Projected Profit/Loss
Add to Parts 1-3 of your Organization Wide Operating Budget by identifying the Projected Profit/Loss for Year 1. This will require you to project actual revenue based on your projected revenue sources. Treatment codes (known as CPT codes) are used to define the type of treatment. Individual Psychotherapy 20-30 minutes is code 90804; 45-50 minutes is 90806, 75-80 minutes is 90808; Family Therapy is 90847; Group Therapy is 90853. Other common codes are listed on the recommended materials website pdf file #4. While there are significant differences in payment for each treatment code based on the payer source (Medicare/Medicare is generally the lowest payer source so this website listed on recommended materials #3 will generate your bottom line revenue projection); there are also significant differences in payment by licensure type, degree (masters vs. doctorate), state or urban/rural geographic location. Assume that traditional insurance like Blue Cross/Blue Shield will reimburse ~30-40% more than Medicare/Medicaid. Managed care and other payer sources will be somewhere in between. Private pay and grant funded clientele are the easiest to predict as long as you have an accurate representation of how many clients will be served by these payer sources.
Create a minimum (based on the lowest paying source for all clients) and optimum (based on what you think will happen with clientele’s payer sources) profit/loss projection based on subtracting the amount from your previous assignment’s conclusion of expenses. If you have a profit, determine if it is enough profit to justify your time/effort/educational investment/etc.? If you have a loss, where can you find additional income sources (i.e., fundraising events, charity sponsorship, partnerships with other related organizations, additional private or public grants) to make up for this loss and how feasible is this? At this point you should also consider any revisions to Parts 1-3 of your budget proposal with rationale for the changes. The recommended length of this assignment is 2-3 pages with reference support.
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