Food-Service-Manual-for-Health-Care-Institutions

Control Function and Financial Management
Analyzing labor costs is necessary to determine total cost per meal and total cost per
patient day. In addition, analyzing labor costs identifies operational areas that need improvement.
The efficiency of labor use can be evaluated more precisely by calculating productivity
statistics each month and by comparing them with those for past months or with statistics from
other institutions.
Productivity can be defined as the relationship of the amount of resources used to the
amount of products or services produced, or the relationship between inputs and outputs.
Productivity can be simply calculated by dividing the amount of input by the amount of output.
For example, dividing the number of labor hours worked (input) by the number of meals
served (output) provides a meaningful indicator of productivity in the food service department.
Overall, productivity is a valuable index of the department’s efficiency and performance.
Productivity statistics include the following types of data:
• The number of patient trays served per patient day
• The number of labor minutes per patient meal
• The number of labor minutes per nonpatient meal equivalent
• The amount of revenue produced per full-time-equivalent employee assigned to nonpatient
meal service
• The number of customer transactions performed per each full-time-equivalent employee
assigned to nonpatient meal service
• The total number of food service employee work hours per patient day
• The total number of food service employee work minutes per unit of service
Changes in productivity statistics may indicate the need to change operating procedures or
staffing levels. When such indicators are calculated on a regular monthly basis and analyzed
promptly, the director can make appropriate changes before the department’s long-term financial
goals are negatively affected.
Monthly Supply Costs
To some extent, expenses can be controlled for such nonfood supplies as dishware, glassware,
service ware, kitchen utensils, disposable paper products, cleaning compounds and equipment,
printed forms and other office supplies, and small equipment. Procedures for purchasing, requisitioning,
maintaining inventory, and controlling stock for such supplies are the same as for
food supplies. The costs involved and the quantities used are also determined by calculating
beginning inventory, monthly purchases, and closing inventory. Records may also be kept and
information reported by the type of commodity, such as paper and cleaning supplies.
Monthly Performance Report and Other Control Reports
The kinds of other control reports that need to be maintained in the food service department
vary from institution to institution. Some examples include monthly performance reports,
budget variance reports, quality control reports, productivity reports, and in-service education
and orientation reports. Only the monthly performance report will be discussed in this chapter.
After all the individual cost categories have been determined for the month, it is helpful for
the food service director to prepare a summary form that includes all of the important operational
data for the department. The food service performance report shown in Exhibit 11.6 is
an example of a comprehensive and useful monthly summary. It provides a means for comparing
current costs against budget targets from one month to the next. If cost allocations have
been made properly, the true costs of patient and nonpatient meals will be indicated.
Variances in month-to-month costs and revenues should be carefully analyzed by the food
service director. Differences that cannot be explained by similar changes in patient census or
nonpatient meal counts should be carefully reviewed. Some differences can be controlled, while
others cannot be. For example, if fewer patient meals were served with no change in labor
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