Health Care Budget

1080 words 5 pages
HCS 577
September 2012

Health Care Budget
Manage a health care organization is not an easy task, the compromise with the community to provide an excellent service and the responsibility of keeping the profitability and viability of the organization makes health care management a complex and every day challenging profession. It require effective practices to avoid the failure of the business.
Independently if the organization is not-for-profit or for-profit, a vital duty of the management team is to keep the organization finances in a status that allows it to operate, and produce a level of revenue that secure its existence over the years. To reach these objectives, managers must perform key functions that involve planning, decision
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As anticipated, the overstock in supplies will reduce inventory expenses three percent in 2010.
In general, expenses increases for 2010 were kept in a low percentage range except for the 30% sharp rise on the interest cost caused by the repayment plan for the monies borrowed in 2009 to buy equipment and supplies. A second exception to the trend was the 10% rise on the provision for doubtful accounts as a result of the new managed care contracts that allow slow payments that for sure will increase the accounts receivable aging. These amounts may reflect inefficient managerial practices at the moment of contract with third party payers and inefficiency on negotiation of terms with lenders.
An effective management practice is to monitor the operating budget, which allows managers not only to discover adverse tendencies but also to make the necessary corrections to turnaround negatives into positive end of the year results. Patton-Fuller practices budget monitoring reason why the 2010 assumptions and projections are based on the 2009 variance report and not in the initial 2009 budget projections.
According to Gapenski (2008), “actions taken in response to variance analysis often have the potential to dramatically improve the operations and financial performance of the organization.” (p. 240). In 2009 Patton-Fuller shows and example of how variance analysis could be useful for the organization permitting base 2010 projections in realistic ciphers. Originally


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