BHA FPX 4008 Assessment 1 Developing an Operating Budget BHA-FPX4008 Health Care Budgeting and Reporting

 

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Abstract

Budgeting is essential for managing a facility and ensuring its expansion. An administrator must keep the financial records of a facility by ensuring that it functions within its allocated funds and generates income that is at least as high as anticipated during crucial budget meetings. Budgets are not always set in stone and are regularly analyzed to ensure that everything is on track. If something is off, the budget’s figures need to be adjusted to bring it back into line. Although they can be difficult, budget cuts are essential to keep growth going (Finkler et al., 2020).

Developing an Operating Budget

Introduction

Throughout this essay, I will discuss the significance of budgeting in the planning process at Vila Health Developing an Operating Budget. Discussing the differences between operating and capital budgets with examples is also essential. In the third place, give accurate, detailed estimates of the revenue and expenses for the current month. Additionally, there should be a balanced budget, and evaluating how it will affect the organization’s operations is essential.

Why Budgets Are Important

A healthcare system’s planning process needs to include budgeting since it gives the organization a clear view of its financial situation and the best action to take when considering a new initiative. A firm budget enables more beneficial hospital investments and leaves room for mistakes in failed ventures. Hospital staff members, executives, and administrators risk wasting money if they don’t have a proper budget and don’t consider how to spend it most effectively (Finkler et al., 2020; Glushchenko et al., 2021).

Difference Between Operating, Project, and Capital Budget

An operating budget is a forecast of anticipated income and costs. They typically receive payment in exchange for the items and services they offer, much like for-profit companies. Resources that a business consumes or uses during its operations are considered costs. Most of the time, there may be a gap between a business’s offering of goods and services and its eventual receipt of cash payments. There are parallels and frequent lag between when a company uses resources to provide goods or services and when it pays cash for those resources. A corporation uses capital budgeting to evaluate possible initiatives that could demand substantial investments. Capital budgeting can determine whether the anticipated return complies with the established standards by examining the financial flows into and out of a project. Realistic capital budgeting methods include thought-put analysis, discounted cash flow, and payback. An instrument for estimating a project’s overall cost is the project budget. A project’s funding is a comprehensive assessment of all the costs that might accrue before completion (Finkler et al., 2020).

Provide Correct Revenue and Expenses

After analyzing the budget for the fiscal year 2021, a spending cap of $50 million was established for inpatient care revenues. Expenses during the second half of the fiscal year totaled $23,123,516 million. Estimates for 2021 Actuals will come to $46,247,032.00 million if operating costs stay the same for the remainder of the year. I arrived at this figure by multiplying the amount for 2021 (July through December) by $23,123,516.00 million. Vila Health may use the leftover funds to hire additional staff, support efforts to educate employees, purchase new equipment, or come up with other creative methods to improve patient care (Vila Health Developing an Operating Budget, n.d.).

Estimate the Correct Revenue and Expenses

I calculated the current budget using the two values for the current YTD total and found that the current budget is $3,966,130 above budget. The operational budget’s overall budget is $40,895,000. However, the actual amount is $44,861,130.

Balanced Budget for the Next Fiscal Year

I believed the budgets would have stayed the same while being reduced by 5%. However, the budget totals for the upcoming year were calculated by multiplying all of the current-year budget totals by 0.95. The budget for the upcoming year could be approved since cutting it will make it difficult to sustain because it exceeded 5%.

Conclusion

A budget is necessary for a company to expand and sustain its income. Whether utilizing an operational budget, project budget, or capital budget, each is equally crucial to ensuring that your company is on track with spending and bringing in the necessary revenue. Providing the facility is running within the budget and generating the required income is a big part of an administrator’s work.

References

Armitage, H. M., Lane, D., & Webb, A. (2020). Budget develop