DNRS 6211 Week 1 Assignment 1 Health Ways Budget

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Student name

Walden University

DNRS 6211: Finance and Economics in Healthcare Delivery

Professor Name

Submission Date

Interpretation:

I. Answer the following question related to the results of your calculations: What interpretations can you make based on the data? What is happening in regard to such measurables as:

     1. The full-time equivalents (FTE) for HealthWay employees: 

1. Answer: The full-time equivalents (FTE) for HealthWays employees in June 2018 remained stable with no change for both Physician and Nurse Practitioner FTEs, each maintaining 1.0 and 3.0 FTEs respectively. This indicates that the staffing levels were in line with the budget and there was no need for additional personnel or reduction in workforce. The steady FTEs suggest that HealthWays is operating efficiently without any major fluctuations in staffing requirements.

For both Physician and Nurse Practitioner roles, the actual FTEs met the budgeted expectations, showing that the clinic is managing its workforce effectively. This stability may also imply that HealthWays has an established workforce that can meet its current patient volume. However, close monitoring is needed to ensure that staffing levels remain optimal as patient encounters fluctuate.

     2. The number of encounters, both new and established:

2. Answer: In June 2018, HealthWays saw a higher number of established patient encounters (291) compared to the budgeted 275, indicating a favorable variance of 16 encounters. On the other hand, new patient encounters were lower than expected, with only 18 actual encounters compared to the budgeted 25, resulting in an unfavorable variance of 7 encounters. Overall, the total encounters for June were 309, exceeding the budgeted 300, which suggests that the clinic was able to handle a slightly higher patient volume. The variance in new patient encounters could point to a need for additional marketing or outreach efforts to attract more new patients. The higher volume of established patients may reflect a strong patient retention rate or repeat visits. HealthWays should continue to monitor both new and established patient trends to maintain a balanced and sustainable patient flow.

     3.  Non-personnel expenses:

3. Answer: In June 2018, non-personnel expenses totaled $15,628, which was $755 higher than the budgeted amount of $14,873, resulting in an unfavorable variance. The primary contributors to this increase were medical supplies, which exceeded the budget by $636, and capital expenses, which were $147 higher than expected. The increase in medical supplies could be attributed to an unanticipated rise in demand or an increase in supply costs. Office supplies came in under budget by $40, which helped mitigate some of the overall variance. Rent, depreciation, and overhead remained exactly on budget, showing stability in these fixed costs. HealthWays may need to review its medical supply management and capital expenditure planning to control costs moving forward.

     4.Total expenses:

4. Answer: In June 2018, total expenses amounted to $53,892, which was $1,852 higher than the budgeted total of $52,040, resulting in an unfavorable variance. The increase in expenses was primarily driven by higher personnel costs ($1,098) and non-personnel expenses ($755). While personnel expenses were slightly above budget, the larger portion of the variance came from the higher-than-expected medical supplies and capital expenses.

This increase in total expenses may suggest that HealthWays is experiencing higher costs to maintain operations, possibly due to an increase in patient encounters. The unfavorable variance could impact the clinic’s profitability if these trends continue without corrective actions. Moving forward, HealthWays should look for opportunities to better manage both personnel and non-personnel expenses to stay within budget.

II. If these trends continue, what could it mean for HealthWays? What strategies might they employ to address any issues your analysis suggests?

Answer: If these trends continue, HealthWays could face increased operational costs, particularly in personnel and non-personnel expenses, potentially impacting profitability. The unfavorable variance in new patient encounters suggests a need for improved marketing or patient acquisition strategies to ensure a balanced patient base. The increase in medical supplies and capital expenses could strain the budget further, indicating the need for more effective inventory management and cost control measures.

To address these issues, HealthWays might consider optimizing staff utilization to reduce unnecessary personnel costs and focusing on efficient supply chain management to control rising supply costs. Additionally, they could implement patient retention strategies to maintain a steady flow of established patients while boosting efforts to attract new ones. By focusing on both cost containment and patient growth, HealthWays could maintain financial stability and growth.