Essay on Variance

1001 Words Mar 9th, 2014 5 Pages
Variance Analysis
Health care is in itself an extraordinarily intricate business. Health care executives now have to find ways to transform a broken and out of date health cares system by focusing on reducing pointless surgeries and diagnostic test and removing disproportionate health care costs. When the annual budget presents itself and shows that salaries are steadily increasing with supplies decreasing several factors have to be considered when presenting the variance analysis report. Factors that should be considered are the number of staffing, patient bed occupancy, specialist care and supplies. In order to control cost the executive must be able to recognize the problem and its cause and have a solution in place to correct it.
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Providing employees that meet the criteria of early retirement and the buying out of their contract is another option for the organization. Employing this option can give the employee a sense of choice in the matter and isn’t look at as a negative option in their perceptions.
Healthcare costs for supplies being lower than budgeted can be used to place moneys in other departments that may be in need. Each department should be analyzed and it should be established which ones require a fixed budget and those requiring a rolling budget. Due to the fact that salaries have increased could also suggest longer hours and overtime. Those staff members in that situation should be in departments requiring a rolling budget. The rolling budget can be evaluated over an established period of time. The department head in these departments should be responsible for reporting an average cost over time. This will allow the financial team to plan for periods where the costs may peak or drop depending on previous trends.
The first step each department must take in order to control the costs and expenditures of their department should be developing the statistics budgets for their respected departments. (Cleverley, Cleverley, Song 2011). Utilizing this tool can provide a base line for the organization’s financial team. Once it has been determined the output

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