There are three major components to any hospital budget. The first is the strategic plan, the second the revenue, and the third, the expenses. All three components depend on the nature of the hospital, being either a for-profit or a non-profit institution (Dalton & Warren, 2016). Finally, how the budget operates depends on two main factors, being the systems in place and the people handling these systems.
As a new practice administrator in an existing practice, I would begin by studying the system theoretically. I would study the strategic plan and nature of the hospital. These would include the operating procedure, the current budget, past budgets, and future projections. Such studies would enable me to get a mental picture of both the hospital and its finances.
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The second step would be management by walking around, of possible on an incognito basis. I would observe what happens from the time patients walk into the hospital through to when they leave. The basic idea is to establish the actual picture of how the hospital operates corresponds with its books.
The other step would be to question the individuals in charge of budgeting and the day-to-day management of the hospital. By this time, I already understand how they create and implement the budge to the hospital. This process would begin with how they establish the general strategy for the year, and how they reduce the strategy into a budget complete with respective amounts. I would also want to understand how they deal with contingencies, complications, and problems, such a sudden high expenditure health problem (de Campos et al., 2017).
Finally, I would go back to the records and take a fresh look at them with the assistance of the head of accounting. This final evaluation, combined with an explanation, will bring together the twin factors of the system and the human components. The process above would enable me to understand the budgeting system of the hospital.
References
Dalton, C. M., & Warren, P. L. (2016). Cost versus control: Understanding ownership through outsourcing in hospitals. Journal of health economics , 48 , 1-15.
de Campos, C. M. P., Rodrigues, L. L., & Jorge, S. M. F. (2017). The role of management accounting systems in public hospitals and the construction of budgets: a literature review. In Public Health and Welfare: Concepts, Methodologies, Tools, and Applications (pp. 289-312). IGI Global.
