Cost Management

Introduction

The chief Administrator of an Uptown Clinic, Dr. Stephanie White, is concerned about the dilemma of coping with reduced budgets next year and into the foreseeable future. This clinic is a community mental health agency but she wants to increase demand for services along with the budget cuts. In order to plan this change she must first identify where costs can be cut or reduced but by still keeping the agency functioning. With the data given to me from the past year I will provide her with a dollar range of costs to reduce the budget. Then I will cut $94,000 in cost along with the priorities those cuts can be made without impact on operations or the quality care of the serves they provide. In conclusion I will provide my thoughts and views on how she can prepare for this reduced budget.

Cost Management

Data set:

Program Area

Administration Costs Cuts Revised Costs

Salaries:

− Administrator 60,000 1,000 59,000

− Assistant 35,000 1,000 34,000

− Two secretaries 42,000 -1 21,000 21,000

Supplies 35,000 -0.25 8,000 27,000

Advertising & Promotion 9,000 -0.25 2,000 7,000

Meetings/dues 14,000 -14,000 14,000 0

Purchased Services:

− Accounting and billing 15,000 2,000 13,000

− Custodial 13,000 1,000 12,000

− Security 12,000 12,000

− Consulting 10,000 1,000 9,000

Community Mental Health Services

Salaries (2 social workers) 46,000 2,000 44,000

Transportation 10,000 -0.5 5,000 5,000

Outpatient Mental Health Treatment

Salaries:

− Psychiatrist 86,000 1,000 85,000

− Two secretaries 70,000 -1 35,000 35,000

Total Costs Total Cuts Revised Total Costs

457,000 94,000 363,000

Worst case analysis:

I know that administration can not function efficiently without the assistant and at least one secretary. They each can pick up half of the load from that loss. The meetings can go, absolutely no reason for that kind of expense which should be coming out of their own pockets. Advertising and supplies can be cut by a ј. Going to cut transportation in half because bigger vehicles or car pools will save some money and carpooling services come with benefits that cover most of the costs accrued. I really find it hard to believe that a Psychiatrist needs two secretaries so will cut one of those too. After doing all those cuts I still had to cut 11,000 more dollars and decided that it would be fair to take 1,000 to 2,000 off the rest of the salaries and departments with the exception of security which I believe is very important in any business. Total cost being at this point $363,000.

Best case analysis:

A secretary and an assistant can do the same functions. Here we would eliminate the assistant and one secretary in administration salaries. Advertising, meetings, and consulting would be eliminated also. In the community services a social worker