Variance
ale_dal
variance_analysis_case_study.xlsQuestions
| The subsequent two spreadsheets provide workload (expressed as relative weighted products (RWPs) for inpatient care), revenue, and expense data for Schumpert Medical Center covering their fiscal years 2010 and 2011. The data includes FY10 actual workload, revenues, and expenses; FY11 forecasted workload, revenues, and expenses; and FY11 year-to-date workload, revenues, and expenses. The Inpatient Product Lines worksheet provides further details on the types of services provided within each major service line. Using the available data, perform a variance analysis on Schumpert Medical Center and answer the following questions: |
| 1. What was the hospital's original profit forecast (assume away any issues with depreciation, taxes, etc.)? Halfway through the fiscal year, what is the hospital's revised projection for FY11 profits? |
| Answer: |
| 2. Which inpatient service lines are overbudget? Which product lines are overbudget after accounting for workload increases? |
| Answer: |
| 3. What actions would you take at the mid-year point if you were a fee-for-service hospital? In other words, where are the problem areas on which you would focus your attention, and who might provide ideas for "best practices" based on their performance? |
| Answer: |
| 4. What actions would you take at the mid-year point if you were a capitated hospital? In this case, the revenue spreadsheet would be replaced with an overall budget of $50 million with which to operate (rather than being able to bill for each episode of patient care). Federal, state, county, and city hospitals normally operate under a capped budget. Additionally, many HMOs also operate under a fixed Per Member, Per Month (PMPM) capitated process. |
| Answer: |
Revenues
| Schumpert Medical Center | |||||||
| Revenues Worksheet, Mid-Year Review | |||||||
| Inpatient | |||||||
| Inpatient Product Line | Price/RWP | Forecasted RWPs For FY11 | Projected IP Revenue For FY11 | Actual RWPs (FY11 YTD) | Actual IP Revenue (FY11 YTD) | ||
| CIRC | $ 6,010.65 | 724 | $ 4,351,711 | 421 | $ 2,530,676 | ||
| DIGEST | $ 6,021.65 | 1,161 | $ 6,988,125 | 636 | $ 3,830,402 | ||
| ENT | $ 6,001.65 | 130 | $ 780,215 | 72 | $ 433,948 | ||
| GYN | $ 6,013.65 | 219 | $ 1,313,983 | 116 | $ 697,128 | ||
| MENTAL HEALTH | $ 502.99 | 1,351 | $ 679,539 | 736 | $ 369,949 | ||
| NERVOUS | $ 6,103.65 | 228 | $ 1,391,632 | 112 | $ 682,744 | ||
| NEWBORN | $ 7,014.71 | 733 | $ 5,141,782 | 433 | $ 3,033,900 | ||
| OB | $ 5,713.65 | 1,501 | $ 8,576,189 | 868 | $ 4,960,622 | ||
| ORTHO | $ 6,084.18 | 631 | $ 3,839,118 | 274 | $ 1,664,658 | ||
| OTHER | $ 6,018.14 | 2,152 | $ 12,951,037 | 800 | $ 4,813,961 | ||
| RESP | $ 6,118.73 | 677 | $ 4,142,380 | 197 | $ 1,202,960 | ||
| Total Inpatient Earnings | 9,506 | $ 50,155,710 | 4,664 | $ 24,220,949 |
test:
RWP=Relative Weighted Product
test:
IP=Inpatient
test:
YTD=Year-to-Date
Expenses
| Schumpert Medical Center | ||||||||
| Expenses Worksheet, Mid-Year Review | ||||||||
| Inpatient | ||||||||
| Inpatient Product Line | Budget/RWP (FY10) | Actual RWPs (FY10) | IP Expenses (FY10) | Forecasted RWPs (FY11) | FY11 Budget (FY10+6% Inflation) | Actual RWPs (FY11 YTD) | Actual IP Expenses (FY11 YTD) | |
| CIRC | $ 5,475.81 | 690 | $ 3,778,309 | 724 | $ 4,202,356 | 421 | $ 2,472,822 | |
| DIGEST | $ 5,476.81 | 1,105 | $ 6,051,875 | 1,161 | $ 6,737,188 | 636 | $ 4,356,173 | |
| ENT | $ 5,477.81 | 124 | $ 679,248 | 130 | $ 754,842 | 72 | $ 462,822 | |
| GYN | $ 5,478.81 | 208 | $ 1,139,592 | 219 | $ 1,268,947 | 116 | $ 777,322 | |
| MENTAL HEALTH | $ 498.78 | 1,287 | $ 641,930 | 1,351 | $ 714,283 | 736 | $ 400,730 | |
| NERVOUS | $ 5,478.81 | 217 | $ 1,188,902 | 228 | $ 1,324,119 | 112 | $ 675,173 | |
| NEWBORN | $ 5,478.81 | 698 | $ 3,824,209 | 733 | $ 4,256,926 | 433 | $ 2,971,020 | |
| OB | $ 5,478.81 | 1,430 | $ 7,834,698 | 1,501 | $ 8,717,115 | 868 | $ 5,472,892 | |
| ORTHO | $ 5,478.81 | 601 | $ 3,292,765 | 631 | $ 3,664,557 | 274 | $ 1,771,063 | |
| OTHER | $ 5,478.81 | 2,050 | $ 11,231,561 | 2,152 | $ 12,497,823 | 800 | $ 4,662,277 | |
| RESP | $ 5,478.81 | 645 | $ 3,533,832 | 677 | $ 3,931,704 | 197 | $ 1,233,771 | |
| Total Inpatient Expenses | $ 43,196,922 | 9,506 | $ 48,069,860 | 4,664 | $ 25,256,062 |
Inpatient Product Lines
| Product Line | MDC Description |
| CIRC | Diseases and Disorders of the Circulatory System |
| DIGEST | Diseases and Disorders of the Digestive System |
| ENT | Diseases and Disorders of the Ear, Nose, Mouth, and Throat |
| GYN | Diseases and Disorders of the Female Reproductive System |
| MH | Mental Diseases and Disorders |
| MH | Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental Disorders |
| NERVOUS | Diseases and Disorders of the Nervous System |
| NEWBORN | Newborns and Other Neonates with Conditions Originating in Perinatal Period |
| OB | Pregnancy, Childbirth, and the Puerperium |
| ORTHO | Diseases and Disorders of the Musculoskeletal System and Connective Tissue |
| OTHER | Unknown |
| OTHER | Diseases and Disorders of the Eye |
| OTHER | Diseases and Disorders of the Hepatobiliary System and Pancreas |
| OTHER | Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast |
| OTHER | Endocrine, Nutritional and Metabolic Diseases and Disorders |
| OTHER | Diseases and Disorders of the Kidney and Urinary Tract |
| OTHER | Diseases and Disorders of the Male Reproductive System |
| OTHER | Diseases and Disorders of the Blood, Blood Forming Organs, Immunological Dis |
| OTHER | Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasm |
| OTHER | Infectious and Parasitic Diseases, Systemic or Unspecified Sites |
| OTHER | Injuries, Poisonings and Toxic Effects of Drugs |
| OTHER | Burns |
| OTHER | Factors Influencing Health Status and Other Contacts with Health Services |
| OTHER | Multiple Significant Trauma |
| OTHER | Human Immunodeficiency Virus Infections |
| RESP | Diseases and Disorders of the Respiratory System |
