Managerial economics focusing on cost and revenue analysis

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 Cost and Revenue Analysis to Make Management Decisions: Conducting cost and revenue analysis helps you develop a baseline of programmatic and financial data for your facility, provides you with a picture of your current situation, and helps you identify needed changes to increase your program's cost efficiency and revenue generation. You will also find these analysis useful in developing strategies for cross- subsidization, or using some services or facilities to subsidize others. Once you have your baseline data, you can explore the possible impact of making changes (such as changing standard practices and adding new services or facilities) by developing "What if" scenarios. [...]