Finance and Economics in Healthcare Delivery

NURS 6211: Finance and Economics in Healthcare Delivery

Discussion: Why Do Good Budgets Go Bad?

Budgeting and Variance Analysis

Instructions:

The following are budgeted and actual revenues and expenses for a hospital:

Budgeted Actual

Revenues

Surgical Volume

2,300 2,600

Gift Shop Revenues

$18,000 $19,000

Surgery Revenues

$589,500 $852,750

Parking Revenues $17,000 $19,000

Expenses

Patients Days 26,000 25,000

Pharmacy

$119,000 $158,000

Misc. Supplies

$68,000 $795,600

Fixed Overhead Costs $832,000 $890,000

In preparation of your Discussion post submission, complete the following:

1. Determine the total variance between the planned and actual budgets for

Surgical Volume. Is the variance favorable or unfavorable?

2. Determine the total variance between the planned and actual budgets for

Patient Days. Is the variance favorable or unfavorable?

3. Consider which variances are potentially due to change in volume and which

variances are potentially due to change in rates or other factors.