Variance Analysis- Variance Reports
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Medicine
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Jan 9, 2024
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Variance Analysis: Variance Reports
Brandi Munday
College of Science, Grand Canyon University
HCA-240
Professor Joseph Anderson
December 10, 2023
1
Variance Analysis: Introduction
As a manager of a hospital department that cares for patients, variance reports will need to be completed once the monthly budget has been received with the results. A variance report is a “document that compares what was supposed to happen with what happened,” (Wolters Kluwer). Variance reporting is typically used to analyze any differences between the hospital's budget and its actual performance. The use of variance reporting is important to a hospital's growth financially and its physical performance. Variance reporting helps a hospital to identify anything that needs to be changed. It focuses on the budget structure and the performance of the hospital. In order to write a variance report for the hospital department, a manager would need to
collect and organize any data from the department including salaries, revenue, operating income, etc. The manager would also be expected to determine from the variance report what needs to be worked on in the department based on the funds and money spent. As a manager of a hospital department when creating a variance report an individual must keep in mind the expectations and
factors of a variance report, budget goals and performance should be able to be compared and determine the next steps for the hospital, and the variance issues must be in accordance with health care organizations (HSOs). Expectations
As a manager of a hospital department that cares for patients, they are expected to send variance reports to the vice president of the hospital. Variance reports need to be very detailed in order to determine what to do next to make the hospital not only better for the patients, but also to make sure financial goals are met and profit is being made. Writing A variance report should include the prices of services provided, the volume of sales each day, costs of equipment, cost of products used, fixed costs, any flexibleness in the budget, types of services provided, salaries
needed for workers both part-time and full-time, and any maintenance needed in that department.
It is important to include all these factors when writing a variance report because if there are any mess-ups in the data taken, then it could affect the monthly budget, or it could affect the number of supplies that were to be purchased. These reports need to be specific when calculating costs. Some other things to keep in mind as a manager of a hospital department when writing a variance report are if any pregnant women may be leaving the hospital soon which would cut costs, anybody planning to go on vacation, the location of the hospital which could determine if the hospital might need a bigger budget for maintenance. Also, some other things a manager of a hospital could be aware of when writing a variance report is planning for the weather expecting more patients around certain holidays, and comparing spending and costs from the year prior on that same day. Operational Variance Report VS. Results of Performance
As a manager of a hospital department who has received the monthly budget results that state the salaries of the employees were more than expected and the supply usage was lower than
what was expected. This means that the operational variance report budget goals were expected that the salaries were to be lower, and the hospital was expecting to use more supplies to take care of patients than what was used. This could mean to a manager based on the lower usage of products that patients aren’t coming in as frequently expected and that there is no current need to hire any more employees. It is important for managers to pay attention to what the budget goal is
compared to the actual results of the performance because “understanding these differences is critical to improving budgeting accuracy and performance,” (Vareto). Because the salaries were higher than what was budgeted, this could mean many things for example, managers not paying close enough attention to the budget goals when hiring, this could be because of the overall
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performance of employees, or due to other issues. A variance report determines what was budgeted and what the actual results ended up being.
Variance Issues
A Health Care Organization (HCO) is referring to “a system comprised of people, facilities, and resources,” (CDC). They focus on each department to make sure patients are receiving quality care. Variance issues focus on the budget goals of the hospital. Issues that need to be addressed with the HCO would be problems of performance. Variance issues that need to be addressed would be to create a stable income for the hospital without going completely over or under the spending budget that was set for the hospital. By doing this, it could help to reduce the amount of wasted product and cut down on salaries that were over budgeted. Conclusion
As a manager of a hospital department that cares for patients is expected to send in a variance report to the vice president of the hospital, there are many factors to keep in mind when creating one, they must be able to compare costs and performance and determine any issues to be
addressed in accordance with health care organizations. It is important to pay close attention to the financial parts of a hospital department and all the costs. If a manager fails to do so, a hospital's budget goals and their performance may not add up together which could cause more problems like departments taking pay cuts.
References
BDGBHD
Hospital Scenario. (n.d.). Allied health community. Retrieved form https://lc.gcumedia.com/
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Centers for Disease Control and Prevention. (2023, July 18). Terminology. Centers for Disease Control and Prevention. https://www.cdc.gov/infectioncontrol/guidelines/healthcare-
personnel/terminology.html#:~:text=Healthcare%20Organization%20(HCO),deliver
%20healthcare%20services%20to%20patients. Cleverley, W. O., & Cleverley, J. O. (2018). Essentials of health care finance (8th ed.). Jones & Bartlett Learning.
Vareto. (2022, September 15). Budget vs. actuals variance analysis and why it matters for businesses. https://www.vareto.com/blog/what-is-budget-vs-actuals-variance-analysis Variance reporting. Glossary | CCH Tagetik | Wolters Kluwer. (n.d.).
https://www.wolterskluwer.com/en/solutions/cch-tagetik/glossary/variance-reporting
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