Budgeting
is an important activity within every healthcare organization. The particular
challenges encountered, however, can vary depending on the type of
organization. A state or federally funded organization, for example, will
likely have a budget that is allocated to it, and it needs to follow specific
guidelines on how the money can be used. A for-profit organization, by
contrast, will typically have more influence and flexibility in setting up
its budget and making choices on matters such as how much to spend on
marketing, patient care, or incentives for employees.

In
addition to preparing budgets, as a healthcare administrator, you must also
be able to evaluate whether or not you have achieved your budget using
variance analysis. This is important because variance analysis measures the
differences between the budget and actual results, and provides
administrators with a starting point for correcting financial performance.
For this Assignment, you conduct a variance analysis for a healthcare
organization.

To
prepare for this Assignment, review the Week 7 Assignment document provided
to you by the Instructor. Examine the budgeted and actual revenues and
expenses for a hospital. Reflect on concepts of budgeting and variance. Refer
to Chapter 10 and Chapter 11 of Financial Management
of Health Care Organizations: An Introduction to Fundamental Tools, Concepts
and Applications in this weeks Learning
Resources for additional guidance.

The
Assignment

Using an
Excel spreadsheet to show your calculations, address the following:

Determine
the total variance between the planned and actual budgets for Surgical Volume. Is the variance
favorable or unfavorable?

Determine
the total variance between the planned and actual budgets for Patient Days. Is the variance
favorable or unfavorable?

Determine
the service-related variance for Surgical Volume.

Determine
the service-related variance for Patient Days.

Prepare
a flexible budget estimate. Present side-by-side budget, flexible budget
estimate, and the actual Surgical Revenues.

Prepare
a flexible budget estimate. Present a side-by-side budget, flexible budget
estimate, and the actual Patient Expenses.

Determine
what variances are due to change in volume and what variances are due to
change in rates.

General
Guidance on Assignment Length: Refer to the Week 7
Assignment Rubric for grading elements and criteria. Your Instructor will use
the rubric to assess your work.