Budgeting Models in Healthcare Setting
Healthcare budgets are often classified by their managerial approach and their design characteristics. This Module’s Case will examine your understanding of the central types of healthcare budgets, and how they are used in the current setting. Production units, as specifically measured units of work volume in a given department or setting of service provision, will also be examined.
Case Assignment
Using the information in the required readings, as well as some additional research in peer-reviewed sources, complete your Case assignment by answering the following:
Summarize both the benefits and the drawbacks of top-down vs. bottom-up budgeting. Which works best in your current or future setting?
Concisely describe the eight design characteristics of budgeting. Which do you feel would be most effective in running a for-profit hospital, and why?
Choose any department in the healthcare setting, and explain how their production units would be effectively measured. How do these production units tie into the larger budgeting process?
Assignment Expectations
Conduct additional research to gather sufficient information to support your analysis.
Provide a response of 3-5 pages, not including title page and references
As we have multiple required items to be addressed herein, please use subheadings to show where you’re responding to each required item and to ensure that none are omitted.
Support your responses with peer-reviewed articles, with 2 to 3 references.
Budgeting Models in Healthcare Setting
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Budgeting Models in Healthcare Setting
Advantages and disadvantages of Top-down and bottom-up budgeting methods
Planning for a financial budget is important to improve efficiency, goal attainment, and planning for profit. The two types of business budgets are the top-down and bottom-up both with their advantages and disadvantages. A top-down budget is usually prepared by the senior management for the entire organization then the departments are expected to make their budget within the allocated amounts. A top-down budget considers previous years' budgets and existing trends and growth strategies to ensure alignment with the departmental objectives and goals.
The advantage of this type of budget is that it enables the heads of departments and their team members to have a clear picture of the organization's expectations and plans. The process is time-saving considering the departments have been allocated with the amounts to plan for and few departments are engaged (Mukherjee et al., 2016). Also, the senior management has more information on the company finances compared to the department heads thus more strategic planning. Besides, the approval process is more guaranteed, and easy to make changes.
However, the budgeting method limits the communication process since the departmental managers are not involved which might lead to creating unrealistic expectations. It is hard to accurately measure the departmental budget and not involving lower and middle-level management might lead to a lack of motivation.