HEALTHCARE BUDGET

Healthcare Budget

The following is the projected operating budget on the basis of 2009 budget and the provided assumptions.

Patton-Fuller community Hospital

Statement of Revenue and Expense

2009 to 2010 Operating Budget

2010 Budget

Revenue

Net Patient Revenue

473697

Other Revenue

3544

Total Revenue

477241

Expenses

Salaries and benefits

222960

Supplies

72346

Physician and profession fees

113687

Utilities

1260

Other

1840

Depreciation

36036

Interest

4820

Provision for doubtful accounts

13935

Total Expenses

466884

Total expenses will rise 0.99 %

Income

Operating Income

10357

Loss

Investment Income

-62

Net Income

10295

The Financial Management Practices in Creating and Monitoring Operating Budget

Budgeting is an important part of organizational planning and control. Many traditional companies use top down budgeting, which means that the budgeted amounts for the coming year are literally imposed on middle and lower level managers. These managers set departmental budget targets in accordance with overall company revenues and expenditure specified by top executives. Although there are some advantages to the top down process, the movement toward employee empowerment, participation and learning means that many organizations are adopting bottom up budgeting, a process in which lower level managers anticipate their department's resources, needs and pass them up to the top management for approval.

Management tends to budget with a high-level view. Companies must consider the cost of obtaining information, and it might make sense involve middle management in the budgeting process to increase the usefulness of the budget data. Some organizations prefer top-down budgeting so they can use it as a vehicle to set performance goals for divisions and lower levels of management. Top-down budgeting is a common strategy in larger, bureaucratic organizations. The bottom-up budgeting process starts with managers who work on the front lines of daily operations. These employees provide the best source of realistic, detailed information for a budget, and middle management's experience helps complete more accurate budgets in less time. Additionally, this makes it easier for executives to hold managers accountable to budgets they created themselves. Ultimately, budgeting is imprecise; the best approach may be to iterate budget results between the top-down and bottom-up methods to reap the benefits of both (Fay et al, 1971).

The zero-based budgeting is a method of planning the budget each year. It helps to re-evaluate all programs and expenditures of an organization. It provides detailed information on the economic resources needed to achieve the desired results, highlighting the duplicity of efforts. The process of zero-based budgeting is to identify and rank decision packages in order of importance, with a cost-benefit analysis. Establishes programs, set goals and objectives, make decisions on basic policies of the organization.

Benchmarks should be established based on ...