Beyond the Budget

Successful budgets should not just exist in a galaxy far, far away or once upon a time! Budget numbers are only meaningful if they can be achieved and maintained. As organizations draft and finalize the budgets for the 2019 fiscal year, it is important that the focus not just be on fixed, annual numbers, but on flexible, volume-based staffing goals as well. This will ensure alignment with performance improvement strategies and real-time control over labor costs.

Too often, budgets are developed in a vacuum and then distributed to leadership, leaving them to face the resulting gap between expectation and reality. The challenge is to look at operations and determine what needs to change during the budget process. Department and service-line managers should work collaboratively with the Finance and Executive teams to outline realistic budgets – what worked last year might not fit into next year’s plans. Therefore, hard questions need to be asked: What changes in volume (increase/decrease) and staffing (additions, retirements, etc.) are anticipated? What aspects of current operations are necessary? What can be done differently? How can processes be modified/streamlined? Without continuous emphasis on improvement, the budget will only be numbers and the gap to those numbers – a “villainous,” insurmountable roadblock. Don’t start the new fiscal year off with a “bad-apple” budget!

The first step in influencing change is acknowledging that it is needed and being proactive to address it. A comprehensive budget process will assist hospitals and health systems in both establishing realistic objectives and identifying the associated cost-savings. In addition, it will create a culture of accountability and provide clear strategic direction so organizations can operate happily ever after!

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