The worst thing that can happen is not to be over or under budget, but to be over or under budget and not know why! If the nurse leader doesn't know why the variance is occurring, then he or she cannot respond to the variance in order to bring it back to the planned amount. Using critical thinking skills to justify, explain, and evaluate what caused the variance is vital.
Common reasons for variance include:
- Volume: Budgeted volume compared to actual volume is always a first step in variance justification. Is the reason more was spent in the account that you did many more procedures than expected?
- Weather: Has the weather been milder than predicted, leading to less stress on the population (shoving snow, falling on ice), bringing volume down?
- New technology or medical advances: Was something new purchased or a new supply used that has increased cost?
- Age and physical condition of patients: Has there been a shift in patient population resulting in a higher consumption of services and supplies?
- Competition: Has another facility opened or is a competing hospital taking some of the volume?
- Physicians' commitment to practice at your facility.
- Change: Practice protocols changed, causing a change in supplies needed or the cost of the supplies being used.
- Price: Contracts have changed and there was a price change as a result.
The previous list is by no means inclusive. It is a start to asking yourself, "Why is the expense in this account not what we predicted it to be?" That's the answer you're looking for!
-Pamela Hunt, BS, MSN, RN and Deborah Laughon, RN, BSN, MS, DBA, CCRN