Reflect on the types of budgets you have created, whether for your personal finances or in a professional role. How did the budgets help you (or your department) plan for the future? What insights did the actual results provide about the budgeting process?
Budgeting is an important activity within any health care organization. The particular challenges encountered, however, can vary depending on the type of organization. A state or federally funded organization, for example, will likely have a budget that is allocated to it, and it needs to follow specific guidelines on how the money can be used. A for-profit organization, by contrast, will typically have more influence and flexibility in setting up its budget and making choices on matters such as how much to spend on marketing, patient care, or incentives for employees.
Variance analysis relates to the difference between what was projected in a budget and what the actual results were, and helps managers identify the sources of such differences.
To preparefor this Discussion:
- Reflect on the role of budgeting within the overall financial planning process, as described in Chapter 8 of the course text.
- Bring to mind a wide range of health care organizations, such as a long-term care facility, large for-profit hospital, physicians’ practice, VA hospital, or state-run clinic. Consider how budgeting would be influenced depending on an organization’s sources of funding. How do the purposes or uses of a budget vary according to the kind of health care organization it is?
- Select a health care organization with which you are familiar (or one that you would like to learn more about), and think about the role of budgeting in that particular organization. Conduct research, as needed, to find out more about the budgeting process of this organization.
- Review the information in the Learning Resources on variance analysis, and consider its value to health care organizations. How would this organization make use of variance analysis?
Post by Day 4a response to the following:
- Describe one or more key dimensions along which health care organizations vary with regard to budgeting.
- Identify a health care organization with which you are familiar, and indicate whether it is for-profit, not-for-profit, state, federal, or military. Discuss the purpose of budgeting in your selected health care organization. Why is this important to this particular health care organization?
- Briefly define variance analysis and explain how it would likely be used by the management in this organization. Provide an example (actual or hypothetical) of how it might subdivide variances