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.




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