714285714 0
$12,143 $18,143 $32,000 $8,143 $20,000
 Working Note 4
Department
Pediatrics Family PlanningAdult Medicine Nursing Mental Health
20000.00 5000.00 30000.00 27000.00 15000.00
1,000.000 1,300.000 1,800.000 300 1,000.000
1,000.000 200 2,400.000 100 0
5,000.000 10,000.000 2,100.000 4,000.000 1,400.000

3600 4680 6480 1080 3600

1000 1300 1800 300 1000
600 780 1080 180 600
5200 6760 9360 1560 5200

8772.71186440678 1754.5423729 21054.5084745763 877.271186440678 0

4813.5593220339 1203.3898305 7220.33898305085 6498.30508474576 3610.169491525

2012.87929524496 4025.7585905 845.409304002885 1610.30343619597 563.6062026686
departments
 Department
Social Services Community Health Dental Administration Record Keeping Laboratory
32000.00 5000.00 20000.00 38000.00 7000.00 16000.00
500 1,100.000 1,000.000 500 300 1,200.000
0 100 200 0 0 0
1,500.000 2,500.000 6,400.000 0 0 0

1800 3960 3600 1800 1080 4320

500 1100 1000 500 300 1200
300 660 600 300 180 720
2600 5720 5200 2600 1560 6240

0 877.27118644068 1754.54237288136 0 0 0

7701.69491525424 1203.3898305085 4813.5593220339 0 1684.7457627119 3850.84746

603.863788573489 1006.4396476225 2576.48549791355 0 0 0
Total

10,000.000
4,000.000
32,900.000

36,000.000
10,000.000
6,000.000
52,000.000

35,090.847

42,600.000
13,244.746
 Departmen
Year Pediatrics Family Planning Adult Medicine
1975 Cost 56442.0076245428 41386.5479367 96623.11390449
1975 No of patients 5,000.000 10,000.000 2,100.000
1976 Expected Cost 62086.2083869971 45525.2027304 106285.4252949
1976 Expected no. of patients 5500 11000 2310
1976 Cost per patient 11.2884015249086 4.13865479367 46.01100662118
Charge per patient 12.3043576621503 4.5111337251 50.15199721709

Inflation
0.09 (Average of 0.08 and 0.1)

Note: Here the charge per patient is the amount that rosemont hill healthcare center should collect
 Department
Nursing Mental Health Social Services Community Health Dental
28688.7368502 35516.632837051 32048.41584668 26949.9578074288 44344.587193
4,000.000 1,400.000 1,500.000 2,500.000 6,400.000
31557.6105353 39068.296120756 35253.25743135 29644.9535881717 48779.045912
4400 1540 1650 2750 7040
7.17218421256 25.369023455037 21.36561056446 10.7799831229715 6.9288417489
7.81768079169 27.65223556599 23.28851551526 11.7501816040389 7.5524375063

thcare center should collect from each patient depnding on their visits of different departments