Building an Operating Budget in Health Care
Building an Operating Budget in Health Care
Building a good operating budget in healthcare requires a lot of planning and collaboration. The following steps are involved in the construction.
1. Information Gathering: Collection of historical data with regard to finance, previous budgets, and financial statements. It is the basis on which a suitable, realistic budget is prepared.
2. Involvement of Stakeholders: Representation from other departments within the organization, such as clinical staff, administration, and finance teams, lays the foundation for proper awareness regarding the various needs for services and resources across those areas.
3. Projected Revenues: Estimate revenues that could be generated, based on historical data, forecasts of patient volume, and changes in reimbursement rates. This projection will have significance in the demonstration of financial capacity.
4. Expense Estimates: Estimate all the expenses required for running the operation, including but not limited to staffing salaries, supplies and equipment, and administrative costs. Thereafter, taking both fixed and variable costs into consideration, the analysis will be made.
5. Budget Preparation: The actual budget document is prepared by combining the revenue projections with expense estimates. Ensure that the budget is in line with the achievement of organizational strategic goals.
6. Review and Revision: Present the budget to the key stakeholders for review, including the board of directors. Integrate feedback and make adjustments as may be necessary.
7. Monitor and Adjust: Once the budget is finalized, actual performance must be monitored against the budget on a continuing basis. Adjust as necessary to respond to any changing conditions or unexpected challenges.
Conclusion
The operating budget in healthcare is an intense and vital aspect of financial management. Understanding the types of budgets, recognizing their importance, and knowing the variables that can affect them are important for health care organizations.
Hence, a sound operating budget will enable the healthcare facilities to assure themselves that they are prepared and remain committed to their goal of quality care with financial responsibility. Sound healthcare business budgeting practices during this period of dynamic change remain the cornerstone for organizational success and patient satisfaction.
