A good budgeting process engages those who are responsible for adhering to the budget
and implementing the organization's objectives in creating the budget. It gathers future income
and expenditures that are based on the financial position of organizational budget process.
Budgeting decisions are driven both by mission priorities and fiscal accountability (Foley, 2010)
Working capital is an organization's current assets such as cash, short-term securities, accounts
receivable, inventories, and prepaid expenses, that are available to convert to cash within one
year (Nowicki, 2021). It allows for the fixed or long-term assets like the facility or equipment
within it to remain working and generate revenue. This type of productivity shows management
how and where they can make the decisions for spending to keep the facility running. Financial
analysis is used to evaluate the past, present, and future financial performance of an organization
based on the financial statements, financial outcomes, and working capital. This can be a key
part of the budgeting process as the decisions about the budget are made based off the financial
analysis. Financial statements show the position, results and cash flow of an organization to
compare the productivity of a company over time (AccountingTools, 2022). These statements
help make the hard decisions of where money should be invested or what areas need
improvement/upkeep.
The main objective of managing cash flow is to always have the right amount of
cash on hand by maximizing and expediting cash inflows and minimizing and delaying cash
outflows (Nowicki, 2022). This objective can be reached by utilizing the cash conversion cycle
that converts resources such as employee wages and supply expenses (cash outflows) into
product or services such as patient revenues. The purpose of having this type of cash on hand is
to allow for precautions or emergencies, pay employees and vendors as expected, and to allow
for the extra expenditure of items if the vendor is willing to sell the product for as a bundle deal
Being able to effectively budget money to pay employees, vendors, and unexpected costs gives
room for the healthcare organization to make decisions easier.
The three factors that set the healthcare industry apart from the other industries is the
nature of the services provided, the cost of the services provided, and the method of payment for
the services provided. This is mainly because the services that are provided are so emergent that
it requires highly trained staff as well as advanced technology all hours of the day for patients in
need of care. Furthermore, such services that are provided to patients are mostly reimbursed by
insurance companies (Nowicki, 2021).
Medical facilities have been affected by trends and healthcare trends over the past few
years. Medicaid and Medicare have reduced reimbursements to providers whereas third-party
payers have offered fee-for-service contracts. These fee-for-service contracts have allowed for
reimbursements to providers, but not in the full charge price before. Things that like fraud, waste,
and abuse have baffled healthcare organizations which is all the more reason that the medical
billing