Variance in Hospital Annual Budget vs Annual Financial Performance

Especially, in a private hospital, budget is important and it should not be taken lightly.

Annual budget is the projected revenues and expenses and incomes for the incoming year.  It is a financial target.  Thus, the annual financial performance outcome should be in the vicinity of the budget.

If there is a big variance, whether positive or negative, there must be explanations forwarded for continual improvement purposes.

The variance is usually due to the following:

  1. Inadequate planning leading to faulty  projections
  2. Inadequate performance leading to targets not being met
  3. Unforeseen events like a disaster which was not adequately controlled leading to targets not being met

Commitment and training on proper planning budgeting and commitment on performance to reach target are of utmost importance.

ROJ-TPORs@16jan19

 

 

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