Nurs 6211: Finance And Economics In Healthcare Delivery Disc

Nurs 6211 Finance And Economics In Healthcare Deliverydiscussion Why

The following are budgeted and actual revenues and expenses for a hospital: Budgeted and actual revenues include surgical volume, gift shop revenues, surgery revenues, and parking revenues. Expenses encompass patient days, pharmacy costs, miscellaneous supplies, and fixed overhead costs. For the analysis, students are asked to determine the total variance between planned and actual budgets for surgical volume and patient days, and to assess whether these variances are favorable or unfavorable. Additionally, students should consider which variances are potentially due to changes in patient volume versus changes in rates or other external factors.

Paper For Above instruction

Understanding hospital budgeting is crucial for effective financial management in healthcare, especially when discrepancies occur between planned and actual financial outcomes. In analyzing hospital variances, it is essential to identify whether these are driven primarily by volume changes—such as patient admissions or surgical procedures—or by rate changes, such as increased costs or pricing adjustments. This analysis helps hospital administrators implement corrective strategies that improve financial stability and service quality.

Firstly, examining the variance in surgical volume reveals significant insights into hospital performance. The budget projected a surgical volume of 2,300 cases, but the actual number was 2,600, indicating an increase of 300 surgeries. This variance of +300 surgeries is favorable because a higher surgical volume generally translates into increased revenue, provided the hospital manages the additional costs effectively. The positive variance also reflects good demand forecasting or increased community need, which benefits the hospital's revenue streams.

Similarly, analyzing patient days generates valuable information regarding hospital utilization. The planned patient days were 26,000, but the actual figure was 25,000, reflecting a decrease of 1,000 patient days. This negative variance suggests an unfavorable outcome, possibly attributable to shorter hospital stays, lower patient inflow, or discharge practices. However, this decrease might also point to improved efficiency or changes in patient care protocols that reduce length of stay, which could be favorable if it results in cost savings without compromising care quality.

In understanding what drives these variances, it is critical to consider the factors influencing volume versus rates. The positive variance in surgical volume is most likely due to increased demand or improved referral patterns, rather than rate changes, since the revenue from surgeries increased substantially, from $589,500 to $852,750. This indicates a possible increase in procedure complexity or higher billing rates for surgical services. Conversely, the decrease in patient days may be primarily influenced by a rate change—such as shorter length of stay protocols—rather than fewer admissions. It might also result from increased efficiency or improved outpatient services, which reduce inpatient days.

Applying variance analysis in healthcare finance enables managers to pinpoint causes and develop targeted responses. For instance, a favorable volume variance signals opportunities for revenue growth, whereas unfavorable variances, like the decrease in patient days, warrant investigation into operational efficiencies, staffing, or patient care strategies. Moreover, understanding whether these are due to volume or rate changes allows for appropriate adjustments in budgeting, resource allocation, and strategic planning.

In conclusion, analyzing variances between budgeted and actual financial figures in healthcare requires a nuanced understanding of volume and rate influences. By distinguishing between these, hospital administrators can better manage financial risks and opportunities, ultimately leading to improved hospital performance and patient outcomes.

References

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• Martin, P. (2019). Hospital Financial Management: Variance and Budget Analysis. Academic Press.