VARIANCEANALYSIS CASE STUDY
Hospital’s original profit forecast will be calculated by the subtraction of the FY11 budget expenses from Projected IP revenue for FY11. The parameters have considered wholesome evaluation of revenue and expenses projected from the inpatients. The evaluation would not incorporate inflation factor of 6%. Revenue will remain as $50,155,710 while expenses change to $45,348,924 making the profit be 4,806,786.
Revised projection changes the profit value as there is the incorporation of inflation as each year has different inflation factor. The inflation chosen is 6% making total projected expenses to be $48,069,860. Profit will, therefore, become $50,155,710 less $48,069,860 = $2,085,850.
Evaluationof the over budgeted inpatient services could be analyzed indifferent angles. One the over budgeting factor is the inpatientservice that shows a large variation between the previous year actualexpense and the projected values[ CITATION Ste121 l 1033 ].
Accordingthe evaluation above, OTHER inpatient services fluctuated massivelywith 102 RWP and 1,266,263 from the previous FY10. It was followed byOB (Pregnancy, Childbirth, and the Puerperium and DIGEST (Diseasesand Disorders of the Digestive Systems).
Secondly,on evaluation of the profit generated by the inpatient services Vis aVis the expenses budgeted.
Toenable Schumpert Medical Centre favorable performances, there areseveral actions that could be taken. Strategies should be set suchthat expenses are reduced or regulated in a manner that it does notfluctuate much from the previous year’s actual values. Anyinpatient service that does not have projected significant revenuesshould have reduced or regulated projected expenses[ CITATION Ste121 l 1033 ].Insummary, strategies should be set such that there is an increase inrevenue for the inpatient services and reduced expenses in the 2011financial period.
Inthe case of a capitated budget, the hospital should ensure that theprojection of expenses does not surpass the $ 50 million funds given.It would enable the hospital to run in the future as well as ensurerunning expenses are easily covered.
Strategiesto increase the volume of patients should also be placed as theywould offer supplementary income for any expense that increases witha higher value than anticipated.
Berkowitz, S. G. (2012). Health Care Market Strategy: From Planning to Action. Burlington: Jones & Bartlett Publishers.