Strategic Budget Justification- Aligning Financial Needs with Organizational Goals
Operating budgets provide a framework that guides organizational financial operations over a specified period. It is, therefore, important that during budgetary allocation and creation, every organizational docket that utilizes funds be sufficiently covered. Budgets control organizational spending and ensure that they do not overspend on a line of items that reduce the profitability of the organization (Egbunike & Unamma, 2017). Budgets also act as tools that support organizational objectives by providing financial allocations that aid in processes implementing these objectives. Organizational leaders are often tasked with analyzing any created budget to determine its feasibility and whether it meets the organizational requirements and objectives. It is upon the budget creator to convince these leaders of its feasibility to ensure its approval. This paper seeks to outline a budget negotiation and communication process for an operating budget
It is every organizational desire to be profitable in their businesses. It is for these reasons that strategies are laid that work towards profitability and realization of fiscal success (Rauscher & Wheeler, 2016). This budget utilizes several strategies that, in the long run, will ensure financial growth and, consequently, profitability. This budget focuses on specific items that enhance the efficiency of service delivery while reducing allocations to items that draw funds away from its financial basket. Service delivery enhancement confers profound benefits to quality improvement and effective care. Whereas this on its own is not a money generator, it effectively ensures an increase in the patient population visiting the hospitals (Lee, 2016). All patients yearn for quality, safe, and effective care in the hospital, and by ensuring unmatched quality and efficiency of care, more patients will be drawn to the hospital. The significance of a higher patient population is increased revenues and, consequently, higher profits.
The specific quality and efficiency enhancers as evident in the budget include higher salaries and wages as well as employee benefits to ensure more work staff. Also, the supplies docket has been allocated more funds to ensure a constant stream of supplies that don’t compromise any element of care. Additionally, the amounts utilized by the organization in paid time-offs have been cut considerably to minimize funds outflow from the hospital. This will, however, be compensated for by the acquisition of already qualified staff that may not need these services.
The hospital’s productivity goals are centered around work efficiency, resource availability, the adequate knowledge base of its employees, and time management. This budget adequately addresses these issues. It increases allocation to the salary and wages docket as well as employee benefits, thus ensuring that more staff are availed. It also provides allocation to the incentives docket, allocation. A combination of raised wages and incentives is particularly fundamental in boosting the employee’s morale, enhancing their work efficiency and effectiveness. This budget also increased allocations that enable the increase of resources that are needed by the patients and the providers are available and suffices their needs. By allocating funds for continuous medical education, this budget ensures that all the employees involved in care delivery processes are well knowledgeable with the current knowledge base, thus enabling them to maintain competency in the care processes. The combination of increased workforce and resource availability adequately enhances work efficiency and reduces time wastages that may be attributed to employee fatigue and long shifts (Roth et al., 2019). All these are provided for in the budget.
Work efficiency requires a constant flow of resources, such resources utilized in care delivery processes are medical equipment. The budget projects an increase in the patient population visiting the hospital. It, therefore, allocated more funds to the supplies docket to ensure that more equipment is purchased to maintain a high level of work efficiency and that no patient is turned away because of lack of any medical equipment. This higher patient population will also need healthcare services. The budget takes care of this by allocating more funds for the acquisition of more healthcare workers as well as improving the employee incentives to boost their morale and input in the work processes.
The organizational objectives are to provide quality care that is safe and effective to all the patient population and to ensure profitability. The budget seeks to enhance budgetary allocation on components that will aid in the implementation of these objectives. Quality and safety accordance is dependent on the service providers and resource availability (Cho & Hong, 2018). The budget targets an increase in service providers and resource availability by increasing funding to these budgetary areas. The significance of increasing the working staff is evident in enhanced work effectiveness and quality service provision as they don’t have to work for longer shifts and that they have more contact time with the patients.
Additionally, this budget decreases funds outflow from the hospital by reducing allocations for the paid time offs docket. Whereas this docket is significant in ensuring employees get involved in knowledge-building activities, it costs the hospital money that could be otherwise utilized in other dockets. This same need is yet addressed by the targeted acquisition of more staff. The combination of increasing the workforce and ensuring resource availability has far-reaching benefits of ensuring quality and safety assurance to the patients, an attribute that forms the baseline objective of the hospital. Likewise, work efficiency is accustomed to more staff and resource availability, as well as reduced fund outflow from the hospital’s financial basket, enabling more revenues to stream into the hospitals and thus ensuring profitability.
The effectiveness of any budget is dependent on its ability to address all organizational issues while aiding in the attainment of its goals and objectives. The budget design should thus take into consideration these issues. It is also necessary that the budget contents and the strategies it utilizes in attaining these objectives be communicated to organizational leaders for approval. This is only ensured when the budget adequately addresses these concerns. Such concerns as equipment and service costs, as evident in this hospital budget, should be adequately addressed in the budget. The organizational objectives of quality and safe service delivery, as well as the profitability of the organization, are also demonstrated in the budget.
References
Cho, N., & Hong, K. (2018). A Kitchen with Too Many Cooks: Factors Associated with Hospital Profitability. Sustainability, 10(2), 323. https://doi.org/10.3390/su10020323
Egbunike, P., & Unamma, A. (2017). Budgeting, Budgetary Control, and Performance Evaluation: Evidence from Hospitality Firms in Nigeria. STUDIES AND SCIENTIFIC RESEARCH. ECONOMICS EDITION, (26). https://doi.org/10.29358/sceco.v0i26.398
Lee, M. (2015). Financial Analysis of National University Hospitals in Korea. Osong Public Health And Research Perspectives, 6(5), 310-317. https://doi.org/10.1016/j.phrp.2015.10.007
Rauscher, S., & Wheeler, J. (2016). The importance of working capital management for hospital profitability. Health Care Management Review, 37(4), 339-346. https://doi.org/10.1097/hmr.0b013e3182224189
Roth, A., Tucker, A., Venkataraman, S., & Chilingerian, J. (2019). Being on the Productivity Frontier: Identifying “Triple Aim Performance” Hospitals. Production And Operations Management, 28(9), 2165-2183. https://doi.org/10.1111/poms.13019
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Question 
PART 3 of 4 (Part 1 – Order 38945, Part 2 – Order 38946)
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OVERVIEW:
Write a 3–5 page executive summary that justifies the operating budget you prepared in Assessment 2.
Note: Complete the assessments in this course in the order in which they are presented.
Strategic Budget Justification- Aligning Financial Needs with Organizational Goals
Negotiating budgets and communicating financial needs to stakeholders are vital skills for nurse leaders. Given today’s numerous funding constraints and a highly competitive environment, the ability to win support for budget proposals hinges on presenting a compelling argument based on well-documented needs, accurate financial information, and a justifiable business case.
This assessment provides an opportunity for you to examine the mission and goals of a healthcare organization in order to justify a budget proposal. A persuasive argument requires thoughtful justification and rationale for the expenses required to support your proposal. A proposal that supports the organization’s mission and goals strengthens your argument and is much more likely to get you what you need.