please explain how a large variance from budget would you consider important to address on a monthly hospital variance report:5% 10% 25%
In a monthly hospital variance report, a large variance from the budget generally refers to the difference between the actual financial performance and the planned or budgeted performance. This variance indicates how well the hospital is managing its financial resources and meeting its financial goals.
The importance of addressing a large variance depends on the magnitude of the deviation. In this case, we have three different variances: 5%, 10%, and 25%.
A 5% variance from the budget usually reflects a relatively minor deviation. It suggests that the hospital is relatively close to meeting its financial targets, with only a small difference between the actual expenses/revenue and the budgeted figures. While it is still important to investigate this variance, it may not require immediate action.
A 10% variance indicates a more significant deviation. It suggests that the hospital's actual financial performance is 10% higher or lower compared to what was planned. This deviation should be carefully examined to identify the underlying causes and determine if any corrective measures are required.
A 25% variance from the budget is a substantial deviation and would likely be considered a significant red flag. Such a large variation suggests a significant difference between the anticipated and actual financial performance. This may indicate financial inefficiencies, revenue losses, excessive spending, or other issues that require immediate attention and corrective actions to bring the hospital's financial performance back on track.
In summary, a larger variance from the budget, specifically a 25% deviation, would be considered important to address on a monthly hospital variance report due to its magnitude and potential implications on the hospital's financial health. However, it is important to note that the significance of a variance can also vary depending on the specific circumstances and financial goals of the hospital.