After your monthly review of your unit\’s operational budget, you find you are over your budget for medical supplies.
After your monthly review of your unit\’s operational budget you find you are over your budget for medical supplies.
This is for discussion question. Each discussion question must have at least 250 words and two references. Thank you.
Topic 1: Basic Operational Concepts
1. Identify the key components of budgeting in health care.
2. Differentiate between operational and capital expenses.
Topic 1 DQ 1
After your monthly review of your unit\’s operational budget, you find you are over your budget for medical supplies. What steps would you take to investigate why this happened and how to correct the issue?
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1.1. Operational Budget
Every healthcare organization conducts annual or semi-annual budgeting processes. Operational budgets are important in determining the financial requirements of every process. All equipment and all the activities used in the healthcare system have to be budgeted for. Medical expenses often form a critical part of the monthly budget. Effective budgeting processes ought to be considered to ensure that there is no over budgeting or under budgeting. However, in some cases, this may not be the case, given numerous factors that ought to be considered. Over budgeting is common in different healthcare units due to changes in the operational expenses that may change due to the prevailing economic conditions (Kim et al., 2019). Also, a shift or changes in the healthcare practices may lead to over budgeting processes. The increase in the demand for quality healthcare services may lead to overbudgeting due to the demand for different efficient equipment.
In cases there is an overbudgeting for the medical supplies, several steps can be taken to investigate why this has happened. First, the changes in the prices of medical supplies may be considered. Secondly, there is the need to determine the changes in the demands of healthcare equipment or facilities. Overbudgeting may be determined by the overall increase in healthcare costs or the wastages that may have been recorded (Zhang & Yang, 2020). Correcting the issue of overbudgeting is important in reducing the wastages and ensuring that each department operates within its means.
One of the ways of correcting issues over budgeting for the medical supplies is ensuring wastages of the medical equipment. Also, considering the priorities in the budgeting process is necessary for reducing the wastages, which can lead to an over budgeting process.
Kim, H., Yoon, W., & Zurlo, K. A. (2019). Health shocks, out‐of‐pocket medical expenses, and consumer debt among middle‐aged and older Americans. Journal of Consumer Affairs, 46(3), 357-380. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1745-6606.2012.01236.x
Zhang, X., & Yang, S. (2020). Analysis of medical expenses of inpatients with diabetes: China’s Eastern, Central, and Western regions (2013–2015). Public Health, 185, 167-173. https://www.sciencedirect.com/science/article/abs/pii/S0033350620301165