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Health Care Budgeting
Larry Scanlan, in his article about hospital budgeting, presents seven keys to a successful budget. These "reality keys," as he calls them, are designed to help insure that the CFO and CEO are able to navigate through a difficult process.
The first of these is accountability. He recommends communicating about the status of financial performance in all areas, and instituting a compliance plan that monitors and responds quickly to problems. Teamwork and a high sence of management integrity are essential. The budget is everyone's responsibilty, not just management.
The second key is to know your market. The budget process should mesh seamlessly with the strategic plan. Management should have a clear enough understandfing of their market, so that they can respond to changes quickly...
Physicians are the key to revenue, and management should be actively involved in physician service, retention, and recruitment. This will allow management to accurately predict volume from admissions and subsequent revenue.
The fourth key is to base the budgets on reasonable objectives. Scanlan discusses basing budget numbers on realistic achievments, rather than "what the boss wants." The budget should have specific action steps, responsibility, and timelines and milestones so that progress can be monitored and corrective action taken when needed.
The fifth key deals with keeping the operating margin healthy. The margin must be realistic and as accurate as possible. "Without a rigorous approach to…
Bibliography
Larry Scanlan. (January 2005). "Budget Reality: It's Up to You." Healthcare Financial Management. Retrieved June 24, 2005 from http://www.findarticles.com/p/articles/mi_m3257/is_1_59/ai_n8706920.
Larry Scanlan. (January 2005). "Budget Reality: It's Up to You." Healthcare Financial Management. Retrieved June 24, 2005 from http://www.findarticles.com/p/articles/mi_m3257/is_1_59/ai_n8706920.
Ibid.
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