The first task is: Source of Revenue: An Increase in the Medicare Patient Popula

Question

The first task is: Source of Revenue: An Increase in the Medicare Patient Population The president of Gentiva Health Services is considering increasing her number of Medicare patients served next year. However, to do so she must begin to use RNs for client visits, which Medicare reimburses at $45 per visit. An RN costs $35 per hour versus the current cost of $15 for an LPN or nurse’s aide. The president believes she can increase her patient visits by 15% by accepting Medicare patients. She is also aware that if she increases her Medicare patients, the company’s administrative costs will increase by approximately $10,000 per year because of the claims file complexity.

Use the following websites to gather data:

·         10K Annual Report- https://www.sec.gov/Archives/edgar/data/1096142/000109614214000007/gtiv-2013x10xk.htm

·         10Q Quarterly Report - http://www.streetinsider.com/dr/news.php?id=10017840

Use the following volumes for your calculations:

Volume for the year:

·         Flexible budget: 6,000 visits

·         Static budget: 5,945 visits

·         Actual budget: 5,889 visits

Prepare a two-page report that addresses the following:

1. How many more visits will the company generate if it accepts Medicare patients?

2. What would be the estimated profit or loss associated with the Medicare service line?

3. Would you recommend that Gentiva Health Services increase its number of Medicare patients served? Why or why not?

The second task is: Business Plan

Review the quarterly report and develop a business plan for the organization for its upcoming financial year. Be sure to include the following in your organized business plan:

·         Organization segment .

·         Marketing segment

·         Financial segment

·         Projected cash flow statement

·         Projected income statement

·         Projected balance sheet

Feel free to take liberties with information needed that is not available in the report.

You may find the quarterly report at http://finance.yahoo.com/news/gentiva-health-services-reports-third-221500117.html Include all required tasks for this assignment in a Word document.

Explanation / Answer

Business plan

Gentiva Health Services

Introduction

We have been assigned this task to prepare business plan for Gentiva Health Services. Our business plan will include both non-financial measures and financial measures based upon the requirements.

Business plans are prepared to support future operations of the organization, this is done by the use of historical data and predictions of future, plans can never be 100% accurate but management should draft the plans on a very scientific basis so that there would be least deviations of actual results from the expected results. Before drafting business plan for Gentiva Health Services following steps should be followed:-

Business Segments

Gentiva Health Services is majorly operating in two segments, one is Home health segment and other is Hospice segment. These segments have been divided in order to allocate the resource and separate the branding strategies to gain maximum advantage

Home health segment comprises of therapy services and direct home nursing operations, this is one of the largest segment situated in 265 locations located in 38 states. This division is further separated into 5 divisions based on geographical regions; these subdivisions are further separate into operating areas which is very essential to successfully run the organization. Few of the clinical associates working for this organization are on payroll and others are paid on per visit or per hour basis.

Hospice segment, this segment mainly serves those patients who are terminally ill and their disease is incurable. Gentiva Health Services operates its hospice segment in 165 different locations in 30 different states; team handling hospice operations is further separated into four different geographical regions and each location has its own branch through which it operates.

Hospice segment is planning to launch memory care specialty program which will help in building individualized programs form managing diseases such as Alzheimer’s, dementia etc. this will help caregivers in managing patients easily. There are various other programs which both the segment is planning to make the process of health care more beneficial for both company as well as patients.

Currently Medicare patients hold the highest percentage in both home health and hospice business segment and the company is planning to increase it further, according to our analysis that would not be financially profitable and must not be pursued. Rather we would suggest Gentiva Health Services to continue doing innovations in the field of health care so that they can reduce their total expenditure and at the same time can increase their revenue.

Epilogue

We have completed the business plan of Gentiva Health Services, the company must not increase the total number of Medicare patients as it will lead to reduction in the net income.

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