Choose ONE (1) question below to discuss and then respond to TWO (2) of your classmates answers (Try not to repeat others answers). Include the question with your response.

1. What are the key differences between a strategic and operational plan? Explain.
2. What is the statistics budget and how does it influence other budgets?
3. What demographic factors impact volume and future revenues?
4. What is variance analysis and why is it important to the budget process in a healthcare organization?
5. What is a flexible budget, how does it vary from a fixed budget?
6. Compare and contrast zero-based versus incremental budgeting?

Make sure you are properly citing your source(s) and providing your reference(s) for information you obtain from another source. Please review the Discussion Expectations and Grading posting if you have any questions regarding answering the discussion question and/or responding to your peers.

SOLUTION

What is variance analysis, and why is it important to the budget process in a healthcare organization?

Variance analysis is the practice of comparing actual and budgeted financial performance. It identifies the variations, or variances, between expected and actual results (Finkler et al., 2022). Variance analysis is critical in determining if a healthcare organization follows its financial strategy and identifying areas where financial performance deviates from expectations. Positive variations occur when actual performance exceeds the budget, whereas negative variances imply that performance falls short. Variance analysis is especially significant in healthcare since care delivery is complex and often unpredictable.

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