Changes to Performance over Time
Between last year’s Q3 and the current year’s Q3, there has been a 16.5% increase in total revenues, whereas the total costs have grown by 12.4%. There is a positive variance for the net income since the latter has grown by 38% since the previous Q3 (Southern New Hampshire University, n.d.). The potential causes for the increases in revenues/net income are commercial and governmental revenues. The most critical causes of increases in expenses are growing costs of medical utilities, increases in salary expenses, and larger commercial medical expenses.
Planned/Actual Q3 Performance
Based on the differences between the planned and actual Q3 financial performance, the predictions for Q3 were not perfectly accurate. Particularly, the department’s actual net income exceeds the projected one by more than 12%, which demonstrates the presence of exceeded performance expectations. Among the influential causes for these differences are commercial and government revenues, whereas revenues from charity care turned out to be lower than expected. For differences between actual/projected Q3 expenses, the greatest contributors are the governmental medical expenses, governmental expenses, and staffing salaries.
Departmental Factors Leading to Gains and Losses
Regarding the variance in the volume of payer types, the actual number of cases exceeded the projected one by over 6%. The most significant increase was related to commercial and government clients associated with larger revenues than the other client types (Penner, 2004). Actual expenses on staffing salaries were lower than expected, whereas actual medical costs were 6.1% higher than anticipated, which, however, did not cause any net losses due to steady increases in revenues. In Q3, revenues from managing commercial and government clients’ cases were the primary sources of revenue, whereas expenses associated with the same services acted as the key cost drivers. These costs and increases in the number of managed patient cases could have affected the operations by requiring greater medical utility expenses, which did not affect the overall budget very much.
Firstly, continuing to increase the proportion of commercial clients will be beneficial for the facility. From financial data, for this patient category, revenues per case exceed $12,000, which is almost three times higher than average revenues for any other client demographic. Secondly, there has been a positive difference between projected and actual legal fees ($1,754), and changing it in the future would promote a decrease in variable operating expenses.
Penner, S. J. (2004). Controlling budget variance. Web.
Southern New Hampshire University. (n.d.). Variance analysis reference guide. Web.