Health service providers have to carefully manage the use of scarce resources while meeting a growing demand for services and rising expectations for quality. Conducting cost and revenue analysis can greatly increase a managers' understanding of the factors that affect resource use, including staffing patterns, service mix, service practices, and procurement. The information these analysis generate helps managers consider different ways of producing services in order to reduce costs, increase revenues, or both. Conducting a cost and revenue analysis is particularly useful to organizations that are trying to meet major management challenges, such as expanding existing services, integrating new services, or working toward financial sustainability. This issue of The Manager shows why a cost and revenue analysis is useful and suggests various options for increasing cost efficiency and revenue generation. The issue presents three electronic spreadsheet software tools for analyzing costs and revenues and discusses the types of decisions managers can make using these tools. The issue also presents the tools' features, data requirements, and the kinds of information they can generate.
[...] This issue discusses the benefits of undertaking an analysis of the costs and revenues of a facility or an organization and provides information on three spreadsheet-based tools currently available for cost and revenue analysis. It discusses how using electronic spreadsheet tools helps managers determine how their programs use resources, track sources of service revenues, improve efficiency and revenue generation, develop long- term sustainability plans, improve cost recovery, and both project and monitor the impact of management decisions. The guest editors for this issue of The Manager are Dayl Donaldson, Stephen Sacca, Gerry Rosenthal, Charles Stover, William Newbrander, Dan Kraushaar, and Josh Coburn, all members of the Health Reform and Financing Program (HRFP) of Management Sciences for Health. [...]
[...] Reviewing the Features of Three Cost and Revenue Analysis Tools Tool Required Inputs Features Cost-Analysis Staff salaries and Focuses on fixed and Methodology for benefits variable costs Clinic-Based Time allocation of directly related to Family Planning staff per family providing services. Methods planning method Calculates direct Costs of medicines, costs by collecting laboratory supplies personnel spend on a family planning method amount of medicines, and clinical and Number of days worked laboratory supplies in a year used. Types of staff Provides an annex with involved in delivering lists of medicines and each family planning clinical supplies method needed for different methods and steps to provide quality services. [...]
[...] Using a Cost and Revenue Analysis Tool: To conduct cost and revenue analysis, managers usually use spreadsheet-based tools. A spreadsheet is a large grid that helps organize the lists of the financial data and other information needed for your analysis. Formulas embedded in the cells of the grid tabulate the data, allowing you to analyze the data and make calculations and projections. Looking at three useful tools- This section presents three spreadsheet tools you can use to conduct cost and revenue analysis. [...]
[...] Integrating Cost and Revenue Analysis into Ongoing Activities: Analyzing your costs and revenues on a regular basis will generate thought-provoking questions about costs, revenues, and cost recovery and will help you find answers to those questions. The analysis can also provide a common framework for management discussions among your clinical staff, managers, and funding sources so that together you can develop cost recovery strategies that contribute to quality and sustainability of your services. Once you have conducted a cost and revenue analysis and have objective data on your costs, revenues, and cost recovery, you can use the information to maintain or improve quality and provide more cost-efficient services. [...]
[...] One reviewer comments, "The results of our cost and revenue analysis had great impact in promoting change in our organization and motivating managers to improve their managerial capacity. The analysis also had a social impact, because they showed us that some of our prices were too high and could be reduced." On involving service delivery staff in the analysis . One reviewer says, "Many service delivery staff were initially uncomfortable with the financial management side of services. It was easier to involve them in conducting cost and revenue analysis after they understood their potential benefits. [...]
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