Healthcare Budget Analysis

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Budgeting is one of the phases in the management control system. Budget development is critical to identify revenue sources and expenditures throughout the year that will help a health care firm achieve its goals and objectives in a fiscal year. Development of the yearly budget is a good way to manage cost control within the healthcare organization. There are four objectives recommended for consideration by the American Hospital Association when developing a healthcare firm’s budget plan:
- Providing a written expression, in quantitative terms, of the policies and plans of the healthcare firm or organization.
- Provide a basis for the evaluation of financial performance in accordance with the plan.
- Provide useful tools for the control of cost.
- Create cost awareness …show more content…

The statistic budget or operations budget includes output expectations, responsibility for expectation, and estimation methodology. Output expectations within the strategic budget measure the amount of services or the number of patients treated by the health care organization during the fiscal year. Responsibility for expectations is the indicator of workload and project development responsibilities to meet output levels. Statistic budget estimation methodology is an estimation of problems that may happen during the budgeted time frame. Estimation problems may include number of patients serviced or tended during the week, weekends, and even yearly seasons. Expense budget is the budget area of the budget plan that includes operational cost budges within the healthcare firm. The expense budget part of the complete budget plan is dependent of four general issues: Length of budget period, flexible and forecasted budgets, standards for price and quantity, and allocation of indirect costs (“Expense Budget,” vitalsource.com, February 28, 2016). Once the expense and statistic budget are both created, the next step would be to develop the revenue budget to include into the

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