Budgets

Angela Lee HCA-240 May 21, 2013 Professor Tirizia York Budgets A budget is a businesses way of projecting and planning how monies will be spent to operate. Once operational capital has been accounted for, most businesses then seek ways to create more business and in turn bring in a profit. Even businesses that are not-for-profit seek a profit to ensure those that work for them a salary. There is so much more to constructing a working budget than jotting down estimated costs of renting a building or facility. There is a question of staff salaries, supplies, time allotted for each employee based on procedural time, and man hours it takes to complete a task. There is the need to order supplies, to account for activities that do not benefit the overall business in the manner of production and profit, the liabilities, the ones who pay, and the ones who do not pay. In this particular case there is a question of excessive salaries that were not included in the budget, and the low cost of supplies that were a part of the budget forecast. The health care industry is one filled with constant change, and the demand for skilled professionals can increase or decrease without warning. In this case there was a need to accommodate increased man hours due to different specialists having to coordinate efforts to treat an emergency situation. A variable budget is essential in this respect. There is no way a person can determine when the need for medical attention will arise, and there is no way to know the severity of each case that enters into a health care establishment. Subsequently, there was a major catastrophe that warranted the use of staff from this hospital, and others in the surrounding area to meet the needs of the community most devastated by the tornado. Some of the injuries were so severe that the need for more staff was inevitable. The budget for supplies remained consistent because there was no need for any repairs or ordering of additional supplies to meet the disaster. What was needed is reflected in the fact that the professionals who answered the call were to be compensated for their time and efforts. Since physicians and other health care professionals are patient-centered, and have no outward thoughts of the economics when it comes to saving lives. This patient-centered thinking, conflicts with budgetary planning (Macinati, 2010). In regard to the budget it has been established that the salaries of the professionals employed in the hospital setting make up for about sixty-percent of the hospitals overall expenses; while the cost of supplies account for thirty-percent of the monies spent to keep the system functioning efficiently,and effectively. The cost o f supplies are not accounted for in one period of accounting, but over the life of the goods. In other words, the cost of supplies are broken down into segments that determine the value over a given period of time according to its estimated length of use. Therefore, depreciation, comes into effect. Supplies are then considered a fixed expense and the total price does not appear in the initial financial report. There is also the subject of amortization of intangible assets, such as patents, and copyrights that is spread over the anticipated life of the asset in question (access project.org). In retrospect, the need for a variable budget serves to ensure health delivery, and compensation for the professionals that dedicate their lives to aiding the patients in need of their expertise. A budget is defined as a forecast or plan that an organization uses to project income. The use of a variable budget is the best way to approach a situation where man hours vary according to the medical necessities of the public. There is no way to determine the amount of hours needed to handle a medical situation because not every patient has the same illness, an illness can require more time than initially assessed. A forecast or projection is only the basis of an effective business plan, and there must be flexibility in the health care field because it is a system that is filled with constant change. References Macinati, M. S. (2010). NPM Reforms And The Perception of Budget By Hospital Clinicians: Lessons From Two Case-Studies And The Perception of Budget. “Financial Accountability & Management 26(4), 422-442.doi.10.1111/j.1468-0408.2010.00509.x www.accessproject.org/downloads/Hospital_Finance.pdf