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ACCA Strategic Professional · Advanced Performance Management · Financial performance measurement

Hartwell Hospital Trust receives a fixed annual government grant of $48m. Last year it treated 24,000 patients at a total cost of $48m. This year it treated 26,000 patients at a total cost of $48m, but an audit found the average waiting time rose from 20 to 35 days and readmission rates doubled. Which conclusion is most appropriate?

Cost per patient fell from $2,000 to about $1,846, so efficiency improved. However, longer waiting times and doubled readmissions indicate outcomes worsened, so effectiveness may have deteriorated. Meeting budget and treating more patients does not by itself prove value for money.

  1. AEfficiency improved because cost per patient fell from $2,000 to about $1,846, but effectiveness may have deterioratedCorrect
  2. BValue for money improved because the budget was met and more patients were treated
  3. CEconomy deteriorated because cost per patient rose
  4. DEfficiency and effectiveness both improved because output rose

Explanation

Cost per patient fell from $48m/24,000 = $2,000 to $48m/26,000 = $1,846, so efficiency improved. Longer waits and higher readmissions suggest outcomes (effectiveness) worsened. Meeting budget alone does not prove value for money, and economy concerns input prices, which are not shown to have changed.

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