Critique Of Budgetary And Financial Decision-Making Processes In Healthcare Organizations

Setting Budgets for Healthcare Departments

Budget is a type of financial statement which mainly shows the overall estimation of expenses and revenue for future years and revalued on a periodic basis. It is the statement which mainly highlights the estimation of both revenue as well as expenditure that would help the organisation to estimate their expenses or income over a certain period of time (Andor, Mohanty and Toth 2015). It is a type of financial plan which mainly enhances the business for their expenditure and measuring the overall outcome of the business along with planning for the contingencies. This statement also helps in understanding the amount of expenditure which would be beneficial for the healthcare organisation in their future years and those are to be included in their normal mode of operation. Healthcare organisations also prepare budgets that mainly help the organisation to enhance their overall activities along with providing the services to the patients (Cabannes 2015). A healthcare organisation mainly consist of different departments which deals with different functions in the organisation. Budget that is prepared for the every department that mainly focuses on the number of beds in which the patients would be allocated along with estimating the expenses that would be incurred in the overall process.

In this case, the department of pathology has been considered which would also have to prepare the budget for their activities that consist of different types of examination of patients such the blood and other aspects of the patients. The budget for department of pathology would mainly estimate the cost of examining the blood and other aspect of the patients during their treatment (Rossi 2014). Some of the budgets such as incremental budget, zero based budget and activity based budget are some of the kinds that are used for estimating the cost of a healthcare organisation. There are different types of budget which are used for estimating the total amount of expenses in future years that would be incurred by the organisation. The pathology department of the organisation is used to select the zero based budgeting as these departments are totally based on the activities that are mainly performed within a certain time period (Schlegel, Frank and Britzelmaier 2016). For the pathology department, zero based budgeting has been considered which would show the estimated amount of cost. These are the procedures by which budgets are being prepared in the ward of a care giver organisation. All of the expenses are to be recorded in a statement and from which the budget is to be prepared as per the historical records and those are to be included in the budget of the organisation. Moreover, the budgets that are prepared with in the health care organisation are required to be developed by establishing the assumptions which are to be related with the trends of sales as well as of cost which are incurred within the organisation (Goddard and Mkasiwa 2016). Certain variable are associated with the budgeting period which are to be included with the changes that are based on the different level of services that are provided to the patients.

Best Practices for Reporting Budgetary Performance

Budgeting is considered as one of the methods by which the process of management accounting points out the overall theoretical practices that offers several opportunities. The budgeting research is to be analysed as per the theoretical perspective that would help in providing the assumptions of the rationale of the overall process (Rossi 2015). Most of the perspective that is associated with the business mainly includes the effective influential theoretical aspects which points out the maintained assumptions for substituting the budgeting process. Reporting the performance of budgetary performance incorporates the research topics which are used in an extensive manner along with socio economic process of budgeting (Baines 2014). The theoretical perspective of the budgetary research is to be completed with the available form of literature that would help in understanding the overall frequency of reporting. The best practice of reporting the budgetary performance mainly consist of the contents of budget report which are to be associated with the business for pointing out the overall reporting structures. The main content of the budget report is the estimated amount of expenses as per the selection of the budget holder (Owens 2015). Some theories are related to the process of budget such as economic theory that mainly helps in suggesting the overall ways of solving certain issues of mutual influences in budgeting.

Different types of variables are to be included with the common ground of evaluating the research methods that are included in the process of budgeting. Variance has been shown in the statement of budget which mainly shows the difference between the actual cost and estimated cost of the items that would be incurred. All of the financial information from the organisation are to be included in the budget statement that focuses on the potential information that are available within the company (Ham and Murray 2015). The development of agency theory consist of different preferences that involves with the activities of the employees and communicate to the owner for managing in a better way. In addition to this, the reviewing of contracting theory mainly provides a comprehensive analysis as well as insightful analysis that provides broad conceptual foundation of managing accounting issues (Miller et al. 2016). Integrating the elements of budgeting is to be determined by the owner as well as the employees which provides the discussion of the incomplete targeted markets. The key roles of the zero based budgeting within the reporting structures includes the managers who are mainly responsible for presenting the budget within the organisation. The responsibility of the managers is to highlight the overall structure of reporting that points out the estimated amount of expenditure which would be incurred by the healthcare organisation for the services that are provided to the patients (Ham et al. 2015). Therefore, these are the best practice of reporting the budgeting practices which are to be included with the performance and the theories that are directly associated with the process of budgeting.

Analyzing the Long-Term Financial Impact of Investments

The theoretical model of budget reporting mainly highlights the jurisdiction of public administration that provides each department of NHS to work in a better way along with providing better services to the care users. The department of finance generally prepares the estimated income and expenditure statement which highlights the total amount of expenses that would be incurred within the time if providing the services to the care users (Kingsfund.org.uk 2019). The control orientation of budgeting has changed with traditional line which provides traditional budgeting and those are to be included with the amount of money that are spent by the government (Ham and Murray 2015). The management also dependent on the money that are allocated for incurring the overall expenses within the organisation. The funds that are to be allocated within the funds provides the satisfactory results after the process of preparation of budget. Zero based budgeting provides the overall ranking of the priorities that programs with different types of programs and decides the objectives which are to be achieved. A budget mainly provides a series of goals which decides the tasks that are to be achieved after a certain period of time (Schlegel, Frank and Britzelmaier 2016). Certain financial failure in the NHS from Kings Fund has been reported from the health and social care organisation in England.

The total amount of budget of NHS has changed and they are mainly funded from the source of general taxation along with contribution from national insurance. The treatment of patients has increased with the health care institutions along with attendances of department for elective admission and experiences of the patients (Goddard and Mkasiwa 2016). Bolton NHS Foundation Trust has helped in increasing the number of health care service provider which mainly faces the financial difficulties that shows all the trust for planning at the end of a financial year. The measurement of health inequalities is used to be measured in a different way that would help in increasing the overall life expectancy in several ways. The theories of budgeting which are to be critically valued mainly shows the reporting practice in a resolution (Andor, Mohanty and Toth 2015). Agency theory provides an overall conceptual advances in the process of budgeting along with providing a structure which is well defined for the health care providing organisation. It is also important for analysing the effectiveness of this particular theory as it consist of practices which help in preparation of the budgets along with proper communication with the employees of the organisation. These theory also integrates the elements of the budget that are prepared for estimating the overall amount of expenses. Moreover, the economic theory mainly adopts the behaviour that are based on the research of the findings which are to be associated with the budgets that are prepared (Owens 2015). Consistency theory is associated with individuals for a structure that is balanced in nature as it deals with the cognitive conflicts. Therefore, the theoretical model of budgeting to the reporting practices provides different aspects of the overall process that are associated with a health care organisation.

References

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Cabannes, Y., 2015. The impact of participatory budgeting on basic services: municipal practices and evidence from the field. Environment and Urbanization, 27(1), pp.257-284.

Goddard, A. and Mkasiwa, T.A., 2016. New public management and budgeting practices in Tanzanian Central Government: “Struggling for conformance”. Journal of Accounting in Emerging Economies, 6(4), pp.340-371.

Ham, C. and Murray, R., 2015. Implementing the NHS five year forward view: aligning policies with the plan. London: King’s Fund.

Ham, C., Baird, B., Gregory, S., Jabbal, J. and Alderwick, H., 2015. The NHS under the coalition government. Part one: NHS reform. London: The King’s Fund.

Kingsfund.org.uk (2019). The NHS in a Nutshell. Available at: https://www.kingsfund.org.uk/projects/nhs-in-a-nutshell [Accessed on 15 November 2019]

Miller, R., Peckham, S., Coleman, A., McDermott, I., Harrison, S. and Checkland, K., 2016. What happens when GPs engage in commissioning? Two decades of experience in the English NHS. Journal of health services research & policy, 21(2), pp.126-133.

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Rossi, M., 2015. The use of capital budgeting techniques: an outlook from Italy. International Journal of Management Practice, 8(1), pp.43-56.

Schlegel, D., Frank, F. and Britzelmaier, B., 2016. Investment decisions and capital budgeting practices in German manufacturing companies. International Journal of Business and Globalisation, 16(1), pp.66-78.