Problem
Read Case "Cascades Mental Health Clinic" from Gapenski's Cases in Healthcare Finance, Sixth Edition textbook (attached above).
In preparing your response to the case, follow the instructions provided within the case to prepare your responses.
Complete the following questions:
a) What is the business's aggregate profit (total) variance for 2018? Interpret your results.
b) What is the profit (total) variance for each of the four product lines? Interpret your results.
c) Decompose the profit (total) variance for the aggregate organization and each product line into revenue and cost variances. Interpret your results.
d) Decompose the revenue variances into enrollment and rate variances. Interpret your results.
e) Decompose the cost variances into volume and management variances. Interpret your results.
f) Focus on the volume variances. Break these down into enrollment and utilization variances in the aggregate and for the four product lines. Interpret your results.
g) Focus on the management variances. The case does not contain data related to supplies costs or fixed costs, so the management variances are, in reality, staffing variances. Break down the staffing variances into the rate and efficiency variances for each product line and within each product line by inpatient and outpatient services. Interpret your results.
h) Summarize the results of your variance analysis in a Word document. This summary focuses on the underlying meaning of the numbers instead of the numbers themselves.
i) What are your recommendations for management action to counter the adverse financial trends experienced in 2018?
j) In your opinion, what are the three key learning points from this case?