HA520 Unit 4 Sample Paper

Operating Budget Variance for a Three-Site Primary Care Group, Quarter Ending June 30, 2025: Volume, Rate and Spending Drivers with a Staffing Recommendation

[Author Name]

School of Health Sciences, Purdue University Global

HA520 Health Care Financial Management

Unit 4 Assignment

[Instructor Name]

August 11, 2026

Riverbend Family Medicine and Cornerstone Health System are composites written as a model document. No real practice, health system or employee is described, and no figure is drawn from an actual organization.

What this page is doingThe title states the entity, the period and the three variance families the paper separates, so a reader knows what kind of document this is before reading a number. The course line carries Purdue Global's own vocabulary, Unit 4 Assignment, rather than a deliverable name the school does not publish. The final line marks the practice and the system as composites, which is what allows a full budget to appear on the page without implying an employer's confidential figures were used.

Scope, Basis and Method

This analysis covers Riverbend Family Medicine, a composite three-site primary care group operating inside Cornerstone Health System, for the fiscal quarter running April 1 through June 30, 2025. The group budgeted 12.0 provider full-time equivalents across 100 clinic days at 20 visits per provider day, which is the origin of the 24,000-visit budget. All figures are in dollars and come from the system general ledger at the July 18, 2025 close, with volume drawn from the practice management system for the identical period. Net patient service revenue is stated after contractual allowances and provision for bad debt. No allocated system overhead is included, so the margin reported below is a departmental contribution rather than a fully loaded result.

The method has two stages, and the second is what makes the first usable. Stage one is the static variance: budget against actual, line by line, with each difference labeled favorable or unfavorable from the group's point of view. Stage two rebuilds the budget at actual volume with budgeted rates held constant, so that variance caused by seeing fewer patients can be separated from variance caused by paying more per unit or consuming more units per patient (Reiter & Song, 2018). Only medical supplies are treated as variable with visit volume; salaries, benefits, occupancy and depreciation are treated as fixed within the quarter, which matches how the group can actually act on them inside ninety days.

What this page is doingScope and method are settled before any variance is shown, and that ordering is worth points. The period, the close date, the source system, the revenue definition and the overhead treatment are all stated, so a reader knows exactly what the margin does and does not include. Declaring which lines are variable and which are fixed is the single most consequential sentence in a variance paper, because it determines every flexible budget figure that follows and stops the analysis from being argued backward.

Operating Variance for the Quarter

Table 1. Budget, actual and variance, quarter ending June 30, 2025. Visits: 24,000 budget; 22,080 actual; 1,920 unfavorable, 8.0 percent. Net patient service revenue: 3,360,000; 3,201,600; 158,400 unfavorable, 4.7 percent. Salaries and wages: 1,680,000; 1,704,000; 24,000 unfavorable, 1.4 percent. Employee benefits: 420,000; 443,040; 23,040 unfavorable, 5.5 percent. Contract provider coverage: 48,000; 214,800; 166,800 unfavorable, 347.5 percent. Medical supplies: 168,000; 145,728; 22,272 favorable, 13.3 percent. Purchased services and other: 96,000; 101,400; 5,400 unfavorable, 5.6 percent. Occupancy and depreciation: 312,000; 312,000; no variance. Total operating expense: 2,724,000; 2,920,968; 196,968 unfavorable, 7.2 percent. Operating margin: 636,000; 280,632; 355,368 unfavorable, 55.9 percent. Margin percentage: 18.9 percent budget against 8.8 percent actual.

Read against the static budget alone, the quarter looks like a spending failure. The flexible budget corrects that impression. Rebuilt at the actual volume of 22,080 visits, with medical supplies as the only variable line at 7.00 per visit and every other line held at its budgeted level, the flexible budget produces net revenue of 3,091,200, operating expense of 2,710,560 and a margin of 380,640. The distance between the static budget margin of 636,000 and that figure, 255,360, is pure volume: 1,920 visits multiplied by the budgeted contribution of 133.00 per visit. The remaining 100,008 of the 355,368 total unfavorable margin variance belongs to rate and spending, and that is the portion management could act on inside the quarter.

What this page is doingThe budget appears in full before it is discussed, in one order, with the sign of every variance named rather than left to a minus symbol. Percentages sit beside dollars because a 5,400 variance and a 166,800 variance are not the same problem even when both are unfavorable. The paragraph that follows then does the move that separates a graduate paper from a report: it rebuilds the budget at actual volume and shows that 255,360 of the 355,368 shortfall was decided the moment two physicians left.

Drivers Behind the Variance

The volume shortfall has one cause, and it is not demand. Two physician positions, 2.0 of the budgeted 12.0 provider full-time equivalents, went vacant on March 31, 2025, one to retirement and one to relocation. Locum coverage filled 120 clinic days at 1,790 per day, which is the 214,800 sitting in contract provider coverage against a 48,000 budget. Those locum days produced 2,080 visits, an average of 17.3 visits per clinic day against 20.0 for the group's own physicians, so the coverage restored capacity but not productivity. The group's own physicians delivered 20,000 visits across 100 clinic days at the budgeted rate, and 1,142 appointment requests were logged as unschedulable within 21 days.

One large variance runs the other way, and it deserves the same scrutiny as the unfavorable lines. Net patient service revenue came in at 145.00 per visit against a budget of 140.00, worth 110,400 favorable across 22,080 visits. Two conditions produced it. The share of established patient visits documented at moderate complexity rose from 28.0 percent to 34.0 percent after a documentation review completed in March 2025, and payer mix shifted 2.4 points toward commercial coverage when a local employer expanded. Neither is a rate the group negotiated and neither is guaranteed to hold, so the documentation gain should be carried as a level shift already banked rather than as a trend extended into next year (Centers for Medicare & Medicaid Services, 2025).

Spending variance divides cleanly. Contract provider coverage at 166,800 unfavorable is nearly the whole account; every other expense line together moves 43,608 unfavorable, most of it the health plan renewal that lifted benefits from a budgeted 25.0 percent of salaries to 26.0 percent, worth 23,040. Salaries ran 24,000 over because the two departing physicians were paid accrued leave in April. The 22,272 favorable variance in medical supplies is largely an artifact: at actual volume the flexible supplies budget is 154,560, so only 8,832 of that favorability is genuine efficiency and the other 13,440 is the cost of visits that never happened. Reporting the full 22,272 as a saving would misstate performance to the board.

What this page is doingEach driver is written as a quantity with a cause attached, and the favorable variance is examined as carefully as the unfavorable ones. Treating the supplies favorability as mostly volume, not thrift, is the honest reading and protects the writer from claiming credit that a flexible budget would remove in front of a board. Naming the documentation gain as a level shift rather than a trend is the kind of judgment a finance reader is looking for when deciding whether to trust the recommendation.

Recommendation and Its Financial Basis

The recommendation the numbers support is to convert locum coverage into permanent capacity and to fund the recruitment package that does it, rather than to trim supplies or defer purchased services. In specific terms: authorize recruitment for two family physicians at base compensation set to the 60th percentile of the specialty and region benchmark, with a 40,000 signing bonus each against a two-year commitment (Medical Group Management Association, 2024); bridge the gap with one full-time equivalent nurse practitioner starting no later than October 1, 2025; hold the documentation review in place as standing practice; and leave the 145.00 net revenue per visit out of the next budget until it has held for two consecutive quarters.

The arithmetic is what carries the recommendation. Locum coverage cost 214,800 for 2,080 visits, or 103.27 per visit. An employed physician at 250,000 base with benefits at 26.0 percent costs 78,750 per quarter fully loaded and delivers 2,000 visits at the budgeted rate, or 39.38 per visit. The group therefore pays 63.89 more per visit for locum capacity, which is 132,891 per quarter on the same 2,080 visits and roughly 531,564 across a full year of coverage. The 80,000 in signing bonuses is recovered inside the first quarter both physicians are seated. Restoring 1,920 visits at the budgeted contribution of 133.00 per visit returns 255,360 of margin, which no expense reduction available to this group can match.

Three limits belong on the record. First, the payback assumes recruits reach 20 visits per clinic day within one quarter of start; at 17.3 visits per day the employed cost rises to 45.52 per visit, the advantage narrows to 57.75, and the annual figure falls near 480,000, still decisively favorable. Second, a nurse practitioner at 108,000 base adds 34,020 per quarter fully loaded and should be judged on its own contribution once panel assignment settles. Third, if the volume shortfall were demand-driven rather than capacity-driven this recommendation would be wrong, and the 1,142 unschedulable requests are the evidence that it is not. Reporting continues monthly against this same flexible budget, with contract provider coverage and net revenue per visit as the two watched lines.

What this page is doingThe recommendation is priced, dated and traceable to figures already on the page: 103.27 per locum visit against 39.38 for an employed physician, and 133.00 of contribution per restored visit. It also names what it declines to do, which keeps it from reading as a wish list. Stating the limits, including the condition under which the recommendation would be wrong, adds credibility rather than subtracting it, and the monitoring lines tell a reader how the decision will be checked.

References

Centers for Medicare & Medicaid Services. (2025). Physician fee schedule. U.S. Department of Health and Human Services. https://www.cms.gov/medicare/payment/fee-schedules/physician

Healthcare Financial Management Association. (2024). MAP keys: Industry-standard revenue cycle performance metrics. https://www.hfma.org

Kaplan, R. S., & Porter, M. E. (2011). How to solve the cost crisis in health care. Harvard Business Review, 89(9), 46-52.

Medical Group Management Association. (2024). MGMA DataDive provider compensation. https://www.mgma.com

Reiter, K. L., & Song, P. H. (2018). Gapenski's healthcare finance: An introduction to accounting and financial management (7th ed.). Health Administration Press.

Zelman, W. N., McCue, M. J., Glick, N. D., & Thomas, M. S. (2020). Financial management of health care organizations: An introduction to fundamental tools, concepts, and applications (5th ed.). Jossey-Bass.

How this HA 520 Unit 4 example is structured

In many sections this unit asks for a budget or variance analysis of an operating unit; your classroom's instructions decide the exact form, so read the unit assignment page and the rubric before you use this HA520 Unit 4 example as a shape. Scope and method come first, because a variance means nothing until a reader knows what was held constant. The budget follows in three columns, budget, actual and variance, so every figure used later can be checked against it. Drivers come third, one paragraph per source, with the favorable rate variance given the same scrutiny as the unfavorable ones. The recommendation closes, priced and dated, with the limits that would change it. Health Care Financial Management sits in the graduate health care administration sequence at Purdue Global.

HA520 Unit 4 questions, answered

What does HA520 Unit 4 usually ask for?

In many sections this unit asks for a budget or variance analysis: a budget-to-actual comparison for a defined period, an explanation of what drove each material variance, and a recommendation supported by those figures. Your classroom's instructions decide the exact form, so read the unit assignment page and the rubric first. Some sections ask for a flexible budget as well as a static one.

What is the difference between a static and a flexible budget variance?

A static variance compares actual results to the budget as approved, at the volume that was assumed. A flexible budget rebuilds that budget at the volume actually delivered, holding budgeted rates constant. The difference between the two isolates the effect of volume, so the remainder can be attributed to price, spending and efficiency instead of being blamed on managers who did not set the census.

Where do I get budget figures for a paper like this?

Build a composite entity and say so on the title page, as this paper does. Choose a volume driver, set budgeted rates, then make every line reconcile: revenue variance plus expense variance must equal margin variance. Published compensation and revenue cycle benchmarks give plausible ranges. Never publish an employer's internal budget in classroom work, and never present composite figures as an actual organization's results.

Write yours, or have the desk draft it

This paper is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.

HA520 Unit 4: sample paper, in real form