Cost variances in health care: when should managers investigate?
Robbins, W.A.; Jacobs, F.A.
Healthcare Financial Management Journal of the Healthcare Financial Management Association 39(9): 36-42
1985
ISSN/ISBN: 0735-0732 PMID: 10272683 Document Number: 265199
When costs must be controlled, variance analysis can be a useful tool to implement that control. Variance analysis compares a standard of performance against actual results and investigates those differences that are felt to be the result of inefficient performance. The question becomes, which variances should be investigated? Using a decision model based on probability theory, variances can be identified that are statistically significant and require further investigation.