HCM410DB4

Running head: FINANCIAL PLANNING

FINANCIAL PLANNING

Financial Plan and Operational Budget

Unit 4 Individual Project

Carlene Baines

HCM 410

Professor Miller

November 24, 2022

Financial Plan and Operational Budget

According to an introduction from the US constitution and CJ system, an operational budget is essential for enabling eased operations within an organization and maintaining its financial viability. The need for working funding to managers is focused on discovering the number of resources necessary and available at their disposal at the time to operate a unit. For that reason, departments can figure out costs aligned with their department’s usage and profit estimation. On the other hand, a financial plan is elaborated as a higher articulation of the organization’s financial goals and objectives. Also, a plan differs in that it consists of anticipated aggregate costs and revenues (Sant, 2020).

Operations Budget

In preparing an operational budget, a unit manager is solely responsible for preparing a budget’s preliminaries. A previous financial year’s budget is also applied to consider any future adjustments of costs or revenues by the unit. In the case of the Nouveau Health facility, future cost adjustments will reflect in the new services available at the facility, as well as any increased revenue from them and the allocation by the facility CEO. The new services at the facility also come with increased staff personnel, thus an increase in salaries as a cost. New services will involve additional maintenance, employee-related insurance, and other overhead costs (Barr & McClellan, 2018).

Figure 1: Hospital Operational budget

In Figure 1, the current value column shows the income value for the current financial year 20XX. On the other hand, the values from the Next Year column show the number of projected revenues and expenses after the incorporation of additional funds availed by the company CEO and the accountability of new services offered by the facility.

Financial Plan

For any organization to continue being viable in business terms, financial viability has to be achieved. Achievement of economic viability follows a varied course of functions. Such functions include planning financially and accounting for the budget. Achievement of a strategic financial plan for a health facility consists of factors that are preliminary to the process. From the case of Nouveau Health and Krona hospital’s operational budget, the following primary factors are considered for evaluation to achieve strategic financial planning changes (Alexander, 2018)

For this case, the following sections are projected to have an increase in their amount of revenue. The inpatient section, outpatient section, the pharmacy department, and the Home health and hospice section. Also, expenditure in the projected budget due to new services is projected to rise. The payroll section is to include the additional nurse’s salary. Second, the benefits section-where-expenditure-incurred-from-benefits paid is expected to rise to cover new workers’ benefits. General Service and insurance sections also recorded increased expenses under the-new projections. Workers paid insurance and increased general service as overheads explain this course.

1. Outpatient

The facility can improve revenues associated with the outpatient section by reducing the hospital readmission rate. With low-readmission rates, patients will always feel much safer attaining medical services from the facility without the gamble of being re-admitted. As a trending concern also, hospitals with high readmission rates incur a penalty cost from the government (CMS.gov, 2022)

2. Pharmacy

As hospitals incur some part of the cost, the production of mediation at a lowered price remains a fundamental incentive to customers willing to receive treatment from a particular facility.

3. Home, health, and hospital.

Similar to our case scenario, hospitals have introduced the application of artificial intelligence as a critical trend in monitoring expenses and revenues. With AI in the offered new services by the facility, higher income is expected (Wessler, 2021).

Conclusion

The 10% increase in payroll for salary and wages caters to the rise in recruit and contract nurses in the new services section. On the other hand, increased funding is generated from the allocated three million, enabling work progress as the facility eyes for the increased revenues originating from new services. Therefore, the facility’s financial situation can be considered stable, wherein expected increases boost revenues even higher. Caution has to be taken to minimize expenditure costs to avoid jeopardy to the facility’s operations.

References.

Alexander, J. (2018).  Financial planning & analysis and performance management. John Wiley & Sons.

Barr, M. J., & McClellan, G. S. (2018).  Budgets and financial management in higher education. John Wiley & Sons.

CMS.gov. (2022, August 5).  Hospital Readmissions Reduction Program (HRRP). Retrieved November 24, 2022, from https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Readmissions-Reduction-Program

Sant, R. (2020).  Budgeting systems and controls within a diversified local group of companies (Master’s thesis, University of Malta). https://www.um.edu.mt/library/oar/handle/123456789/66094

WESSLER, J. D. (2021). Extending Care Team Access to Out-of-Hospital Settings.  A Practical Guide to Emergency Telehealth, 222.