You have been asked to conduct a budget variance analysis: analyzing performance by comparing budgeted workload, revenue, and expenses for a range of different service lines, with actual workload, revenue, and expenses for those service lines.

Analyze the data below. In each case, show the calculations that you conducted to answer the question. Then, explain your conclusion and how your calculations support your reasoning.

• 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?
• Which inpatient service lines are over budget? Which inpatient service lines are over budget after accounting for workload increases?
• What two actions would you recommend be taken at the mid-year point if you oversaw 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?
• What two actions would you recommend be taken at the mid-year point if you oversaw 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

. Jiranna Healthcare Expenses Worksheet, Mid-Year Review Inpatient Budget (FY10) Actual (FY10) IP Expenses (FY10) FY11 Budget (FY10+6% Inflation) Actual IPExpenses (FY11 YTD) | Actual (FY11)| 421 636 72 Inpatient Product Line (FY11) 690 1.105 124 208 1,287 724 1.161 CIRC DIGEST ENT GYN MENTAL HEALTH NERVOUS NEWBORN $ 5,475.81 S 5,476.81 S 5,477.81 $ 5,478.81 $ 498.78 S 5,478.81 S 5,478.81 $ 5,478.81 S 5,478.81 S 5,478.81 3,778,309 6,051,875 4,202,356 6,737,188 754,842 2472,822 4,356,173 462,822 777,322 400,730 1139,592 1,351 228 733 1,501 631 2,152 677 9,506 736 ORTHO OTHER RESP Total Inpatient Expenses 698 1,430 601 2,050 645 $1,188,902 $3,824,209 7,834,698 $3,292,765 11231561 3,533,832 43,196,922 4,256,926 8,717,115 3,664,557 12,497,823 433 868 274 800 197 4,664 2,971,020 5.472,892 1771,063 4,662,277 1233,771 25,256,062 48,069,860 Jiranna Healthcare 2 Revenues Worksheet, Mid-Year Review Inpatient Forecasted For FY11 Projected IP Revenue For FY11 Actual IP Revenue (FY11 YTD) Inpatient Product Line (FY11 YTD) 0 2 5 0 DIGEST 2 MENTAL HEALTH NERVOUS NEWBORN 8 3 Total Inpatient Earnings 2 Product Line MDC Description CIRC DIGEST ENT GYN MH MH NERVOUS Diseases and Disorders of the Nervous System NEWBORN Newboms and Other Neonates with Conditions Originating in Perinatal Period OB ORTHO OTHER OTHER OTHER OTHER OTHER OTHER OTHER OTHER OTHER OTHER OTHER OTHER OTHER Factors Influencing Health Status and Other Contacts with Health Services OTHER OTHER RESP Diseases and Disorders of the Circulatory System Diseases and Disorders of the Digestive System Diseases and Disorders of the Ear, Nose, Mouth, and Throat Diseases and Disorders of the Female Reproductive System Mental Diseases and Disorders Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental Disorders Pregnancy, Childbirth, and the Puerperium Diseases and Disorders of the Musculoskeletal System and Connective Tissue Unknown Diseases and Disorders of the Eye Diseases and Disorders of the Hepatobiliary System and Pancreas Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast Endocrine, Nutritional and Metabolic Diseases and Disorders Diseases and Disorders of the Kidney and Urinary Tract Diseases and Disorders of the Male Reproductive System Diseases and Disorders of the Blood, Blood Forming Organs, Immunological Dis Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasmm Infectious and Parasitic Diseases, Systemic or Unspecified Sites Injunies, Poisonings and Toxic Effects of Drugs Burns Multiple Significant Trauma Human Immunodeficiency Virus Infections Diseases and Disorders of the Respiratory System