BUDGET

Managing Resources: Budget



Managing Resources: Budget

Introduction

Preparing a budget plan is an integral part of management for any organization. Likewise, the Veterans hospital prepares budget on a yearly basis to understand the allocation of costs that are necessary to run the hospital and to provide quality care to every patient of the hospital.

In addition, the new healthcare legislation and increased population has enhanced various issues for allocating the budget in hospitals because each patient expects to get the desired care, but it has become difficult to incur a cost to provide necessary care to each patient. Therefore, the responsibilities of leaders have increased because they are now required to have thorough and detailed knowledge of every cost of a hospital in order to manage its resources appropriately (Leape et al. 2005).

From the management standpoint, cost centers can be distinguished that are based on the nature of their work-patient care, intermediate clinical care and overhead centers. Some cost centers represent patient-centered activities (i.e., final or intermediate cost centers), while others are primarily for general services (i.e., overhead cost centers) such as housekeeping, laundry, maintenance, and the many other tasks necessary for the satisfactory operation of a complex organization like a hospital (Cutler et al. 2005).

Discussion

At every level of decision-making, the use of cost data is essential and draws from seven categories such as budgeting, variance assessment, profitability, efficiency improvement, expansion or contraction of services, contraction of outside services of production of in-house services, and enhancement of cost-effective programs at national level (Leape et al. 2005).

The Veteran hospital uses cost information for establishing rates and complies with both internal and external reporting requirements. It also determines whether departments are operating within their budgets and constructs a budget for every department. Finally, it allocates budget among departments or cost centers ...