As we enter a new fiscal year, both staffing and budget challenges are top of mind for hospital leaders and other healthcare organizations. However, the dynamics of a post-pandemic industry have made that task more challenging and complex than ever before. With that in mind, here’s a look at what matters in budgeting in healthcare management today, as well as a few tips to stay on top of finances in the year ahead.
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How Budgeting in Healthcare Management Has Changed Since Covid-19
The process of aligning revenue and expenses within a specific timeframe, budgeting plays a central role in every business plan. But with its unique dynamics, the healthcare industry demands a different approach than other industries. To truly succeed at budgeting in healthcare management, leaders must adopt a specialized approach to meet their specific needs.
As with most businesses, healthcare leaders must manage cash flow and resource allocation across different projects and departments. They must also invest in new technology and techniques to meet changing standards and consumer (i.e., patient) demands. And like any other business leader, they must contend with supply chain disruptions and the rising cost of utilities, equipment and insurance.
The Unique Challenges of Healthcare Budgeting
Unlike other businesses, though, healthcare leaders must also stay on top of constantly changing reimbursement and payment guidelines. And while other industries must also deal with labor shortages, those problems are often much more acute in healthcare. That’s especially true for providers of long-term care (LTC), senior housing and nursing homes.
But if it’s a big job, budgeting in healthcare management is also a necessary one. From ensuring quality care to generating a profit, sound budgeting is an essential step for achieving any goal. It’s also necessary to make new investments or offer new services based on market changes. In other words, budgeting gives leaders the power to keep their organization adaptable and ahead of the curve.
3 Types of Budgeting in Healthcare Management
Traditionally, leaders leverage different types of healthcare budgeting models, including capital expense, operational expense, and rolling forecasting.
For instance, capital expense budgeting involves funding infrastructure (both physical and technological), equipment, repairs, and maintenance. Meanwhile, operational expense budgeting covers day-to-day needs like supplies, software and staffing. These methods complement one another and are best planned together.
Rolling forecasting is another commonly used type of healthcare budgeting. Based on continuous assessment of recent data, this model uses constantly updated projections to improve adaptability. Other experts have identified many other types of budgeting, such as incremental (or fixed) budgets, program budgets and activity-based budgets, which set funding based on different needs.
Budgeting in Healthcare Management: 5 Tips for the Year Ahead
Of course, cost, budget and staffing vary widely based a can number of factors, such as location and facility type (for example: LTC vs. a hospital). The dynamics of operating a hospital differ from that of a skilled nursing facility, for instance. So, leaders must know which combo of budget models is best for their specific facility or organization. Then, they must tackle the even harder job of putting it in place.
True, budgeting in healthcare management lacks a “one size fits all” solution. But every leader can still use a number of universal methods to get the job done. Creating a custom budget calendar, setting smart deadlines, and setting up reporting to key stakeholders are all essential tactics.
Still, these tried-and-true methods may not cover every base in a post-pandemic world. With that in mind, here are five updated tips to help leaders make sure they get the most from their budgeting efforts.
#1: Seek Input from Clinical Managers
Too often, traditional budgeting happens only among executives or high-level management. However, leaders are increasingly finding value in including other stakeholders in these plans. Offering clinical managers a voice in the process provides a clearer picture of on-the-floor budget realities. It can also help boost morale and engagement — no small bonus at a time when employee retention is a top goal.
#2: Adopt a More Positive, Proactive Mindset
As some experts have argued, leaders should regard budgeting not as just another tedious task. Instead, they should see it as an important tool that enables them to “translate its visions into actions.” The idea is to approach budgeting in healthcare management as the chance to make essential improvements and pursue new opportunities. This shift in mindset could make the different in a budget that simply meets current needs versus one that paves the way to a more successful future.
#3: Leverage Data for Better Decisions
Thanks to the widespread availability of data in today’s clinical workplaces, leaders have access to a truly unprecedented amount of information. From hiring staff to tracking equipment, the cost of almost every process can be understood on a much more detailed basis than ever before. Using analytics to drill down into these expenses can help ensure accuracy and success in healthcare budgeting.
#4: Leverage Technology to Improve Efficiency
The efficiency that comes from using automation and other new innovations in technology can also help ensure successful budgeting in healthcare management. For instance, automating key workforce tasks can help keep certain costs firmly within predictable bounds and less subject to fluctuation. It can also help carry out other key tasks like reviewing contracts and warranties, giving leaders room in their budget to meet other expenses.
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#5: Streamline Labor Budgeting with a Recruitment Partner
Labor cost is one of the largest challenges for healthcare leaders. However, leaders can address one of their biggest, fastest-growing budget expenses with the help of a healthcare recruitment provider. As the cost of clinical labor continues to grow after reaching all-time highs during the pandemic, accurate budgeting in healthcare management has become a challenge. Recruitment partners can help stabilize this cost to help create a budget that’s more accurate and predictable — and with more room in it, as well.
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Meet Your Healthcare Management Goals with CareerStaff
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Contact us today to get started or learn more about how we can help you tackle your healthcare workforce challenges.