BOOKS OF RtfiDIfGS - PAHO/WHO

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analysis, forecasting, and negotiation
activities in the programming and budgeting
phases. For the nonfinancial objectives,
explicit statements of expectations
should be available from the planning
phase.
Information about actual outcomes
should be available from the organization's
management information system.
The data should be accurate, provided
on a timely basis, and must be comparable
with data from the budgeting
system. This generally means that the
hospital's financial accounting system
must have the ability to 1) accumulate
expense items by responsibility center,
2) provide cost accounting systems for
calculating per-únit costs, and 3) collect
operating statistics as an integral
part of the systematic management information
system. Davis and Freeman
(641 offer some suggestions on how to
evaluate management information systems,
and DATAPRO [651 specifies
some guidelines for judging commercial
software packages.
The assessment of performance
should be as timely as data permits.
The first cut at the analysis should be
standardized management reports of
four types:
1. Productivity Monitoring. Reports in
which the productivity (output +
input) of responsibility centers and/
or individual providers is measured.
These reports compare actual measures
with internal and/or external
standards [17, Chap. 18; 66-681.
2. Variance Analysis. Methodologies
for estimating the difference between
budgeted and actual accounts.
Such analyses can be performed at
the total or gross variance level for
specific responsibility center or line
items [691 or at the component variance
levels [9, pp. 82-85; 701. Component
variance analysis attempts to
partition the total experience into
Health Services Research
parts which correspond to identifiable
causes, e.g., price, volume, supply
quantity, etc.
3. Operational Audit. Process of examining
the operations of departments
and organizational control systems
to assess their effectiveness. The
process is concerned with problem
detection rather than problem solving
[711.
4. Financial Statement Analysis.
Methodologies for analyzing the organization's
financial performance
as a whole and assessing its financial
position 172,73].
The purpose óf this first cut analysis is
to systematically identify problems
and, to the extent possible, their apparent
causes. When problems are indicated,
further analysis and discussions
with responsibility managers are generally
necessary to identify the true
causes and the appropriate courses of
action.
The reporting and analysis of performance
serve several purposes. First, the
reports are used to keep management
informed of what is happening in the
different responsibility centers. Management
can, when necessary, take appropriate
action on the basis of these
reports, or can initiate additional analyses.
Second, they can be used to evaluate
the performance of responsibility
center heads. Third, such reports may
indicate that the budgeting process
should be altered. Fourth, the reports
can be useful in educating department
heads to the financial consequences of
their decisions. Without such reports,
department heads may be unable to
make staffing and scheduling decisions
which are consistent with the overall
goals of efficiency and effectiveness.
The controlling phase should be
viewed as a feedback loop to the
programming and budgeting phase.
Analyzing performance will have little