Types of Budget and Health Care System Discussion

Types of Budget and Health Care System Discussion

Types of Budget and Health Care System Discussion

Read Chapter on Davis Plus: Finance in order to answer the questions below. Book and chapter PDF attached.

1. Mention some examples of indirect and direct cost.

2. What is Medicaid?

3. What is Medicare? How many parts it has? What does each cover?

4. Mention the types of budget

5. What is DRGs and PPs? What do they do for the Health Care System.

6. What is: ADC, ALOS, HHPD?

7. Mention three of the strategies for Cost-Conscious Nursing Practice?

8. What is the income statement.

Thank you

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Principles of Budgeting

Now that we have covered the basic financial terminology necessary to run a business along with terms that are specific to health care, it is time to put everything together and look at the budgeting process. As mentioned earlier, a budget is the basic financial document in most health care organizations. It is the financial plan that outlines the resources needed to run the organization. Budgeting is an ongoing activity in which revenues and expenses are overseen to help maintain fiscal responsibility and economic health. It is a plan for the allocation of resources, so it serves as a means to control how much money is spent. Budgets do not have to be based simply on revenues and expenses, however. Budgets can be created to help coordinate the efforts of different departments. If one unit can expect a certain number of inpatients, then ancillary departments, such as housekeeping, can expect a certain amount of collateral work, so their budgets may be based on what is expected to happen elsewhere. Planning for a budget occurs during a specific time period, typically during a fiscal year. The cycle begins with an assessment of the environment, looking at trends within and outside the organization. If the area is building a retirement community, then the institution needs to consider the increase in the geriatric population and all the services that population utilizes. Changes in third-party payer contracts will also affect the potential revenues for a hospital.

Institutions must also consider their competition. If a competing hospital is adding a rehabilitation unit, for example, then the potential decrease in that specialty needs to be addressed. A unit that may see a decrease in patients would not want an increased number of employees. Most important, however, the hospital needs to have clear goals and objectives. The vision or strategic plan for the hospital will affect where the money needs to be allocated or readjusted. If the hospital is adding bariatric services, then other departments—cardiology, for example—may see a decrease in some admissions as the program progresses. Hospital admissions for complications of diabetes or hypertension may decrease as patients lose weight. Those affected departments need to account for those possibilities in their budget projections. Once the goals and objectives are established and competition and community environments have been evaluated, each nursing unit will begin to see a draft budget proposal. This is where each nurse and employee of a department or unit needs to be involved, where it becomes important to understand patient mix and patient ALOS.