Sample Healthcare Paper on Healthcare Budgeting

Healthcare Budgeting

Planning and budgeting is crucial for any organization. Organizations that implement effective planning procedures are more likely to save more money and reduces their overall expenditure. Effective planning act as a roadmap to the desired destination. On the other hand, budgeting promotes effective use of finances in an organization, which promotes execution of the plans developed by the members of the organization.

Planning and Budgeting

Planning and budgeting are important in an organization. Operational benefits of planning and budgeting include forcing the organization’s management to critically examine and analyze the operation of their company and determine which processes are not essential or where they could cut down on the number of staff and still produce the same quality of work. Operationally, budgets provide organizations with direction as they represent a quantification of the organization’s goals. After creating a budget, employees are given specific targets that they should focus on to ensure that the company serves its customers effectively. Budgets also have a role in coordinating activities in the company. They provide a consolidated plan that is used to implement different actions (Poston, 2011; Almenario, 2014). Aside from that, budgets also as educational or evaluation tools as they can be used to review the areas of the organization that the company should focus on improving to promote overall performance (Barrett & Fraser, 1977). These factors promote productivity.

Financially, planning and budgeting helps leaders assess details such as the interrelationship between the economic situation and the position of the company. This helps managers to explore the effects that the economic status of the country will have on the cost of resources. Planning and budgeting ensures that funds are directed towards the most profitable business ventures that will promote the growth of the business and reduce the risk of losses (Almenario, 2014). Financial benefits of planning and budgeting are focused on promoting profitability of the company.

Revenue cycle

Revenue cycle can be viewed as the process that a product or service goes through from the point of the idea generation to its implementation or sale. In business, the process begins when a company delivers a service or product to the point where the client pays for the service. In healthcare service provision, the revenue cycle can be described as the entire process that medical bills go through and includes details about the medical services offered to the patient, administrative and clinical functions that are involved in the process of collecting revenue from the patients served in the healthcare facility.  (Bucci, 2014). An effective revenue cycle is important in running the activities of a healthcare facility and ensuring that patients are served well.

The revenue cycle helps the management tract the funds entering the business such as the cash, money orders received through other forms, payments received directly from patients at the healthcare facility, credit part payment received through mail or over the phone, and funds deposited through the hospital’s bank account. The revenue cycle helps in internal control or procedures and policies related to financial management, documentation, follow up of the different processes through, which funds are collected. It also safeguards inflows of funds into the business and promotes continuity of the business. The cycle helps healthcare facilities to establish responsibilities by allocating specific people to the role of collecting funds and recording money transactions. Key measures for a successful include profit rates, low denial rates, and less than 50 days in accountable receivables (Bucci, 2014). The revenue cycle keeps the funds collected from different sources safe.

Incremental Budget

The steps involved in creating an incremental budget include determining the flow of information, deciding what the incremental budget is going to measure, gathering past budgetary records, developing projections, and determining the break-even point (Ross, 2018). Strengths of incremental budgets include ease in implementing the budget, as it does not contain complex calculations. It also ensures steadiness on the funds used in the business for development purposes, while at the same time ensuring large deviations are not seen in the original budget as the process is gradual (Miller, 2013). This ensures that a company maintains a stable budget annually.

It also helps companies to build the value of equality in the company’s departments as all the subsections are given the same increases in funds that they were given the previous year. This approach also enables companies to tract changes. Some of the weaknesses associated with its use include lack of innovation and may subconsciously promote higher spending to ensure that the budget is maintained in the coming years (Miller, 2013). Aside from that, this budget may lead to unnecessary spending of funds and promote use of conservative modes of management. A manager can unnecessarily increase or pad his or her budget through incorporation of plans that had not been considered during the planning process, adding the number of employees, and obtaining resources that are more expensive that the perceived cost.

Although the incremental budget is easy to implement, it may also limit the company’s ability to make random changes to its plans. Healthcare facilities need to manage their budgets effectively to ensure that they do not lose funds in unnecessary ventures. The profitability of a business relies on its effectiveness in managing a budget.




Almenario, R. B. (2014). Enterprise Development Planning & Budgeting . Trafford Publishing.

Barrett, M. E., & Fraser, L. B. (1977, July). Conflicting Roles in Budgeting for Operations. Retrieved from Harvard Review:

Bucci, R. V. (2014). Medicine and Business: A Practitioner’s Guide. Springer Science & Business Media.

Miller, J. B. (2013). Principles of Public and Private Infrastructure Delivery. Springer Science & Business Media.

Poston, W. K. (2011). School Budgeting for Hard Times: Confronting Cutbacks and Critics. Corwin Press.

Ross, T. K. (2018). A Comprehensive Guide to Budgeting for Health Care Managers. Jones & Bartlett Learning.