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Key Terms:

Actual Expenses: Incurred Expenses

Adjusted Admissions: An industry-wide statistic that equals inpatient admissions plus an adjustment to include outpatient activity.

Benefits: Includes health, dental, and other insurance costs, federal taxes, etc.

Contract Wages: Represents the amounts paid to workers employed by outside agencies

Fixed Expenses: Expenses that do not change in total despite changes of a cost driver (units of service)

Labor Cost per Paid Hour: Represents the average labor cost per hour. It includes premium time and benefits.

Labor Cost Per Hour Formula: Total Salary and Benefit Expense/Total Paid Hours

Labor Efficiency Variance: Represents the salary variance that resulted from using a different amount of labor hours than budgeted.

Labor Efficiency Variance Formula: (Budgeted Paid Hours minus Actual Paid Hours) multiplied by Budgeted Labor Cost per Hour.

Original Budget: Your approved annual budget. It is not adjusted for changes in volume.

Overtime: The amount paid to an employee for working over their appointed hours according to the Fair Labor Standards Act (40,80). It includes both premium OT (@1.5) and straight overtime.

Outpatient Adjustment Factor: Used to calculate adjusted indicators

Outpatient Adjustment Factor Formula: Total Gross Charges/Total Inpatient Charges

Paid Hours: Represents all hours for which the employee received compensation, except on call hours.

Paid Time Off Wages: Represents the amount paid to employees for off duty time suck as sick leave, vacation, holiday, bereavement pay, jury duty, etc.

Productive Salaries: Includes amounts paid for all non-PTO time such as Reg, Shift, Education & Orientation.

Rate Variance: Represents the variance from the volume adjusted budget that resulted from paying a different price for the goods or services (including labor) than was budgeted.

Rate Variance Formula: (Budgeted Labor Cost per Hour minus Actual Labor Cost per Hour) multiplied by Actual Paid Hours

Total Operating Expense per Unit of Service: The average cost of providing one unit of service

Units of Service: Represents the key drivers of a department's worked hours and costs

Volume Adjusted Budget (Flex Budget): A budget that is adjusted for changes in volume. As volume increases, variable budgeted expenses increase in proportion to budgeted standards (WHPUS, operating expense per unit of service) and as volume decreases, variable budgeted amounts decrease in proportion to budgeted standards. The volume adjusted budget includes both variable and fixed expenses.

Volume Adjusted Variance: The difference between actual results and volume adjusted budget

Volume Variance: Represents the difference between the original budget and the volume adjusted budget

Worked FTEs: Represents the number of hours worked in a given time period stated in terms of full time equivalent (FTE) persons. At UTMB, the average FTE works 1,800 hours a year and utilizes 280 hours of paid time of to yield total paid hours of 2,080.

Worked FTEs Formula: Worked Hours divided by (2,080 hours/365 days multiplied by the number of days in the month)

Worked Hours: Includes regular time, overtime, education, and orientation

Worked Hours per Unit of Service (WHPUS): The average number of hours worked to provide one unit of service


Third Column

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