relative weighted products (RWPs)

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?
Answer:
2. Which inpatient service lines are overbudget? Which product lines are overbudget after accounting

for workload increases?
Answer:
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?
Answer:
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. AIDitionally, many HMOs also operate under a fixed

Per Member, Per Month (PMPM) capitated process.
Answer:
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. AIDitionally, many HMOs also operate under a fixed

Per Member, Per Month (PMPM) capitated process.