...Operating Budget Calisse R. Browne Regis University Abstract This paper describes how to compile an operational budget from the article “Hospital Nursing Costs, Billing, and Reimbursement” including the relationship of the budget to the four major financial statements and GAAP principles. Compile an Operational Budget from the article “Hospital Nursing Costs, Billing, and Reimbursement” An operational budget for a hospital nursing department forecasts this unit’s contribution to the income statement (Gapenski, 2012, p. 234). The operational budget has volume assumptions, revenue assumptions, cost assumptions, and a pro forma profit and loss statement. For nursing departments, volume assumptions drive variable cost assumptions such as labor. The revenue assumptions and the pro forma profit and loss statement typically are not applied as nurses are billed as a fixed cost as part of the hospital’s room rate. Typically, the volume assumptions are based on patient location and tied to the Diagnosis Related Group (DRG) weighting, which distributes nursing care expenses across three categories of care such as routine, intermediate, or intensive (Welton, Fischer, DeGrace, Zone-Smith, 2006). The study documented in “Hospital Nursing Costs, Billing, And Reimbursement” found patient location a less accurate indicator of nursing costs when compared to nursing intensity, indicating the patient location methodology does not link nursing care costs with hospital revenue as...
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...Running Head: STRATEGIC & FINANCIAL PLANNING OF FROEDERT HOSPITAL Strategic & Financial Planning of Froedert Hospital [Name of the writer] [Name of the institution] [Page Break]Strategic & Financial Planning of Froedert Hospital Thesis Statement The purpose of this assignment is to analyze the financial & business administration of Froedert Hospital to develop a draft action plan to improve the business of the organization. (Suzanne, 1993) Introduction Produce regular performance & financial plans is an essential component of planning & analytical work of the companies. Operational planning can reduce irrational use of funds of the company by the timely planning of business operations, inventory, financial flows & monitoring their actual implementation. Operational planning is still a weak point of business management of the U.S. health care organizations. About the Organization Froedtert Hospital is a 500-bed academic medical center containing workforce being provided by the staff of The Medical College of Wisconsin. The hospital has been honored with the prestigious Magnet title given by the U.S. Nurses. It works as an eastern Wisconsin recommendation center for higher remedial practice care consisting of thirty seven areas of expertise & subspecialties. (Suzanne, 1993) Objectives of Strategic & Financial...
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...Unit 6 Assignment – HS440-5 Explain the methodologies and processes used in preparing budgets for health care organizations. Before making any major capital investment decisions, such as the purchase of a new Magnetic Resonance Imaging (MRI), Electronic Health Record (EHR), or any major machine/system, the organization must create a business strategic plan that should contain their mission, values, and vision statements, and most importantly, their goals and objectives. Part of this strategic plan, would include the planning and budget process. The general planning process can and will assist an organization and or health system set themselves up for future success. It will be the budget procedure, or financial forecasts that will link...
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...Phase 4 DB HCM410-1303B-02 September 14, 2013 Operational Budget with addition of 4 new areas Introduction The Krona Community Hospital, established in 1977, is a 60-bed, acute care hospital located in Banconota County. They currently offer a full range of health care services and maintain a staff of almost 100 physicians and specialists, 400 employees, as well as numerous volunteers. They are currently fully accredited by The Joint Commission. A private, not-for profit health care chain called Nouveau Health has taken over the management of Krona Hospital. The new facility that has been proposed to the state officials for approval, will include 74 acute care beds, all of which will be private. It will also include four observation rooms, four surgical operating rooms, a 24-hour emergency center, a maternity department including one C-section room and an intensive care unit. It will also have extensive support services such as physical therapy and cardiac rehabilitation. In order for the new facility to be a success, we must prepare next year’s financial plan and operational budget. This can be accomplished through careful planning, forecasting, and finance management. First, we need to expand the budget and take into consideration any new services being offered. We have $3 million we can use for additional staff, maintenance and other services. Funding sources The primary source of funding is through government health insurance programs. Medicare is...
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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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...British Columbia NICU Bed Allocation Case Analysis Background: The executive director of BC’s Neonatal Services Program (BCNSP) and the officials of BC’s Ministry of Health Services (MHS) have been trying to decide whether or not to increase the neonatal ICU bed capacity in the province. This was due to a report in 2007 – 2008 that indicated that the province sent 98 expectant mothers and newborns to the US for treatment. This decision needed to be made also due to pressure coming from the media. For example it was an article by the Globe and Mail that was discussing the need for more beds and an actual national birthing plan. This is when the director was asked to suggest bed allocations among over areas of improvements for the situation. Issues: It states in the case itself that this is an issue because health care costs in BC were rising and the provincial government was pressuring them to avoid increasing spending. At the same time it’s also very expensive to send these mothers and newborns all the way to the US to get treatment. Not only is this costly but sending these patients over also places emotional stress on families. Some other issues could be projected as risks that involve scope and functionality, including the budget, schedule for this decision n and operations associated. If this decision isn’t carried out properly or isn’t performed optimally, it’ll result in less efficient operations, user dissatisfaction and overall lower functionality. There’s also...
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...identified: a cost pool and a cost driver. A cost pool is a grouping of costs that must be allocated. Hence the value of Cost pool for the above question is $100,000. 2) What is the allocation rate if: a. Patient services revenue is used as the cost driver? Sol) Allocation rate = Cost pool/patient services revenue = $ 100,000/$5,000,000 = $0.02 per dollar of patient services revenue. b. Hours of housekeeping services is used as the cost driver? Sol) Allocation rate = Cost pool/hours of housekeeping services = $100,000/5000 = $20 per hour consumed for housekeeping services. 3) What is a cost-volume-profit (CVP) analysis and why is it useful to health services managers? Sol) Profit analysis is an analytical technique typically used to analyze the effects of volume changes on profit. The same procedures can be used to assess the effects of volume changes on costs, so this type...
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...Health Care Business Analysis Kelly Reilly HCS/557 May 18th, 2015 Benjamin Ovando Health Care Business Analysis Budgeting is an extremely important task that takes time and a lot of input from many facets of a work environment. Many budgets are like forecasts as they may not be what actually happens throughout the year but it gives management a good idea of what goals need to be set and how to maintain their programs. Budgets also help in making decisions on how you run your business and in a health care setting that includes budgeting for staff salaries. The following analysis discusses how a CFO might go about budgeting for a hospital, such as the Patton-Fuller Community Hospital, assessing the departmental demands as well as community needs. As a CFO you have to make some tough decisions in regards to where the belt might need to be tightened or if larger purchases need to be made in order to maintain the quality of care. The decision making process is an opportunity to set goals and decide if investments will be worth the cost or cause a financial downfall for the organization. “Among the fundamental concepts basic to the managerial decision process is the incremental concept—only changes in cash flow are important in evaluating decision alternatives.” (Owens, 1980) Variance analysis is basically weighing risk to outcome and in this case the risk would be whether or not it would benefit the hospital long term to increase the nurse’s rate of pay. A CFO would...
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...Patton Fuller Community Hospital Team A BSA 376 John Neels March 20, 2013 Outline for Patton Fuller Community Hospital Stakeholders: Providers- These people will view quality in the technical sense such as accuracy of the diagnosis, appropriateness of therapy, and the resulting health outcome of the patients. Payers- These are the people who are focused on the cost effectiveness of the project and hospital. Employers- These are the people who want to manage cost, and the quality care that is offered to the patient. Patients- These are the people who want to have compassionate care and a clear communication with their physician. Preliminary Assignments and Task: Task 1- Determine Scope Task 2- Determine Grouping Task 3- Assess availability of workload data and system Task 4- Develop Baseline Costs Task 5- Decide type of competition task 6-Develop the Schedule Task 7-Roles and Responsibilities Patton Fuller Community Hospital is seeking the development of their patient management system. They would like to have a more unified patient experience when it comes to their patient management system. Patton Fuller Community hospital would like to be able to track their patients check in’s, the patient’s appointments, and the patient’s surgeries. Being able to do so will help them to have more control of their patient experience as they are wanting. Setting a system for Patton Fuller Community Hospital that offers better management of their patients will allow...
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... Baptist Hospital of Miami is currently analyzing the possibility of developing risk management strategies that will ensure to meet all needs or the organization related to quality management. Every plan needs to be approved by every member of the board of directors. The purpose of the Clinical Risk Management Plan is to support the vision and mission of Baptist Hospital of Miami as it pertains to risks associated with the safety of employees, patients, visitors, volunteer, staff, third parties; also operational risks and property risks. The risk management plan will basically guide the process of development and implementation of a risk management program. The risk management promotes the philosophy of Baptist Hospital of Miami that the risk management and patient safety is responsibility of members of the organization and team cooperation is essential for an effective and efficient functioning. Baptist Hospital of Miami believes that organizational errors should be addressed through the implementation of evidence-based practices, constructive feedback, and learning from error analysis. Clinical errors should be addressed by using the following: • Proper report and analysis of errors related to medical or patient care. • Proactive identification of hazards and unsafe conditions. • Open discussions of mistakes. • Open acceptance of system improvements. The Risk Management Plan at Baptist Hospital of Miami promotes...
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...direct and control the movements of goods in an efficient manner through a hospital system (Langabeer, 2008). This material management proposal document will elaborate on the role materials management plays within a hospital and the role of operations managers in this process. This document will further identify possible constraints a hospital may experience in its supply chain, the potential effects and justification on implementing a new collaborative planning process, and provide suggestions on how to manage a hospital supplied during a disaster. Role of Materials and Operations Management The role of materials and operations management plays within a hospital system is vital to the success of any health care organization. According to Langabeer (2008) material management controls significant resources and have total expenditures, or spending at 50% of a hospital budget. Materials management not only directs and controls the supply chain of a health care organization it is responsible for managing the flow of goods throughout the hospital and carry out supply and resource logistics. Materials management has numerous meanings and some hospitals view material management as an umbrella department with various functions such as central stores, laundry and linen operations, and sterile processing with many other functions to endure. Therefore, the major role that material management plays within the hospital environment is to focus on acquiring, storing, distributing, and replenishing...
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...Budget Management Analysis HCS/571 Financial Resource Management June 27, 2011 Dr. Lena Watson Budget Management Analysis Budget management analysis is used by mangers as a tool and helps determine that all resources available are being used efficiently. The budgets are determined yearly and are based upon the previous year’s budget and variances. This paper will discuss specific strategies to manage budgets within forecast, compare five to seven expense results with budget expectations, describe possible reasons for variances, give strategies to keep results aligned with expectations, recommend three benchmarking techniques, and identify those that might improve budget accuracy, and justify the choices made. Strategies to Manage Budgets Many strategies may be used to control budgets; managers and the chief financial officer of most healthcare organizations have the tools needed to manage the budget. By managing the budget the organization will be better prepared for the financial forecasts, which are the company’s future expenses. Some strategies and tools that will assist with managing the budget are zero based, activity based, performance based, cost variances and benchmarking. Zero based budgeting analyzes every expense within an organization and justifies the need and cost of each. Activity based costing is the gathering of the operating cost data, which is assigned to specific activities such as engineering. The performance dashboard uses the metrics of performance...
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...Syllabus-MBA (Hospital Administration) PAPER – I: BASIC CONCEPT OF HEALTH -Code MHA 101 Concept of Health and Disease • Concept of health & disease and well being. • Natural history of disease and role of hospitals to offer various levels of care • Prevention aspect of diseases • Dynamics of disease transmission • Changing pattern of diseases • Concept of health indicators Preliminary Human anatomy and Physiology • Basic concepts of human anatomy • Basic concepts of human physiology Suggested Reading: Human Anatomy- Prof. Samar Mitra Human Anatomy- Prof. A. K. Dutta Text Book of Human Physiology- Dr. C. C. Chatterjee Common Pathological Conditions • Basic concepts of pathogenesis of common diseases • Basic concepts of interpretation of investigations reports Suggested Reading: Robbin’s Textbook of Pathology – Robbin, Cotran, Kumar Textbook of Microbiology – Ananantanarayan & Paniker Basic concepts of Pharmacology: Commonly used Medicine in a hospital, Narcotic drugs, use and abuse of drugs. Dispensing of medicine, Drugs store, drug stock / purchase of medicine, oxygen, I/V Fluid, Chemicals etc. Suggested Reading: Textbook of Pharmacology: Dr. K. D. Tripathi PAPER – 2: Hospital Based Healthcare & Its changing scenario-Code MHA 102 Overview of Hospital • Concept of Modern Hospital & Privatization in Health Sector • Public Sector Hospitals and Level of care / offered facilities ...
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...Happy Hospital Today’s health care system, with its many different types of health care organizations, is extremely complex. The health care environment has many other goals—improving the health and well-being of the community, providing the highest quality health care services, and minimizing morbidity and mortality. Happy Hospital is no different. The issues of plausible steps and measures that they should take to utilize accounting information to make solid financial decisions to progress towards a sound financial hospital will be covered in this paper. How could Happy Hospital use budgets and performance reports in the decision making process? The use of performance reports would help Happy Hospital extensively. Performance measurement when linked to the budget and strategic planning process can assess accomplishments on an organization-wide basis (Tigue and Strachota, 1994). When used in the long-term planning and goal setting process and linked to the hospital’s mission, goals, and objectives, meaningful performance measurements can assist Happy Hospital’s managers and staff in identifying financial and program results, evaluating past resource decisions, and facilitating qualitative improvements in future decisions regarding resource allocation and service delivery. The use of budget reports would assist the hospital in tracking its cash flow, purchases, expenses and income streams. An analysis of a budget report provides information about how...
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...Budget management analysis is commonly used by mangers as a tool helping to make sure that all resources in existence get put to use correctly. The budgets are determined annually because they are determined by the preceding year’s budget and differences. Budgets can be controlled by specific techniques to control budgets within prediction, consider five to seven expense results with budget anticipations, explain possible factors that cause fluctuations, present ways to keep results associated with goals, share three benchmarking strategies, and consider the ones that could increase budget accuracy, and give good reason for the choices made. (Finkler, 2007) Several techniques are often used to regulate budgets; managers as well as the chief financial officer of nearly all health related agencies provide the techniques necessary to manage the budget. By balancing the budget the institution will likely be better organized for the financial guidelines, which are the company’s upcoming expenses. A few techniques that can improve balancing the budget are zero based, activity based, performance based, cost fluctuations and benchmarking. Zero based budgeting examines each individual expense within a business and justifies the necessity and expense of each. Activity based pricing is the accumulation of the operating cost records, which is also assigned to individual programs which include engineering. The performance dashboard applies the metrics of functioning and examines the reason...
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