Paper Example on Budget for Healthcare: Unique Challenges & Necessary Constraints

Introduction

Drafting a budget for a healthcare facility has never been an easy fete for any management executive in the healthcare industry. The task comes with its own set of unique challenges that the manager tasked with the activity has to factor into the budget. In the present economic times, however, various constraints have made it necessary for healthcare executives to put together relevant budgets for their various facilities in order to remain profitable. The healthcare setting has myriad challenges which influence the drafting of a budget for a healthcare facility. The most significant factors that influence a healthcare facility's budget are mainly environmental and they include the various operating costs that enable a facility to conduct its activities.

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Factors that Influence a Budget

One of the factors that affect a healthcare facility's budget is the payment modes that patients and other healthcare seekers use to pay for the various services that they get at a healthcare institution. The various insurance plans in place either by the government or private entities influence how a healthcare facility plans its budget. For instance, the presence of a state insurance scheme which covers her citizens will mean that healthcare facilities draft their budgets around the policy frameworks surrounding the insurance scheme. Presence of insurance schemes influences how the healthcare facility will run its activities and if the patients visiting the facility have insurance schemes, then the facility is able to run its affairs easily (Jennings, 2015).

The other factor that influences the budget of a healthcare facility is healthcare reforms that affect the running of healthcare institutions. A government is responsible for the healthcare of her citizens and therefore, it is at the forefront of creating policies that steer healthcare in the country. Some of these policies involve the restrictions that the relevant authorities impose on healthcare facilities with regards to financial matters. A government can set a limit to the amount of money that a healthcare facility can charge for specific services and this greatly influences the budgetary allocations of a healthcare institution. The government can also set the baseline for the acquisition of healthcare equipment that all facilities should have before they receive certification to offer medical services. The things mentioned above impact how a healthcare facility plans its budget and therefore, are significant in this process.

The third factor that influences a healthcare facility's budgetary allocations is the market that it plays. With this regard, external competition and other pertinent factors that influence the profitability of a healthcare facility come into play (Opoku-Agyeman, 2018). A rival healthcare facility may have more advanced equipment than another and therefore draw a large number of patients who will then lead to lower revenue generation in the facility that is ill-equipped. Competition is also a construct of the healthcare facility's organization with regards to how the management makes decisions that enable the facility to compete favorably (Das & Swain, 2017). In this regard, a healthcare facility's management plays a significant role in determining how the budgetary allocation to the various departments make it competitive in the market.

Recommendations

To combat the aforementioned issues concerning budgetary allocations and influences that impact the allocation of funds in a healthcare facility, several measures need to be put in place. One of these is to restructure the healthcare facility's management to reflect the operational functions of the facility. In this regard, the healthcare facility should have a professional who is pertinent to the various factors that influence the competitiveness of the facility. The second measure is to equip the healthcare facility with modern equipment that will enable the various healthcare practitioners to attain a high level of quality in the delivery of services. Doing so will attract a large number of clients who will then provide the needed revenue to allow the facility to run its operations. A budget that captures the healthcare facility's improvements will ensure that the facility remains competitive in the long run. Budgeting in a healthcare facility is a tough call to make but with the relevant management changes to bring in a professional who is informed, will ensure that the budget aligns with the healthcare facility's objectives and goals.

Conclusion

Once a budget has been put in place, it is important to develop measures that track the implementation of the various segments of the budget. One of the important measures is the operating margin which determines the total amount of money that a healthcare facility spends on running all the activities and functions that it offers in the course of healthcare delivery. The second measure is the return on investment which is the time that it takes for the facility to recover the money is spent on purchasing equipment. In the case of this healthcare facility, the purchase of software and Magnetic Resonance Imaging (MRI) machine will be a factor in calculating the return of investment. The final measure that will track financial performance is the total margin which determines the cost of running the healthcare facility and the profit that each service returns at the end of a financial period. These measures will be instrumental in tracking the financial performance of the healthcare facility.

References

Das, C. P., & Swain, R. K. (2017). Impact of Organizational Factors on Financial Performance. Parikalpana: KIIT Journal of Management, 13(2), 145. doi:10.23862/kiit-parikalpana/2017/v13/i2/164528

Jennings, J. (2015). Organizational and Environmental Factors Influencing Hospital Community Orientation. Academy of Management Proceedings, 2015(1), 18382. doi:10.5465/ambpp.2015.18382abstract

Opoku-Agyeman, W. (2018). Environmental and Organizational Factors Associated with Hospital use of GPO Services. Academy of Management Proceedings, 2018(1), 18072. doi:10.5465/ambpp.2018.18072abstract