Health Care Finance

Running head: Health care finance
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HEALTH CARE FINANCE

Health care finance
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INTRODUCTION
Financial control in health settings is regarded as a proper accounting system for funds and
equipment which laid down certain standards of performance against which actual
performance would be measured (Dong, G. 2015)
Tools of control areBudget, hospital cost control and financial statement analysis
The difference between actual prices and the standard prices is called a variance and in order
to obtain the detail in depth information abount the financial statement flexible budgeting
variance analysis is a good method.
According to this method variance is of three types volume , quantity or use and price .
The variance caused by a difference between actual workload and anticipated workload is
known as volume variance, whereas use variance occurs due to the difference between the
original quantity and the budgeted quantity of input. On the contrary, price variance basically
is the total amount of variance caused due to the differences between the actual price of the
input and its expected price (Hyett, K et al., 2007) . These different sorts of variances can be
dealt by variance analysis which can operated through two ways 2-variance analysis and 3-
variance analysis
These procedures of analysis can be applied to both budget types flexible as well as static.
There is a potential tool which is sensitivity analysis , which basically identifies and
quantifies the future aspects , if what is thought does not happens. So this tool becomes an
integral part of the plan as it measures the degree of uncertainty , as the future cannot be
absolutely predicted.
SENSITIVITY ANALYSIS REPORT
It is the application of various situations which uses the preposition what if, to model an
array of possible outcomes. It is mainly used to evaluate various formal decisions,
employing different beliefs about variables. A comparatively useful aspect of sensitivity
analysis is to locate those variables that can have an unusually large impact on the
outcome of the analysis. The policy maker of the person taking decisions can then
evaluate the probability of the variables experiencing probable changes. The result
reported is a better understanding of the risks associated with an investment.
One way sensitivity analysis is an effective method of dealing with the system output and
parameters by using statistical analysis in which output variable say ‘y’ is plotted against
each respective parameter say ‘x’ and the plot obtained is attributed to statistical analysis