At a very high-level, the components of healthcare gross and net revenue can be broken down into these areas:

• Fees - the amount charged for a service.
• Volume - the units of service charged.
• Work Days - the amount of days worked in a particular period.
• Payer Mix - the type of insurance reimbursement that a patient may present.
• Acuity - the level of complexity of a service performed.

Complicating the matter, the total change in actual Volume is made up of Pure Volume, Work Days, and Payer Mix.

Payer Mix can be broken down into five different areas:

• Commercial Payers - the amount reimbursed for a service by Commercial insurance payers.
• Contract Payers - the amount reimbursed for a service by payers who have contracted with the healthcare provider.
• Employees - the reimbursement received for employee provided healthcare services.
• Medicare - the reimbursement received for Medicare provided healthcare services.
• Other Government - the reimbursement received for Government provided healthcare services exclusive of Medicare.

Given the components above, there can be many variations of the types of budget and variance analysis that can be performed. In future posts, I'll show some of the Excel modeling and charting that I've used to analyze and explain these components.