Variance analysis provides a comprehensive understanding of clinical pathways and establishes whether or not the clinical pathways meet the set goals and objectives and health care standards. Thus, variance analysis acts as an indicator of success of the clinical pathways. Through variance analysis, health care personnel are able to identify and get rid of undesirable variations within the clinical pathways as well as promote attainment of the desired outcomes._x000D_
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Using Variance Analysis to Improve Care or Reduce Costs_x000D_
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Variance analysis can be used an internal control tool. In my opinion, variance analysis can be used to reduce costs of providing health care services because it helps in identifying discrepancies in offering such services. In addition, variance analysis also keeps the management informed of the effectiveness and efficiency of clinical pathways. Variance analysis also helps in identifying the possible causes of variations or disparities within the clinical pathways that may lead to the provision of low quality health care services; hence it facilitates the development and implementation of corrective measures to rectify the discrepancies and deviations in the clinical pathways. Consequently, health care services are improved._x000D_
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Variance analysis helps providers of health care services to detect deviations in the clinical pathways such as increased overhead costs and lack of proper training amongst care personnel, thus enabling the health care providers to redirect their efforts and make realistic and sensible adjustments within the clinical pathways. This facilitates provision of high quality care services._x000D_
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In my view, health care providers can also use variance analysis to establish the causes of variations between budgeted costs and the actual costs incurred. Establishing this difference would enable health care providers to formulate appropriate actions or measures to correct the situation; hence resulting into the provision of high quality care services at low costs and affordable prices. According to Andersen, Rice and Kominski, variance analysis also helps in forecasting the costs of providing care services and managing clinical pathways, hence it is a crucial management tool._x000D_
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Evaluating a Clinical Pathway Developed by an Organization_x000D_
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In my view, one of the major questions that I would consider when evaluating a clinical pathway developed by an organization is the difference between the budgeted cost and actual costs incurred by the organization during the development and implementation of the clinical pathway. Secondly, I would inquire about the causes of the identified difference. Thirdly, I would inquire about the possible courses of action that the organization would take in order to correct the variations. Finally, I would give recommendations to the organization to enable it correct the variations and reduce costs of providing care services as well as increase revenue generated from the clinical pathways.