Variance Analysis Case Study – Schumpert Medical Center

The subsequent two spreadsheets provide workload (expressed as relative weighted products (RWPs) for inpatient care), revenue, and expense data for Schumpert Medical Center covering their fiscal years 2010 and 2011. The data includes FY10 actual workload, revenues, and expenses; FY11 forecasted workload, revenues, and expenses; and FY11 year-to-date workload, revenues, and expenses. The Inpatient Product Lines worksheet provides further details on the types of services provided within each major service line. Using the available data, perform a variance analysis on Schumpert Medical Center and answer the following questions:1. 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?Answer:2. Which inpatient service lines are overbudget? Which product lines are overbudget after accounting for workload increases?Answer:3. What actions would you take at the mid-year point if you were 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?Answer:4. What actions would you take at the mid-year point if you were 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.Answer:Schumpert Medical CenterRevenues Worksheet, Mid-Year ReviewInpatientInpatient Product LineCIRCDIGESTENTGYNMENTAL HEALTHNERVOUSNEWBORNOBORTHOOTHERRESPTotal Inpatient EarningsPrice/RWP$6,010.65$6,021.65$6,001.65$6,013.65$502.99$6,103.65$7,014.71$5,713.65$6,084.18$6,018.14$6,118.73Forecasted RWPsFor FY117241,1611302191,3512287331,5016312,1526779,506Projected IP RevenueFor FY11$4,351,711$6,988,125$780,215$1,313,983$679,539$1,391,632$5,141,782$8,576,189$3,839,118$12,951,037$4,142,380$50,155,710Actual RWPs(FY11 YTD)421636721167361124338682748001974,664Actual IP Revenue(FY11 YTD)$2,530,676$3,830,402$433,948$697,128$369,949$682,744$3,033,900$4,960,622$1,664,658$4,813,961$1,202,960$24,220,949Schumpert Medical CenterExpenses Worksheet, Mid-Year ReviewInpatientInpatient Product LineCIRCDIGESTENTGYNMENTAL HEALTHNERVOUSNEWBORNOBORTHOOTHERRESPTotal Inpatient ExpensesBudget/RWP(FY10)$5,475.81$5,476.81$5,477.81$5,478.81$498.78$5,478.81$5,478.81$5,478.81$5,478.81$5,478.81$5,478.81Actual RWPs(FY10)IP Expenses(FY10)Forecasted RWPs(FY11)6901,1051242081,2872176981,4306012,050645$3,778,309$6,051,875$679,248$1,139,592$641,930$1,188,902$3,824,209$7,834,698$3,292,765$11,231,561$3,533,832$43,196,9227241,1611302191,3512287331,5016312,1526779,506FY11 Budget(FY10+6% Inflation)$4,202,356$6,737,188$754,842$1,268,947$714,283$1,324,119$4,256,926$8,717,115$3,664,557$12,497,823$3,931,704$48,069,860Actual RWPs(FY11 YTD)421636721167361124338682748001974,664Actual IP Expenses(FY11 YTD)$2,472,822$4,356,173$462,822$777,322$400,730$675,173$2,971,020$5,472,892$1,771,063$4,662,277$1,233,771$25,256,062Product LineCIRCDIGESTENTGYNMHMHNERVOUSNEWBORNOBORTHOOTHEROTHEROTHEROTHEROTHEROTHEROTHEROTHEROTHEROTHEROTHEROTHEROTHEROTHEROTHERRESPMDC DescriptionDiseases and Disorders of the Circulatory SystemDiseases and Disorders of the Digestive SystemDiseases and Disorders of the Ear, Nose, Mouth, and ThroatDiseases and Disorders of the Female Reproductive SystemMental Diseases and DisordersAlcohol/Drug Use and Alcohol/Drug Induced Organic Mental DisordersDiseases and Disorders of the Nervous SystemNewborns and Other Neonates with Conditions Originating in Perinatal PeriodPregnancy, Childbirth, and the PuerperiumDiseases and Disorders of the Musculoskeletal System and Connective TissueUnknownDiseases and Disorders of the EyeDiseases and Disorders of the Hepatobiliary System and PancreasDiseases and Disorders of the Skin, Subcutaneous Tissue and BreastEndocrine, Nutritional and Metabolic Diseases and DisordersDiseases and Disorders of the Kidney and Urinary TractDiseases and Disorders of the Male Reproductive SystemDiseases and Disorders of the Blood, Blood Forming Organs, Immunological DisMyeloproliferative Diseases and Disorders, Poorly Differentiated NeoplasmInfectious and Parasitic Diseases, Systemic or Unspecified SitesInjuries, Poisonings and Toxic Effects of DrugsBurnsFactors Influencing Health Status and Other Contacts with Health ServicesMultiple Significant TraumaHuman Immunodeficiency Virus InfectionsDiseases and Disorders of the Respiratory System