Healthcare Finance Essay Milestone 4

Capital budgeting in healthcare

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University Name

Capital budgeting is a technique of used by business to rank and evaluate investments or potential expenditures that are significant in amount. In healthcare organizations, it is usually managed by inexperienced health care professionals or managers. This proposal seek to discuss the opportunities provided by an efficient capital budgeting and suggest areas of budget improvement in Cryo-Cell international.

Opportunities

A proper capital budgeting will provide future financial planning for Cryo-Cell. It will enable the finance manager to planstrategically their financial future (Young, 2008, p. 28). It will also enable hospital facility mangers to validate and account for budgetary needs, and adequate funding within the budgetary requirement. In addition, it will improve communication with Cry-Cell departments. An effective communication plays a significant role on the success of a capital spend plan (Finkler & Ward, 1999, p. 14). The idea is to encourage alignment, collaboration, engagement, and integration when communicating. There is an opportunity for standardization, which increases efficiency especially when budgeting process is often riddled with inefficient manually intensive processes.

Proposal

The key areas that Cryo-Cell needs to improve in its budgeting process include;

Operating Margins –the operating margins may portray different information for example, large margins could mean money is not properly used to improve patient care and services (Finkler & Ward, 1999, p. 18). This proposal recommends that margins should be analyzed by comparing past budgets and expenditures.

Technology –since most hospitals invest in new technology and medical equipment, this can translate to significance expense on budget. Therefore, it will be advisable to create a separate budget for equipment and medical supplies (Young, 2008, p. 33).

Patients – looking at Cryo-Cell pricing strategy, it does not charge any upfront fees for their patients. It will be vital to note the number of patients still affects expense, costs, and budget needs.

Reference

Finkler, S. A., & Ward, D. M. (1999). Cost accounting for health care organizations: Concepts and applications. Gaithersburg, MD: Aspen Publishers.

Young, D. W. (2008). Management Accounting in Health Care Organizations. Hoboken: John Wiley & Sons.