Your ins & outs


Your ins & outs

Yours in & outs

Finances in health, aged and community care typically don’t operate like regular businesses in many ways.​ In a commercial setting you would be very clear on the targets that are connected to revenue and costs, and there are lots of conversations around this – it is the fuel of the business in the commercial world.   

In the health care industry, particularly in the public and non-profit sectors, this is less the case – but it shouldn’t be.  The reality is that all the good work that is done has to be paid for – it is is not free. 

This lesson is quite simply about revenue (ins) and expenditure (outs).  It is the same as managing your own budgets.


  • Access your organisation’s or unit’s financial report and annual report.

INs: Where does your money come from?

It is often the case that at the unit level, managers cannot see the revenue associated with their cost centres.  Even though you might not be able to see your revenue on the budget line you need to understand it.  These are the drivers for your business.

The money your unit attracts might be determined by your next line manager or the executive level managers.  They will base their negotiations for more money on the information that you give them.​  So there will be much that you can influence just by giving the right information. 

Revenue in public organisations, such as hospitals is generally set by government at the start of each financial year.  In Victoria, for example, each year the government released a new “Policy and Funding Guidelines” which details what revenue each hospital can expect, how it is calculated, and what can be expected in terms of other funding initiatives.  However, there are still plenty of opportunities during the year to attract more revenue as new government initiatives are announced.  You need your ear to the ground.


  • Locate and review the source of information that tells you where your revenue comes from and how it is calculated.

Sources include: government policy and funding guidelines, your organisation’s annual report and organisation’s/unit’s financial report.  Ask your financial person/department for a budget and expenditure report with line items and account codes.

To get an idea of what you might be looking for, check out the Victorian government’s Funding and Policy Guidelines site

  • Review the financial report for your unit or organisation and identify all the sources of income.  If you cannot see it in these reports, then review your annual report.

For example:

    • If you are a residential aged care provider one of your main sources of revenue is via ACFI (Aged Care Funding Instrument).  Can you see what your average ACFI is?  How does that compare to the industry average?
    • If you manage a surgical unit in a major hospital in Victoria, your key source of revenue is from the government on the basis of your ‘WIES’ (Weighted Inlier Equivalent Separations).  What is your target WIES and how is this allocated?

OUTs – Where does the money go?

Salaries and wages are generally the biggest ‘outs’ in most budgets making up about 75% of the expenditure.  This is why managing this closely is so important.  You will also have 4 or 5 other high cost, potentially controllable costs.  Examples in a clinical setting would include: Pharmacy, linen, continence aids (aged care), loan/hire equipment.  Monitor and manage these areas closely and you will maximize your efficiency.


  • List all your cost items?
  • What’s you biggest costs?
  • What is the financial state of your organisation/unit?  Are you in the red (cost exceed revenue) or the black (revenue exceeds costs)?
  • Where are the variations between budget (expected) and actual result?
  • In relation to these variations, how would you investigate their causes?  What information would you need and where might you get that information?
  • What are the biggest financial challenges for your Unit? ​ (Where are the greatest ‘drains’)​?


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