Question

1. Review the attached income statement. Pay attention to the revenue and expenses both for the current month and the year to date, YTD. Please review both the actual and the budgeted amounts for each line item. Remember that positive variance in revenue is usually a good thing but positive variances in expenses is usually negative. A Manager must consider both the volumes and the revenue per patient day or procedure and the expenses per patient day or procedure to truly evaluate the performance. Answer the following questions:
   1. Did the inpatient revenue meet the budget for the month?
      1. What do you think contributed to this result? Be specific.
   2. Did the outpatient revenue meet the budget for the month?
      1. What do you think contributed to this result? Be specific.
   3. Did the total direct expenses meet the budget for the month?
      1. What was the expense category that contributed most to this result? Be specific.
   4. Did this department have a favorable month? Why, again be specific?

General Hospital Budget Report-January 2018
Category	Actual	Budget	Variance	% Variance
Revenue
Inpatient Volume-Days	4,000	3,500	500	14.3%
Inpatinet Revenue	$2,400,000	$2,100,000	$300,000	14.3%
Outpatient Volume-Procedures	1,100	1,000	100	10.0%
Outpatient Revenue	$286,000	$250,000	$36,000	14.4%
Total Revenue	$2,686,000	$2,350,000	$336,000	14.3%
Operating Expenses
Labor
Inpatient Labor	$1,500,000	$1,225,000	$275,000	22.4%
Inpatient Supplies	$500,000	$525,000	-$25,000	-4.8%
Total Inpatient Expenses	$2,000,000	$1,750,000	$250,000	14.3%
Outpatient Labor	$137,500	$150,000	-$12,500	-8.3%
Outpatient Supplies	$55,000	$50,000	$5,000	10.0%
Total Outpatient Exepenses	$192,500	$200,000	-$7,500	-3.8%
Total Operating Expenses	$2,192,500	$1,950,000	$242,500	12.4%
Net Revenue	$493,500	$400,000	$93,500	23.4%

Answer 1

As per rules I am answering the first 4 subparts of the question

1: Yes the inpatient revenue met the budgeted revenue. The actual inpatient revenue is 2400,000 while it was budgeted as 2100,000.

2: The reason for the actual revenue exceeding the budgeted revenue is that the inpatient volume in days was actually higher than what was budgeted (400 vs 3500).

3: Yes the outpatient revenue met the budget for the month since actual revenue was 286,000 as compared to $250000 budgeted.

4: The reason for actual outpatient revenue exceeding the budget was that the number of procedures was 1100 as compared to budgeted procedures of 1000.