The Home health agency’s current year’s budget

While reviewing the home health agency’s current year’s budget, Veronica identified variances in the Personnel and Operating Budgets.  She met with the Home Health Supervisor and learned that these variances occurred because two of the patients receiving services were elderly; lived alone; and had little understanding of their disease and how to manage their care.

Based on the supervisor’s description of the level of care these patients were receiving, Veronica calculated that the full cost of each visit for these patients was about $210 which was more than the $90 per visit the hospital was being paid by the government insurance.


The home health agency provides two visits per week for each of these patients.
4a. What is the financial impact on the Home Health Agency’s budget for providing this level of care for these two patients for 12 months  (52 weeks) based on current full costs and the current governmental reimbursement?  (This is a math calculation problem.  It’s intended to show how a small to moderate amount of expense can have an adverse impact on the overall budget and on the hospital’s bottom line.)

Veronica needs to be prepared to discuss the Home Health Agency’s variance with the Director of Finance.

4b. What are two potential actions Veronica can discuss with the supervisor that could make each visit less costly while still meeting the needs of these patients?

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