1. Results Interpretation: What do each of the following variance results tell us about the Clinic (i.e., what's the good news and what's the bad news)? Analyze in the aggregate and for each product line, as appropriate. If an analysis applies to more than one product line, you may combine product lines in your discussion for convenience. Use of bullet points are fine and, to the extent possible, encouraged.
Profit (total) variance = actual profit – static profit Revenue= Member months x premium
We see that the overall profit is -$329,366 than what was expected
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What caused this variation?

When it comes to revenue, ideally HMOs would like to see enrollment high and utilization low along with costs down making profit high. The main contributors to profit variances are: Revenue issues, Cost issues, or BOTH. Revenue – Cost= Profit. HMOs make money through member months (enrollment) x premiums.
• The main issue with total profit variance is insufficient revenue from PC Commercial and increased costs from the other three product lines due to high utilization from which created negative variances causing decreased profits.
• The static budget expected margin was 12.7% The actual profit was significantly less than static budget with the actual total margin cost being at 2.7%
Revenue Variance:
• The PMPM rate increased in PC comm. the biggest provider, which impacted its revenue through decreased enrollment. Its enrollee amounts were less than the aggregates. SH comm. also had increased its PMPM rate but also increased revenue through number of enrollees. The increase in enrollees in PC Medicare, SH comm., and SH Medicare could be why the revenue still came out positive, although not what was allocated. Even though approximately 300,000 members were lost in PC comm. the premium increase compensates for that through costs almost entirely, just short of $50,000.(See Rate Variance)
Enrollment Variance:
• We compare the four product lines. PC Commercial has the greatest revenue variance because its member enrollment was so much less than originally forecasted. This is one of the direct factors affecting revenue. All three of the other product lines have greater than expected enrollments.