Volume Adjusted ....

Expenses are volume adjusted

The IMS system volume adjusts expenses on every cost center to ensure variances are not attributed to increased or decreased volume. In most cases IMS utilizes the cost center key volume indicator (KVI) to volume adjust expenses. KVI’s determine by account and in total what the cost is to complete the services at the budgeted procedural mix.

The cost center manager can perform further analysis by drilling down to determine what the root cause is. For example the manager may find the volume adjusted Med/Surg per procedure costs to be higher than expected. Some of the reasons for this including:

• Higher material costs, (check the Invoices)

• Waste, Are we are using two instead of one? (check KVI count versus supply)

• Procedural mix has changed. Are we are completing a procedure which requires more material than was budgeted? (check the cost center’s volume trend in the IMS system under the volume menu item).

This is a highly effective way of pin pointing variances.

If required one can compare actual expenses to budget values. Simply change the budget type and you can change the entire budget to “non-volume adjusted”. This can be done for an entire hospital if desired. Managers can turn off the volume adjusting to see where their expenses would be if they were not volume adjusted.

Hospital Volume Adjusted Expense by GL Category

Hospital Budget To Actual Expense by GL Category