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Variance

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Variance Analysis
Health care is in itself an extraordinarily intricate business. Health care executives now have to find ways to transform a broken and out of date health cares system by focusing on reducing pointless surgeries and diagnostic test and removing disproportionate health care costs. When the annual budget presents itself and shows that salaries are steadily increasing with supplies decreasing several factors have to be considered when presenting the variance analysis report. Factors that should be considered are the number of staffing, patient bed occupancy, specialist care and supplies. In order to control cost the executive must be able to recognize the problem and its cause and have a solution in place to correct it. Evaluating the current costs against the previous costs of the hospital should suggest to executives which factors have contributed to the change. (Cleverley, Cleverley, Song 2011). In this situation it is the salaries increasing and supplies decreasing. These two factors have to be heavily investigated prior to the analysis report. The first factor to consider will be the increase in salaries that were more than what were budgeted for. The most important and largest asset of the hospital are the people that are employed. In regards to the variance report the first consideration to the employment would be to consider those that are employed under a contract. These costs cannot be controlled, however renegotiating the contract can reduce the overall costs of these salaries. Implementing a plan of not hiring any non-essential positions over a specific time period is another tool at the disposal of the executive. Productivity has to be considered and emphasis on evaluating those in non-essential areas should be done to ensure cost containment. (Cleverley, Cleverley, Song 2011). Each department should be able to provide…...

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