The population projection forecasts activity among various segments of the program’s member population. Included in the projection are the number of homes, the rate of sales, the number of homes that will be vacated each year, estimates of the temporary and permanent utilization of the health care facilities, the home density ratio (i.e. the ratio of members to total homes occupied indicating the percentage of double occupancies), and other population contingencies that affect the program’s revenues and expenses.
The results of the population projection will be used to produce the financial forecast since many of the program’s revenues, and expenses are associated with population activity over time. The financial forecast applies operating and financial information to the program activity to show operating surplus (or deficit) and any unfunded nursing care liabilities for members over a 20-year period.
The purpose of the actuarial balance sheet will be to identify those factors that are likely to affect the prospective operations and cash flow of your program for purposes of assessing financial feasibility. Financial viability will be determined by forecasting the ability of your program to generate sufficient cash to pay its operating expenses, meet its normal capital expenditure requirements and pay anticipated debt service based on the financing structure.
The forecast will further evaluate and support estimated revenue, costs, and expenses, capital expenditures, working capital and cash flows over future periods beginning with your programs’ current fiscal year and extending 20 years.
In general, the assumptions to be used in preparing the forecast will be developed from data, contracts, and other documentation that is provided by the management team, historical trends within the industry, and any analyses previously prepared by or on behalf of the members of the management team.
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