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Health Care Finance & Budgeting

Health Care Finance & Budgeting. Pharmacy 483 February 15, 2005 Dennis Stillman Department of Health Services. Accountants. Conservative Consistent. Budgeting.

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Health Care Finance & Budgeting

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  1. Health Care Finance & Budgeting Pharmacy 483 February 15, 2005 Dennis Stillman Department of Health Services

  2. Accountants Conservative Consistent

  3. Budgeting A BUDGET isa quantitative statement of the organization’s expressed operating intentions and it translates these intentions into numbers and dollar signs.

  4. Budgeting • Total Financial Requirements • Cost of Doing Business • Cost of Staying in Business • Cost of Changing the Business • Return to the Suppliers of Capital

  5. Budgets • Planning Tool • Expresses management's plans • Control Tool • Benchmark to compare results

  6. Strategic Long term 5-10 years Broad Operational Short-term 1-3 years Objectives of Strategic Plan Strategic or Operational Planning

  7. Budgeting • Operational Plan • Materials & Forms • Projections • Operational Strategies • Calendar • Targets

  8. Budgeting • Workloads & volumes • Projects / Programs • Equipment / Buildings • Revenues • Expense • Cash flows

  9. Budgets • Operating • statistics, revenue and expense • Capital • construction, equipment • Cash • sources, uses and timing

  10. Statistical Budget • How do you estimate activity? • History • Trends • Known changes • Ask providers • Demographics • Optimism & Pessimism

  11. Statistical Budget • Begin with the global measures • Then project support volumes

  12. Revenue Budget • Volumes • Pricing • Payments /Contractual Allowances • Other

  13. Expense Budget • Attempts to account for costs of operations for each department individually and for the institution as a whole. • Attempts to match costswith services and revenuesgenerated. • Fixed and Variable.

  14. Expense Budgeting • Labor - wages + benefits • Supplies - Rx, OR, other • Purchased services • Interest • Depreciation

  15. Operating Budget Volumes + Net Revenues - Labor, supplies - Other Costs - Capital Costs = Net Income or Profit or Bottom Line

  16. Capital Budget • Short and long term • Requests generally exceed funds available • Prioritization • Ability to buy • Capital is driven by the operating budget & LRFP

  17. Cash Budget • Generally prepared last • Projects cash--in and out • Timing and amounts are both critical • Impacts capital budget and operating budget

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