Budget Management Analysis for the Post Anesthesia Care Unit
The budget management process is not an easy task. It is time consuming and difficult. There are some ways to overcome the challenge of managing budgets within forecasts. One way is to budget and report beyond the ledger. Data should be looked at beyond the company’s financial system. This will allow the company to create more accurate forecasts. Next the budget software should be user-friendly. If it is easy to use, the happier the employees are to use and understand it. Thirdly, the budget should have the options to incorporate a flexible financial model. Managers should be able to input information on how their particular department relates to other departments or functions. Next, the company must be able to adapt quickly to change because change is inevitable. The employees can respond to organizational, industrial, and global economic changes with re-forecasting or rolling forecasts. Improving collaboration between organizations, project teams, management, and department managers are another effective strategy to manage budgets within forecasts. Keep on task and submit tasks in a timely manner will help speed up the approval process. Last but not least always look to improve technology and software. One example would be cloud based software. This can decrease the cost for the company by decreasing the need for on-site IT infrastructure to maintain the information.
My Manager is the Director of the entire Surgical Department which includes preoperative care, perioperative care, and the post anesthesia recovery unit or PACU, that is the area that I work in. The surgical services generate a great deal of revenue for the hospital and is an important area in the organization as a whole. She has a general budget for the entire department, but she also has an individual budget variance report for each of the three areas with. Variances are done as part of the budget analysis. At the end of the month, the accountants compare the actual results to the budget. Several weeks after each month ends, the accountants gather all the cost information and report the actual totals for the month. The simplest approach is to compare the total costs that the entire organization has incurred with the budgeted costs for the entire department. The difference between the amount budgeted and the amount incurred is the total department variance. This variance will be referred to as an unfavorable variance because the department spent more than had been budgeted. Accountants use the term favorable variance to indicate spending less than expected. For the sake of this assignment, I will use the variance report for my area, the PACU. We will look at the budget and variances in the areas of salaries and wages including overtime, supplies, equipment management, printing and copying, and education.
Salaries

For the month of June, the PACU was budgeted $33,859 and $520 for overtime for a total of $34,379. The actual amount spent on salaries was $52,734 and $835 for overtime for a total of $53,569. The total variance is $19,190 which is an unfavorable variance. She explained that increased staffing was used to compensate for weekend surgeries. This is the first month that the surgery department started doing elective surgeries on the weekend that led to overtime and increased on call and call back time for the nurses. The PACU nurses have to recover all the endoscopies and Cath lab patients on Saturdays. She went on to explain that the budget will be adjusted to compensate for the increased amount of surgeries. The prior year's budget was $28,600. Supplies My manager stated that she had a fixed monthly budget of $1,800. This is a shared budget for pre-op and PACU. The actual amount spent in the current month was $2,102. The explanation given for the $302 unfavorable variance was the need for additional thermometers. There were multiple broken and non-working thermometers in both areas so this was an uncontrollable expense. The prior year's budget $1,500.
Equipment Management For the current month, the budget for equipment management was for $600. The actual cast for equipment management was $330. This had a favorable variance of $270. In the PACU, there is little equipment to manage. Each bay has a monitor that displays cardiac rhythm, heart rate, blood pressure, pulse oximetry, and respirations. The majority of equipment comes from other departments. The monitoring or maintenance done on the monitors or IV pumps are done remotely. The previous year's budget was $500.
Printing and Copying There are one full-size copier and one copier for approximately 12 computers on wheels and two desktops. There are more desktops in the surgery department in which can print to the copier or printer in the PACU. The budget is $350 for the current month. The actual cost of $270 for the month produced a favorable variance of $80. She explained that there is no possible way to control whose printing or copying where because the department is wide open, and all the computers are linked to each copier and printer in the department. The user has the choice of which printer or copier they wanted to use. The prior year's budget was $300.
Education/Conferences/Seminars

My manager stated that this area along with salaries historically has been over budget mainly due to the continual educational needs for nurses. The monthly budget is $2,000, but the actual cost was $2,945. There was an unfavorable variance of $945. There were four in-services this month for new equipment use and one staff meeting. Various nurses in the PACU went to corporate classes for EKG, epidural, and mechanical ventilation management. The budget for the prior year was $1,800.
Benchmarking Techniques
There are many benchmarking techniques that can be used for a company during the budgeting process. I will discuss competitive, cooperative, and financial or performance benchmarking. Competitive benchmarking refers to finding specific information about individual organizations providing the same services as a particular organization. In some instances, organizations are reluctant to share their secrets with the direct competition. It may be easier to fly across the country and observe several organizations that are not in direct competition with the organization than to observe practices of direct competitors in the same area as the organization. Cooperative benchmarking refers to seeking information from organizations in other industries that can be adapted to the health care industry to improve health care practices. Cooperative benchmarking does not focus on specific competitors, and it looks at organizations in totally different industries. A cooperative benchmarking approach would be to select an organization that is known for its great customer service. For example, a hospital may contact a well-known grocery store chain what they do to provide great customer service. In financial benchmarking, financial analysis is performed and compared to the results to assess the overall competitiveness and productivity. In benchmarking, comparability is the key! Benchmarks can only be trusted if the underlying process to be benchmarked is assessed in similar circumstances. For instance, benchmarking profitability across organizations fails unless the firms are in the same business line. Benchmarking is closely related to the search for best practices. Ideally, one would identify a performance benchmark and then investigate what factors enable achievement of the benchmark. For instance, an optimal profitability forecast may be a result of very different factors: a good process for data collection, sophisticated forecasting algorithm, across other hospital surgical units or PACU’s. Any approach that leads to consistently superior forecasting performance would be a candidate for best practices. Forecaster's search for benchmarks is only part of our search for best practices. They try to optimize their forecasts and need to understand which part of our processes must be improved to reach this goal.

References
Cleverly, W., Song, P., & Cleverly, J. (2011). Essentials of health care finance (7th ed.).
Retrieved from The University of Phoenix eBook Collection database.
Finkler, S.A., Kovner, C.T., & Jones, C.B. (2007). Financial management for nurse managers and executives (3rd ed.). St Louis, MO: Saunders.
Kolassa, S. (2008) Can we obtain valid benchmarks from published surveys of forecast

accuracy? Retrieved from www.forecasters.org/foresight