Developing A Budget As An Effective Management Tool

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

The Institute of Medicine’s (IOM) six aims of quality provide an advantageous framework to progress the quality of care in the U.S.A. health care system. IOM developed six aims for improving to provide safe, effective, patient-centered, timely, efficient, and equitable patient care (Institute of Medicine, 2001). Organizations need to strategically plan to evolve in meeting IOM’s six aims and to remain a financially sound entity. Strategic planning involves defining the future and stipulating the measurement of achievement (Sare & Ogilvie, 2010). The purpose of this paper is to start the initial steps for creating a strategic plan in a healthcare organization, through describing and evaluating an unmet need, considering the mission, vision, and values, providing the background context, vision, strategic goal, and consider the broader issues.

There are many types of budgets can be used for a health care organization which are capital budget, operation budget and cash budget (Buerger,

The budgets process could help to spread resoursces that increase the skill to get best outcome.

This research paper is a brief discussion of budget management analysis. Budgeting is the key to financial management, and is the key to translates an organization goals or plan into money. Budgeting is a rough estimate of how much a company will need to get their work done, and provides the basis for evaluating performance, a source of motivation, coordinating business activities, a tool for management communication and instructions to employees. Without a budget an organization would be like a driver, driving blinded without instructions or any sense of direction, that’s how important a budget is to every organization and individual likewise (Clark, 2005).

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

Managers who are managing health care organizations must be attentive to the accounting practices and must obey and practice the financial management procedures to be able to solve any issues if any should arise. With the continuation of the high costs of health care managers as well as consumers must know how to budget carefully. According to All Business. (2010), the cost of providing health care services, patients way of payment for these services and the environment in which those patients reside and receive those services are important elements that affect the care this is or may not be

A strong operating and capital budget should align with the strategic goals of Creekside Community Hospital, as well as ensure operational efficiencies and financial longevity. Planning capital purchases continually and for future years will allow Creekside to be competitive, which is a crucial factor in capital budgeting (Gapenski & Reiter, 2016). Vianueva (2011) suggests an inadequate capital budget process leads to a key problem area for hospitals. Cost allocation is a vital component of the capital budget process. Costs must be allocated to the appropriate departments or areas where they are incurred, as well as where revenues are generated. With Creekside Community Hospital exhibiting higher inpatient costs than outpatient costs, the hospital leadership should ensure accuracy so that managers have the information necessary to make sound, financial decisions currently and in the future related to staff support, equipment and supply purchase to name a few.

Budgeting is a very important job for a manager of a healthcare facility. It is something you will use on a daily basis to help manage your financial and business operations. There are so many different budgets that we will use to help us decide important factor when it comes to the business operations. Some of the budget that you may use will help your facility achieve its goals. An annual budget also known as an operating budget is going to be the most common budget used. A capital budget, cash budget, revenue budget, and statistical budget can help you make big decisions when it comes to running a healthcare facility.

A company's budget serves as a guideline in planning and committing costs in order to meet tactical and strategic goals. Tactical goals such as providing budgetary costs for daily operations, and strategic objectives that include R&D, production, marketing, and distribution are all part of the budgeting process. Serving as a guideline rather than being set in stone, the budget is a snapshot of manager's "best thinking at the time it is prepared." (Marshall, 2003, p.496) The budget is a method in which to reign-in discretionary spending, and will likely show variances between what costs have been anticipated and what costs are actually incurred.

The steps to create a budget can prove more daunting than actually implementing the budget. Initially the health care organization’s mission and vision must drive the budget. Aligning the health organization’s core values with the budget will help the managers and director’s deciding the budget to stay focused on the task at hand. A careful balance of needs and wants that the health care organization is attempting to develop from the department heads will need to be balanced by the realistic goal of the present and future capital. The initial preparation should include feedback from the previous budget period so the managers can have guidelines for forming the upcoming budget. The managers should be given caps on the amount of money they can spend and should be transparent in where they will be spending the money (Liebler & McConnell, 2012, p. 230). A solid leader should a set time frame for development of the strategy, which must be given to the manager’s. Without a

Budgeting is the systematic method of allocating financial, physical, and human resources to achieve an organization’s strategic goals. Budgets are utilized by for-profit and non-profit organizations to monitor the progress towards the goals, assist in the control of spending, and help predict cash flow for the organization.

Budget formulation and use are tools that guide many decision making strategies in business. The measures that are least effective could create an avalanche of catastrophic events that can negatively impact the decision making strategies. It is in the best interest of the pertinent parties to draft an operating budget based on a collective set of information relating to organizational vision and mission. Ineffective measures can be catastrophic based on the foundation for measures used in creating the budget. Among the many issues organizations face that relates to creating an effective operating budget results from poor

Budgeting is crucial in the well-being of a company especially the financial health status of a company. In fact, no professionally managed firm would fail to budget, since the budget establishes what is authorized, how to plan for purchasing contracts and hiring, and indicates how much financing is needed to support planned activity. It is routine for a company to budget for its expenses. Expense budgets act as a guideline of how much revenue a company would require keeping the activities running. It is used to set the company’s targets for a certain period.

Budget and budgetary control practices are undeniably indispensable as organizations routinely go about their business activities and operations. These organizations are constantly on the alert on how actual levels of performance agree with planned or budgeted performance. A budget expresses a plan in monetary terms. It is prepared and approved prior to a particular budgeted period and explicitly may show the income, expenditure and the capital to be employed by organizations in achieving their goals and objectives.