| Course | HLTH 4383 Finance for Healthcare Administrators |
|---|---|
| Module | Module 3 |
| Paper type | Departmental operating budget with justifications |
| Length | 1,200 words, about 4 pages plus title and reference pages |
| Format | APA 7 student paper |
| School | American College of Education |
| Program | B.S. in Healthcare Administration |
| Updated | September 2026 |
Free sample paper for HLTH 4383 Module 3
Budgeting the First 105 Knees: A First-Year Operating Budget With Line-by-Line Justifications for an Ambulatory Surgery Center's Joint Replacement Program
Student Name
American College of Education
HLTH4383: Finance for Healthcare Administrators
Module 3 Assignment
Instructor Name
October 19, 2026
Purpose and Budget Period
The board of our composite ambulatory surgery center approved the same-day total knee replacement program analyzed in the previous module, with the conditions that a multiyear implant contract be signed and that results be reviewed after 50 cases. This paper presents the program's operating budget for its first 12 months, January through December 2027, with a justification for every line. Because the program is new, there is no prior year to adjust; this is a zero-based budget in which each revenue and expense line is built from volume and a stated rate (Penner, 2017).
The budget has four parts: a statistics budget that sets the number of cases, a revenue budget, an expense budget divided into variable, fixed and one-time costs, and a capital and cash plan. The last part matters more than usual here, because the first module showed that the center holds only about 27 days of cash.
Statistics Budget: Cases by Quarter
The break-even analysis set the planning volume at 105 cases a year after applying patient selection criteria to the surgeons' prior knee patients. Those criteria screen out the patients a national database study linked to more complications after same-day joint replacement, including older adults and people who smoke or have diabetes, heart disease or poor nutrition (Courtney et al., 2017). The budget does not assume those 105 cases arrive evenly. It phases them at 18 in the first quarter, 25 in the second, 30 in the third and 32 in the fourth.
Three reasons justify the ramp. The program will begin with two of the six surgeons while the care team gains experience, adding the others once the first 20 cases have been reviewed. Surgeons must also move patients who were already scheduled at the hospital, which takes a quarter or more. And the first months will include longer operating room times as staff learn new instrument sets, which limits cases per surgery day. The payer mix is budgeted at 60% commercial and 40% Medicare Advantage in every quarter, the split the surgeons observed among their eligible patients last year.
Revenue Budget
Revenue follows from volume and contracted rates. Sixty-three commercial cases at an average facility rate of $11,800 produce $743,400, and 42 Medicare Advantage cases at an average of $8,600 produce $361,200, for total budgeted revenue of $1,104,600. By quarter, revenue is $189,360, $263,000, $315,600 and $336,640.
The rates come from the center's signed contracts, not from its charge schedule, and each covers the facility fee including the implant. The budget also includes a denial and bad debt allowance of 1.5% of revenue, or about $16,600. The center's overall denial rate rose to 7% last year, but most of those denials were missing authorizations for cases scheduled before a check was in place; the joint program will verify authorization for every case two business days before surgery, so a lower allowance is justified, and the rate will be reviewed after the first quarter.
Variable Expenses
Variable expenses total $623,070, or $5,934 per case, and implants are by far the largest line at $430,500. The $4,100 per case reflects a three-year contract with a single vendor for a limited set of knee systems, signed in November as the board required. Surgeon involvement in that decision was deliberate. Okike et al. (2014) asked surgeons and residents to put a price on 13 widely used orthopedic devices, and attending surgeons landed within 20% of the true figure in just 21% of their estimates, even though more than four in five respondents believed price deserved weight in device choice. The surgeons reviewed actual prices before agreeing to the contract.
The remaining variable lines are supplies and drugs at $102,900, direct nursing, technician and therapy time at $56,070, sterile processing at $14,700, home equipment at $12,600, and linen and miscellaneous items at $6,300. The labor line is budgeted from minutes measured in each phase of care, as in the break-even analysis. It is a variable line because the center pays per diem and part-time staff for the additional hours these cases add to existing surgery days.
Fixed and One-Time Expenses
Fixed expenses total $197,000. The joint coordinator, a registered nurse working four days a week, is budgeted at $96,000 including benefits; this person screens patients against the selection criteria, runs the education class and makes the follow-up calls that keep patients from returning to an emergency department. Extended recovery room staffing on the two surgery days costs $37,000. Depreciation on the instrument and power sets and on the ultrasound unit is $50,000, and the patient education program, including printed materials and class space, is $14,000.
Two one-time costs fall in the first quarter: competency training for 14 nurses and surgical technologists at eight hours each, $6,200, and a full simulated case day before the first patient, $4,000. They are shown separately so that they are not mistaken for recurring costs in future budgets.
The Program's Bottom Line
Revenue of $1,104,600 less variable expenses, fixed expenses, the denial allowance and one-time costs leaves a program margin of about $257,800 for the year. By quarter the margin is about $20,300, $61,500, $83,600 and $92,500, rising as volume grows against a fixed cost base. After the $110,000 of existing overhead allocated to the program, the contribution to the center's results is about $147,800. The first quarter barely clears its costs, and that is the budget working as intended, not a warning.
Capital and Cash Timing
The program needs $250,000 of equipment before the first case: $190,000 for instrument and power sets and $60,000 for the ultrasound unit. If the center paid cash, the program would consume about $290,000 in its first quarter, because the equipment, staff and implants are paid for before insurers pay for the cases, and it would still be about $90,000 short at the end of the year. With 27 days of cash on hand, the center cannot absorb that. The budget therefore finances the equipment through the center's existing equipment loan facility over five years, which matches payments to the equipment's useful life. With financing, and counting the loan payments, the first quarter's cash shortfall falls to about $55,000, and the program's cumulative cash position turns positive during the third quarter.
Controls
The budget will be monitored monthly against actual results, using a flexible budget that adjusts expected costs to the actual number of cases so that the center can tell volume effects from spending effects. Implant cost per case, operating room minutes per case, the percentage of patients who need an overnight hospital transfer and days to payment will be reported to the board each month. If implant cost per case exceeds budget by more than 5% or overnight transfers exceed 3% of cases in any month, the administrator and the lead surgeon will review the cases within two weeks. The first formal review against budget will come at the 50th case, the point the board set when it approved the program, and any revision to the second-half volume will be taken to the board at that meeting rather than absorbed quietly.
References
Courtney, P. M., Boniello, A. J., & Berger, R. A. (2017). Complications following outpatient total joint arthroplasty: An analysis of a national database. The Journal of Arthroplasty, 32(5), 1426-1430. https://doi.org/10.1016/j.arth.2016.11.055
Okike, K., O'Toole, R. V., Pollak, A. N., Bishop, J. A., McAndrew, C. M., Mehta, S., Cross, W. W., Garrigues, G. E., Harris, M. B., & Lebrun, C. T. (2014). Survey finds few orthopedic surgeons know the costs of the devices they implant. Health Affairs, 33(1), 103-109. https://doi.org/10.1377/hlthaff.2013.0453
Penner, S. J. (2017). Economics and financial management for nurses and nurse leaders (3rd ed.). Springer Publishing.
The HLTH 4383 Module 3 assignment instructions
In HLTH 4383 Module 3, students typically build a budget for one department or program and defend each number in writing. The prompt usually asks for projected volume, revenue and expenses for a year, with a short justification for every line, and some versions add a capital budget or a comparison of budgeting methods such as incremental, zero-based or flexible budgets. You may be given a case with data or asked to use a department you know, with identifying details removed. Graders want to see where each figure comes from: a volume forecast, a staffing plan, a contract or historical data. Expect to present the budget in a table as well as explain it in prose, and confirm in Canvas whether the table goes in the body or an appendix.
How the HLTH 4383 Module 3 example is put together
The model budget begins by naming its period and method and by reminding the reader of the center's thin cash. Volume comes first, phased by quarter with three stated reasons for the ramp. Revenue is calculated from payer mix and contracted rates, and the denial allowance is justified against the center's own history. Variable expenses are listed with totals and per-case figures, and the implant line is defended with a signed contract and evidence on surgeons' awareness of device prices. Fixed and one-time costs are separated and explained by the work they support. The program's margin is shown by quarter and after overhead. A cash timing section then changes how the equipment is paid for, and monthly controls with thresholds close the paper.
Reading the HLTH 4383 Module 3 rubric
Budget rubrics in health care finance usually reward accuracy, justification and realism. The accuracy criterion checks that totals add up and that revenue and variable costs follow from the volume forecast. Justification is often weighted most heavily, and graders look for a stated basis for every line rather than round numbers. The realism criterion rewards phasing volume for a new service, including allowances for denials and separating one-time from recurring costs. Some rubrics include a capital or cash flow criterion, which is where financing decisions earn points. A monitoring criterion may ask how the budget will be controlled once the year starts. Clear tables, consistent rounding and APA 7 citation of sources complete the scoring in most sections.
HLTH 4383 Module 3 help: mistakes that cost points
Budgets are often marked down for spreading annual volume evenly across a new program's first year, which no new service achieves. A second frequent problem is justifying lines with phrases like based on industry standards without naming the standard. Students sometimes put equipment purchases in the operating budget instead of depreciation, which distorts the margin. Leaving out a denial or bad debt allowance makes revenue look more certain than it is. Check that every total matches its parts and that quarterly figures sum to the year. If you are budgeting a nursing unit, a clinic or a home health program instead, share your volume data and the Canvas prompt, and we will build a Module 3 budget from them.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official American College of Education document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
More HLTH 4383 and B.S. in Healthcare Administration sample papers
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HLTH 4383 Module 3 questions, answered
What does HLTH4383 Module 3 usually ask for?
HLTH4383's third module usually asks for a departmental or program budget: projected volume, revenue and expenses for a year, with a written justification for each line and, in some sections, a capital request. Your classroom's instructions decide the department.
What is a statistics budget?
The volume forecast that the rest of the budget depends on, such as cases, visits or patient days by month or quarter. Revenue and variable expenses are calculated from it.
How do you justify a budget line?
State the basis for the number, such as volume times a contracted rate or a staffing plan, explain why that basis is reasonable, and cite contracts, historical data or published evidence where possible.
Where can I find a free HLTH 4383 Module 3 sample paper?
You are on it. This page carries the complete Module 3 budget for a joint replacement program, from the quarterly volume plan and revenue lines to fixed and one-time costs, cash timing and monthly controls.
Should a department budget include capital and cash flow?
When a program needs equipment or has a slow payment cycle, yes. Showing when cash goes out and comes in can change how the equipment should be financed.