what does relative weighted products mean in variance analysis

what does relative weighted products mean in variance analysis

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The subsequent two spreadsheets provide workload (expressed as relative weighted products (RWPs) for inpatient care),
revenue, and expense data for Schumpert Medical Center covering their fiscal years 2010 and 2011. The data includes FY10
actual workload, revenues, and expenses; FY11 forecasted workload, revenues, and expenses; and FY11 year-to-date
workload, revenues, and expenses. The Inpatient Product Lines worksheet provides further details on the types of services
provided within each major service line. Using the available data, perform a variance analysis on Schumpert Medical Center
and answer the following questions:
1.
What was the hospital’s original profit forecast (assume away any issues with depreciation, taxes, etc.)? Halfway through the
fiscal year, what is the hospital’s revised projection for FY11 profits?
2.
Which inpatient service lines are overbudget? Which product lines are overbudget after accounting for workload increases?
3.
What actions would you take at the mid-year point if you were a fee-for-service hospital? In other words, where are the
problem areas on which you would focus your attention, and who might provide ideas for “best practices” based on their
performance?
4.
What actions would you take at the mid-year point if you were a capitated hospital? In this case, the revenue spreadsheet
would be replaced with an overall budget of $50 million with which to operate (rather than being able to bill for each episode of
patient care). Federal, state, county, and city hospitals normally operate under a capped budget. Additionally, many HMOs also
operate under a fixed Per Member, Per Month (PMPM) capitated process.

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Schumpert Medical Center
Revenues Worksheet, Mid-Year Review
Inpatient
Inpatient Product Line
Price/RWP
CIRC
$6,010.65
724
$4,351,711
421
$2,530,676
DIGEST
$6,021.65
1,161
$6,988,125
636
$3,830,402
ENT
$6,001.65
130
$780,215
72
$433,948
GYN
$6,013.65
219
$1,313,983
116
$697,128
MENTAL HEALTH
$502.99
1,351
$679,539
736
$369,949
NERVOUS
$6,103.65
228
$1,391,632
112
$682,744
NEWBORN
$7,014.71
733
$5,141,782
433
$3,033,900
OB
$5,713.65
1,501
$8,576,189
868
$4,960,622
ORTHO
$6,084.18
631
$3,839,118
274
$1,664,658
OTHER
$6,018.14
2,152
$12,951,037
800
$4,813,961
RESP
$6,118.73
677
$4,142,380
197
$1,202,960
Total Inpatient Earnings
9,506
$50,155,710
4,664
$24,220,949
Forecasted RWPs
For FY11
Projected IP Revenue
For FY11
Actual RWPs
(FY11 YTD)
Actual IP Revenue
(FY11 YTD)

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