three level revenue forecast

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Three eye-ear-nose-and-throat physicians decide to hire an experienced audiologist in

order to add a new service line to their practice.* They ask the practice manager to prepare

a three-level volume forecast as a first step in their decision-making.

Assumptions: for the base level (most likely) revenue forecast, assume $200 per procedure

times four procedures per day times five days equals 20 procedures per week times 50

weeks per year equals 1,000 potential procedures per year.

For the best case revenue forecast, assume an increase in volume of one procedure per

day average, for an annual increase of 250 procedures (5 days per week times 50 weeks

equals 250). (The best case is if the practice gains a particular managed care contract.)

For the worst case revenue forecast, assume a decrease in volume of two procedures per

day average, for an annual decrease of 500 procedures. (The worst case is if the practice

loses a major payer.)

*Audiologists were designated as “eligible for physician and other prescriber incentives” as

discussed in Chapter 20. Thus the new service line was a logical move.

Using the above assumptions, prepare a three-level forecast similar to the example in Figure

17-5 and document your calculations

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