Some things to consider when making your budget
financial management
·
(is essential for...)
·
essential for making
vital resources available to the organization
a good understanding is a necessary qualification for any health administrator
2 functions of
financial management
·
budgeting
(2) financial control
(functions)
·
(1) budgeting
·
-a tool for financial
planning
-sets financial objectives
(functions)
·
(2) financial control
·
-controlling cash and
other assets
-correcting differences between budgeted and actual costs
NHA's role in
financial management
·
The NHA is responsible
for budgeting and controlling costs within the facility.
NHA does not need to be an accountant, however, the NHA does need to be able
to:
- understand basic accounting statements and managerial reports
- formulate a budget
- correct variances
note: ultimately budget is approved by board, but board delegates formulation
of budget to the administrator
managing revenues
·
Need to maintain
expected consensus levels (census, average daily census, patient days)
2. Need to achieve the expected payer mix
Census
·
number of residents in
a facility on a given day
average daily census
·
average number of
residents per day over a specific time period
patient days
·
cumulative number of
days spent in the facility by all resident
payer mix
·
The mix of residents
by payer type
-Keeping the beds filled is not enough because the amount of reimbursements
vary greatly by payer
note: Maintaining revenues by ___________ is important to the overall financial
health of the organization
fixed costs
·
costs that do not vary
with the number of residents
example: salary of employees, rent, maintenance costs, insurance
variable costs
·
costs that vary with a
change in the number of residents
example: supplies, food
semi-fixed costs
·
costs that remain
fixed within a range of residents
ex: nursing costs
(costs for licensed nurses and CNAs; if you have between 108-112 residents,
that may require 70 CNAs, but as soon as you hit 113 residents, that may mean
71 CNAs)
(Costs are controlled
by using)
·
variance analysis
·
analyzing differences
in budgeted vs. actual costs, and determining how to correct them
(Costs are controlled
by using)
·
inventory management
·
procedures for
receiving and controlling inventory
-record keeping (making sure with shipments, you got everything you paid for),
and then inventory (of those items)
(budgeting)
·
An operating budget combines forecasts for...
·
...revenues and
expenses
- Must make assumptions and use managerial judgement to determine reasonable
projections
- Typically prepared for an entire year
- Approved by the board
(budgeting)
·
revenue shortfalls
·
______________, (not
maintaining your census or expected payer mix), are the most common reason
for budget shortfalls, (not having enough money)
What are some things
to consider when making your budget?
- Start with what happened last year
(ex: noticing that something you purchased from a certain vendor last year
increased this year)
- How will you know/what will affect if you have more or less residents this
year?
A competitor opened up in the same area
- Reimbursement rates change from year to year (PPS with
Medicare; see what state has published for Medicaid reimbursement rates)
- What's going on with health policy
(ex: What if VA expands Medicaid? What if we privatized Medicare?)
- Local labor market conditions
(ex: The going rate for your CNAs has increased, and to be competitive, you
need to raise their wages by $0.50 an hour)
- Regulatory changes
(ex: New regulation requiring generators that you have to purchase)
USA 
India