...Health Care Budget An operating budget is a strategic initiative for the organizations financial plans over the course of the coming year. The operating budget works directly with the Statement of Activities (SOA) for a fiscal year to accomplish the organization financial goals. To produce an effective operating budget the organization needs to have knowledge of what financial management practices work best for the financial goals they are planning to use. Proper understanding of these concepts is vital for the operating budget to become successful for the upcoming year. Effective Financial Management Practices Effective financial management practices include several types of rules that an organization should follow to create a successful operating budget. Budgeting should focus on income first targeting the reliable income in the budget. Never filling those gaps with income projections to cover expenses can cause a deficit if your organization can not produce the income target within the year. Expenses should be lower than the dependable income total. Each department should be in agreement with this financial management practice. This leaves the additional programs and projects to be set in motion if the revenue allows additional funds (Hamilton, 2010). A financial management practices uses the beginning with the prior fiscal years total, and building the new upcoming year budget on those amounts. This takes calculating percentage of increases and decrease to determine...
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...HCS 577 September 2012 Health Care Budget Manage a health care organization is not an easy task, the compromise with the community to provide an excellent service and the responsibility of keeping the profitability and viability of the organization makes health care management a complex and every day challenging profession. It require effective practices to avoid the failure of the business. Independently if the organization is not-for-profit or for-profit, a vital duty of the management team is to keep the organization finances in a status that allows it to operate, and produce a level of revenue that secure its existence over the years. To reach these objectives, managers must perform key functions that involve planning, decision making, controlling, organize, staffing, among others. The planning function is a vital chore of health managers that includes the identification of goals, and objectives to take the organization to the desired future state based on the current conditions (Liebler & McConnell, 2008). As part of the planning process, the task of budgeting plays an important role in the effective guidance of the organization toward the established goals and financial stability. Budgets permit managers to allocate financial resources in the planning process, evaluate the financial performance of the organization in a specific period as well as planning, control, and establish benchmarks with previous years details to identify strengths and weaknesses that will...
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...University of Phoenix Material Patton-Fuller Community Hospital Statement of Revenue and Expense 2009 to 2010 Operating Budget Complete the Operating Budget. Assume the 2009 projections were realized. Use the 2009 budget and the 2010 budget assumptions to calculate expenses and income for 2010. The revenues have been completed for you. | | |2009 (Proj) |2010 Budgeted % |2010 Budget |2010 Operating Budget Assumptions | | | | |Change From 2009 | | | | | | |Projection | | | |Revenue | |Based on these 2009 assumptions: a 3% overall deflation rate for prices in 2009—due to the weak economy—will | | | |continue into 2010. | | |Net patient revenue |459,900 |3% |473,697 |Patient revenue will continue to...
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...ll over the world the issue of mental health is a rampantly growing problem. With budget cuts both statewide and federally since the 1980’s by President Ronald Reagan, our country has had to create more cost efficient ways to meet the needs of our mental health crisis. Because of these budget cuts the need for more mental health services has grown and our county has responded to the outcry from those with mental health issues. Tulare County has come up with a way to help meet these needs locally through the Mental Health Services Act (MHSA), which was voted for in November 2004 and became effective January 2005. From August 2009 to October 20011 MHSA has helped over 16,000 Tulare county residents with mental health issues. This is possible because of a 1% tax surcharge on those who make $1 million or more per year. Mental health groups in Tulare County treat a broad spectrum of problems. From Bipolar Disorder and depression to schizophrenia, there are support groups to help clients deal with the difficulties associated with mental illness (HHSA, 2012). In California the rate mental illness vary from county to county....
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...Developing a meaningful budget in the current health care setting is a taxing endeavor. Possessing the knowledge to discern which financial management practices will be most effective from those that will negatively impact the budget is essential to managing and monitoring the budget. “An accurate, useful budget can be a valuable decision-making tool to analyze potential business threats and opportunities and help the administration make sound strategic and disciplined choices” (Maller, 2015). The effective and ineffective financial management practices within a health care organization correlate with the long-term financial sustainability of the organization. Implementing the financial tools requires transparency and accurate knowledge of the day-to-day operations of the organization. Effective management utilizes the budget as a tool to set the financial expectations for the practice to compare the performance to financial plan. Buy in, and accountability from the administration and other key stakeholders is required to create effectively and execute the budget. “A budget is a microeconomic concept that shows the tradeoff made when one good is exchanged for another”("Budget analysis," 2015). An efficacious operating budget is aligned with the vision of the organization to attain the desired targets. Successful leaders maintain accurate balance sheets. Balance sheets summarize a company's assets, liabilities and shareholders' equity at a precise point in time; depicting...
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...Health Care Budget Virginia Ivins HCS/577 October 13, 2014 Robert Adams Health Care Budget Planning and budgeting helps ensure that operations are being carried out in a manner consistent with the mission and vision of the organization. There are several budgeting models that are effective. According to Louis C. Gapenski, (2008), “More detailed managerial guidance is contained in the operating plan, often called the five-year plan. The financial plan, which is the financial portion of the operating plan, contains a long-term plan, working capital management plan, and managerial accounting plan” (Gapenski, 2008). Good financial management processes for tracking resource utilization are essential for a department to make effective use of its resources. Not planning and budgeting properly can also lead to even bigger problems in the finances of an organization. Most effective financial management practices Effective financial planning and control helps each department in the organization keep track of its resources and hold each department accountable. Monitoring of expenditure is essential on a regular basis. The most effective financial management practices include variance analysis, benchmarking, environmental scanning, model development, forecasting, types of budgets, types of monitoring methods and frequency of monitoring. According to VarianceAnalysis.org, (2014), “Variance analysis is defined as the difference between the expected amount and the actual amount of...
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...Health Care Budget Effective financial management is the basis of thriving health care organizations. Organizations must make good investment decisions based on objective analysis (Healthcare Financial Management Association [HFMA], 2005). Integration of financial management principles provides decision makers with guidance to make capital decisions maximize mission-based benefits at effective costs (HFMA, 2005). An operating budget is the statement of profit and loss for the entire organization. Various health care entities prepare operating budget for the following year for discussion and approval by top management (Academic Writing Tips, 2011). At the end of the year, departmental managers provide an account for the previous year’s financial performance (Academic Writing Tips, 2011). Effective Financial Management Practices in Creating and Monitoring a Budget Effective financial management is useful when creating and monitoring a budget. The budget must include data relevant to the organization. An operating budget is a profit and loss statement of projection. The budget must include estimates of revenues and future expenses. Financial managers should present the operating budget with the correct schedule. Leaders must present financial statements such as the Statement of Cash Flow, Statement of Revenue and Expense, and Balance Sheet with the operating budget as supporting documentation explaining the financial practices of a company (Academic Writing Tips, 2011)...
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...decisions based on the analysis of the budget. In this paper, financial management will be reviewed. The most effective and least effective financial management practices in creating and monitoring an operating budget will be discussed. Planning, organizing, directing, and controlling activities such as procurement and use of funds make up financial management. Financial management involves all departments of an organization. Financial management relates to the use of funds from various resources and financial decisions depend upon the source type, the financing period, the financing cost, and returns. Procurement, allocation, and control of resources are concerns in financial management. Some financial management goals include ensuring a supply of funds to various areas in an organization, ensuring returns to investors, and ensuring the best utilization of funds. According to Gapenski (2008), an operating budget “is a combination of the revenues and expense budgets. Operating budgets are prepared at the subunit level” (p. 234). An operating budget is a statement of profit and loss. An account for the previous year’s financial performance is provided by the different departments in an organization at the end of the year. In addition to the operating budget other statements are needed, such as the Statement of Cash Flow, the Statement of Revenue and Expense, and a balance sheet. These statements provide supporting documentation. The operating budget must include estimates of revenue...
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...Variance Analysis Health care is in itself an extraordinarily intricate business. Health care executives now have to find ways to transform a broken and out of date health cares system by focusing on reducing pointless surgeries and diagnostic test and removing disproportionate health care costs. When the annual budget presents itself and shows that salaries are steadily increasing with supplies decreasing several factors have to be considered when presenting the variance analysis report. Factors that should be considered are the number of staffing, patient bed occupancy, specialist care and supplies. In order to control cost the executive must be able to recognize the problem and its cause and have a solution in place to correct it. Evaluating the current costs against the previous costs of the hospital should suggest to executives which factors have contributed to the change. (Cleverley, Cleverley, Song 2011). In this situation it is the salaries increasing and supplies decreasing. These two factors have to be heavily investigated prior to the analysis report. The first factor to consider will be the increase in salaries that were more than what were budgeted for. The most important and largest asset of the hospital are the people that are employed. In regards to the variance report the first consideration to the employment would be to consider those that are employed under a contract. These costs cannot be controlled, however renegotiating the contract can reduce...
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...Budget Management Analysis John Thorpe HCS/571 April 13, 2014 Professor: Amy Reed Budget Management and Variance Analysis Healthcare organizations are faced with severe financial pressures resulting in extreme budget cuts. Consequently, nurse managers and financial managers are tasked with the responsibility of doing more with less while maintaining the high quality of care offered to its consumers. To accomplish the aforementioned tasks, managers use budgetary tools to help them focus on controlling cost while running an efficient operation. Budgeting gives managers the tools necessary to ensure the availability of required resources to meet the organization’s goals and objectives, communicate strategies and monitor results (Cleverly, Song & Cleverly, 2007). Finkler, Kovner & Jones (2007) offer that budgeting should be used to make the organization become more effective and efficient. It is not a tool for maintaining the status quo. Organizations use different approaches to introducing the budgetary process. Some organizations take the current year's budget update it for inflation and projected revenue growth. Others take a clean slate approach; compel managers to justify their expenses and staffing needs on an annual basis. Still other organizations forecast revenue and profit and assign expense rates to departments. However, the most effective budget is one that reflects the true financial position of the organization, provides flexibility and monitored...
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...ORGANIZATION SCIENCE Vol. 2, No. 4, November 1991 Printed in U.S.A. ILLUSIONS AND OTHER GAMES: A TRIFOCAL VIEW OF ORGANIZATIONAL POLITICS* PATRICIA BRADSHAW-CAMBALL AND VICTOR V. MURRAY York University, 4700 Keele Street, North York, Ontario, Canada Despite recent and growing interest in organizational politics, conceptual thought in this area tends to be dominated by a single theoretical perspective. In this paper we describe and contrast three views of organizational politics (functionalist, interpretive and radical) according to their differing structures, processes and outcomes. Each view, or lens, directs attention to some aspects of politics and away from others, and each has strengths and weaknesses embedded in it. In order to assess whether multiple perspectives on politics can be fruitfully applied simultaneously, we describe and analyze a case of a hospital administration engaged in budgeting games and illusion making. The data for the case were collected using naturalistic inquiry and multiple methods including structured and unstructured interviews, review of documents, observation of meetings and casual interaction facilitated by frequent visits over a ten-month period. The case revolves around the hospital administrators' attempts to deal with what they termed a "disastrous deficit" and the most serious financial situation in the hospital's history. Strategies for dealing with the funding agency and board of directors included the management...
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...CASE STUDY Denison Specialty Hospital Denison Specialty Hospital is planning its master budget for the coming year. The budget will include operating, capital, cash, and flexible budgets. The hospital is noted for its three fine programs: Oncology (cancer), Cardia (heart), and Rhinoplasty (nose jobs). Part I. Section A The managers at Denison have been busy working. They have reviewed past records, considered changes in competition, the general economy, and overall medical trends. Using past changes and anticipated rates of medical inflation, they have also made a first attempt at setting their prices. Based on a thorough review and discussion of these data, they have projected that next year will have 240 patients. They expect 120 oncology patients, 80 cardiac patients, and 40 rhinoplasty patients. The charge, or list price, for Oncology patients will average $50,000. Cardiac patients will be charged an average of $40,000, and rhinoplasty, $25,000 per patient. However, those charges often are not the actual amount ultimately received. The amount the hospital receives depends on whether patients pay their own hospital bills or have health care insurance. Assume that private insurance companies pay the full charge or list price. However, Medicare and Medicaid have announced rates they will pay for the coming year as follows: Oncology patients $40,000, Cardiac patients, $30,000, Rhinoplasty $10,000. Self-pay patients are supposed to pay the full charge, but generally...
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...Kenya Ratcliff American Intercontinental University FINA425 – Budgeting January 24, 2016 Abstract This is a research paper about financial budgets. This research paper talks about a management director would establish policies and system for a business and/or organization. This research paper will help to explain the different style of budgets, budget cycles and the guidelines rules for set up a financial budget for a business and/or organization. Unit 3 Individual Project Introduction This is a report from the management director to establish policies and systems for the new business, I Can Business Incorporated (ICBI). This report will be delivered to the board of directors of ICBI. This report will describe what a financial reporting system is and explain how management for ICBI should use an activity based budget instead of an operating budget. This report also gives examples of budget guidelines for ICBI. Describe the meaning and the components of a financial reporting system Financial reporting is the process of compiling statements that shows a glimpse of an organization’s financial “health” or status to management, investors and the government. There are four basic reports that are included in a financial report. There is a balance sheet, an income statement or sometimes called the profit & loss statement, a cash flow statement and a statement of shareholder’s equity. The balance sheet gives a detailed picture of the financial condition of a business at...
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...Budget Variance Every hospital faces many challenges, but one of the most difficult challenges is knowing how to manage expenses. When a hospital is planning their budget not only do they have to plan a budget that is beneficial for their staff but also high level care for their patients. With so much in society changing such as technology, increase health care cost, and government restrictions it makes planning the budget very challenging. In order to analyze how expenses are being spent compared to the budget that is allotted for them, budget variances have to be made (accountingtools.com, 2013). These variances have to be extremely well detailed in order to make an accurate budget for the following year. Things that should be taken into consideration when doing a budget variance are variance reports, interpreting the results of variance reports and analyzing these reports based on actual performance, and developing a way to better the budget based on these results. The purpose of this paper is to fully analyze all factors that should be considered for a budget variance for a hospital. The very first step for a budget variance is to develop a variance report (accountingtool.com, 2013). There are various factors that should be analyzed to produce a proper variance report such as how many beds are available, how many patients are seen daily, how much staff is available or working in a specific day, how many supplies will be used, and how much utilities such as electricity...
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...broad-based statements of purpose. Strategic plans take the broad-based statements and express them in terms of detailed steps needed to attain those goals. Budgets are the short-term plans used to implement the steps included in the strategic plans. For example, a company may have a goal of "Becoming the number 1 company in the industry." The strategic plans would include such statements as: "Increase sales volume by 20% per year." The master budget would state the number of units that are needed to be produced and sold in the coming period to meet the 20% volume increase as well as the production and marketing costs necessary to attain that objective. The master budget would also include estimates of the levels of cash, accounts receivable, inventories, and fixed assets needed to support the budgeted level of activity. 15.2 Operational budgets specify how an organization's operations will be carried out to meet the demand for its goods and services. The operational budgets prepared in a hospital would include a labor budget showing the number of professional personnel of various types required to carry out the hospital's mission, an overhead budget listing planned expenditures for such costs as utilities and maintenance, and a cash budget showing planned cash receipts and disbursements. 15.3 An example of using the budget to allocate resources in a university is found in the area of research funds and grants. Universities typically have a limited amount of research-support resources...
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