Budgeting in Health Care Organizations Essay Example | Topics and Well Written Essays - 750 words

Budgeting in Health premeditation Organizations - Essay ExampleThere are numerous other types of reckons such as annual statistics compute and revenue budget and they vary according to their purposes (Gapenski). These budgets can vary across different health bang institutions. The reason for this is the diversity of the financial structures, organizational culture and reporting dusts of organizations (Finkler and McHugh, 2008, p.171). The process by which health assistance organizations design and implement budget based on such organizational structure, culture and reporting system determines whether they will achieve budgeted operating margin targets. This is demonstrated in the experience of University of Utah Hospitals and Clinics (UUHC). It was found that the institutions military force department are not knowledgeable on budgeting and finance and that there is no organizational mechanism or aspect of the organizational culture that encourage the education of the staff. As a result, expenses always exceed the budget and what is worse, the extra expenditures are found to be unnecessary (Clark, 2005, p.79). Budgeting, or correct budgeting, is important because it supports the operation of the health care organization. ... lth care institutions and it needs budgeting in order to maintain positive performance and deal with problems, such as shrinking revenues and rising expenses (Schwieters and Harper, p.76). The benefit of budgeting is aligned with the importance of cost information. As managers and hospital personnel are informed about budgeting and cost, a sound operating budgeting process can finally be implemented in order to achieve financial health. This point was explained by the disturbance introduced at UUHC in 2004 to improve budgeting results. The organization pursued an aggressive education drive for its staff about budget and finance, oblation incentives to stay within budgets, holding budget variance meetings with managers, and reques ting corrective action plans from managers. The result was improved budgeting performance. The intervention model highlighted by the case of UUHC included an important tool in budgeting variance analysis. It is a mode that focuses on comparisons of veritable results and budgeted expectations for each line in the budget of each cost center in the health care organization (Finkler, Ward and Baker, 2007, p.200). The flexible budgeting variance analysis is one of its types that is widely employ in health care organizations. The methodology follows a framework of gathering information the comprehensively covering fire the composition of departmental expenses. This could lead UUHC, for instance, to subdivide total variance (the difference between standard prices and quantities and actual prices and quantities) into three price, quantity and volume (Baker, 1998, p.128). Baker explained these three in detail Price variance pertains to the relation of the overall variance caused by the differences between actual and expected price input Quantity