Budgeting in Healthcare

Budgets in HealthCare Finance
Budgeting is without doubt a core tool that needs to be carefully implemented in healthcare to ensure that the population served by a healthcare facility can fully benefit from the provision of high quality services as efficiently as possible. To this end, it is critical that healthcare facilities work well to ensure that they develop robust and detailed budgets that dictate the manner in which they use their resources (Gapenski, 2012). As such, it becomes fundamental that healthcare facilities invest significant amounts of time into researching their problems, strengths, and needs in order to develop appropriate budgets based on their financial capabilities.
It is important to note that a variety of budgets are typically quintessential to the successful operation of a healthcare facility. These include the operating budget, the cash budget, the capital budget, the special purpose budget, the long-range budget, the programs budget, and in some cases a service line budget. However, it is important to note that the development of a budget for any healthcare facility does not constitute independently developing these different budgets. Instead, it is based on developing a master budget for the entire facility that budgets funds, time, and resources to the aforementioned budgets. These budgets provide vital information to the nurse leaders of healthcare facilities because they essentially provide a sense of direction on where the facility’s funds are directed as well as the priorities undertaken by the facility (Barasa, Cleary, Molyneux, & English, 2017). This enables nurse leaders to assess how well they can address the problems that they face in the performance of their duties and more importantly the financial confines within which they can do so.
A master budget is typically the main budget developed by a healthcare facility that incorporates all the healthcare facility’s revenue streams and the various departments and programs through which the facility incurs expenses. In essence, it is the grand budget of the facility (Gapenski, 2012). On the other hand, the operational budget details the costs that the facility is going to incur related to the operations and activities that it engages in. The long-range budget is the one detailing the expenses that the facility is incurring as a result of its investment in long-term projects while the programs budget typically details how much money the facility will spend on running its diverse programs (Liaropoulos & Goranitis, 2015). The cash budget details how the working capital of the facility is going to be utilized over the coming financial year and a special purpose budget details the resources set aside for special purposes related to the facility such as special events that it hosts (Gapenski, 2012). The service line budget essentially allocates resources across the facility based on the services that it provides and the operations it carries out.
In addition to budgeting, forecasting plays a vital role in healthcare finance as well. It essentially enables healthcare leaders such as nurse leaders and administrators to effectively project the future needs of the facility and prepare for them accordingly. In this way, it becomes possible for leaders to ensure the needs of their customers are well addressed and catered for in the most comprehensive manner possible (Barasa et al., 2017). The best way to achieve this goal is through the use of time-series forecasting to predict the future needs of the facility based on past data. In this way, forecasting differs from budgeting seeing as it is a projection activity while budgeting is an allocation activity (Gapenski, 2012). In this way, budgeting and forecasting are inextricably linked to each other and need to be provided with similar amounts of attention in order to be successfully utilized.
As a neighborhood, Industrial Heights is primarily inhabited by the Latino community with the African American community being the secondary ethnicity. It has a median household income of $24672 with 37.5% of the population under 65 having no insurance. 20.8% of the population is under the age of 18 years, which translates to approximately 8081 individuals. Taking this information into account, it is very likely that the healthcare needs of this population are likely to be access to affordable healthcare and creating awareness about the use of contraception and engaging in safe sex practices. This is based on the fact that the rates of STDs in the neighborhood, particularly gonorrhea and chlamydia, as well as the rate of teenage pregnancies, were particularly high in the last year.
Sentinel City Healthcare Needs
It is important to also note that Sentinel City’s Industrial Heights neighborhood also hosts the Interfaith Church soup kitchen. This kitchen serves a plethora of citizens ranging from homeless adults, who make up the majority at 64%, homeless children (3%), veterans (12%), disabled adults (7%), the elderly (6%), and healthy adults (6%) and healthy children who take up the remaining 2%. Considering the fact that the homeless constitute the vast majority of the population served by this kitchen, it is inevitable that access to shelter and safety is a vital healthcare need of this population. Furthermore, the fact that only 8% of the population served is healthy points to the need for a working food program that confers nutritional value to the population in Industrial Heights. In this way, it becomes remotely possible to provide the population of this neighborhood with the opportunity to live a healthy life where they can access basic needs, as well as healthcare ones, much more easily and effectively (Nardi & Petr, 2002).
At the same time, it is important to note that in the entire neighborhood of Industrial Heights, there is only one healthcare facility that is meant to serve more than 30000 residents. Such expectations are unreasonable, especially considering the fact that the neighborhood is struggling with teenage pregnancy and abortion as well as with a host of sexually transmitted diseases. To this end, creating awareness on the use of contraceptives as well as the prevalence of STDs is bound to be of great benefit for the community. Achieving he capability of providing these services in the most cost-efficient way possible for this community with a low medium income is bound to be of great benefit in both the long and short term. As such, the Better Health Clinic needs to increase the resources it allocates to dealing with STDs and teenage pregnancies to better serve the population. Also, it would be highly commendable if the clinic could expand and open up a second facility within the neighborhood to ensure it better serve its residents. In this sense, long-range budget for the future expansion of the clinic is needed in addition to increasing the operating and programs budgets for the said facility. These measures are aimed at ensuring that the facility can better address the needs of Industrial Heights’ residents, and particularly those that are homeless and those under the age of 18.
As aforementioned, one of the most vital needs for Industrial Heights is a more active awareness campaign on the use of contraceptives among teenagers. To achieve this goal, the clinic will have to liaise with all schools within the neighborhood to ensure that teenagers can be educated on contraceptives and STDs as early as possible as in the most accurate fashion possible. This is intended to help reduce the number of STD infections and teenage pregnancies, births, and abortions. At the same time, providing more affordable healthcare services for this low income community is a paramount goal that needs to be actively pursued in order to ensure the healthcare needs of the community can be met. For a community with low income and where 37.5% of the population under 65 does not have insurance cover, high healthcare-related costs can be impossible to meet. To this end, the facility should increase its long-range, operating, and special programs budgetary allocations. These would enable special programs to be developed to help combat teenage pregnancies and STDs, plan for the forecasted needs of the future population, and offer more affordable services to the community.
Taking into account the data on STDs and teenage pregnancies, births, and abortions, it is clear that there is a persistent fluctuation every year. Although the number have generally declined in the last 5 years, they are characterized by a drop in one year and a slight increase in the next. This does little to cement any gains made in the community (Nardi & Petr, 2002). Having a healthier community would ultimately result in lower expenses for the facility, and the savings made can be used to plan for future needs that are forecasted for the community (Liaropoulos & Goranitis, 2015). Budget forecasting is essentially a projection process and healthcare market shifts or seasonality events can significantly impact the ability of healthcare facilities to accurately forecast their needs (Barasa et al., 2017). Issues such as price increases in medication or a surge in STD transmissions can very well result in a healthcare facility having to spend more resources on certain programs and activities than it initially intended to.
The Nightingale Square district is a stark contradiction to Industrial Heights. Its primary ethnicity is white with the secondary ethnicity being Hispanic. It has a median household income of $269550 to Industrial Height’s $24672. This represents a more than tenfold comparative value. Insofar as insurance cover is concerned, Nightingale Square has only 0.7% of persons below 65 years without health insurance, a huge contrast to Industrial Height’s 37.5%.
Immunization among adults in the two districts also underscores the disparity between said districts. Nightingale Square records higher adult immunization rates for all the illnesses represented compared to Industrial Heights. In this sense, this district is bound to be much healthier than Industrial Heights. In this way, the facility in Industrial Heights is likely to commit more resources to immunizing it residents than the facility in Nightingale Square (Gapenski, 2012). In return, Nightingale Square facilities can allocate the spare resources to other initiatives while the Better Health Clinic is likely to suffer from inadequacy problems insofar as resources are concerned. Seasonality events as well as market demographic shifts can significantly alter the ability of nurse leaders to effectively perform their duties (Nardi & Petr, 2002). Nurse leaders can plan for such shifts by allocating slightly more funds to programs, developing miscellaneous funds that can be used to combat such changes, and remaining abreast with market shifts and developments to enable the quickest response possible (Barasa et al., 2017). Such measures, though challenging to institute, provide nurse leaders with the best chance of planning well for seasonality events and market demographic shifts.
 
References
Barasa, E. W., Cleary, S., Molyneux, S., & English, M. (2017). Setting healthcare priorities: a description and evaluation of the budgeting and planning process in county hospitals in Kenya. Health policy and planning, 32(3), 329-337.
Gapenski, L. C. (2012). Healthcare finance: An introduction to accounting and financial management. Chicago, Ill: Health Administration Press.
Liaropoulos, L., & Goranitis, I. (2015). Health care financing and the sustainability of health systems. International journal for equity in health, 14(1), 80.
Nardi, D., & Petr, J. (2002). Community health and wellness needs assessment: A step-by-step guide. Australia: Delmar Learning.