To some, the word “budget” can sometimes feel cringe-worthy or even villainous. After all, it is often the reason resources cannot be secured or desired actions cannot be pursued. But don’t blame the budget; when developed and managed well, a budget is a helpful planning tool that can enable the pursuit of initiatives.

This week, you will develop a budget for a proposed healthcare product or service. You will also calculate some ratios to gain insight into the impact of your budget and describe what the results suggest about your proposal and the organization.

Learning Objectives

Students will:

• Apply financial principles to develop budgets and manage resources
• Apply expense forecasts, performance benchmarks, process analysis, and implementation planning in financial decision making

Learning Resources

Required Readings (click to expand/reduce)

Penner, S. J. (2016). Economics and financial management for nurses and nurse leaders (3rd ed.). New York, NY: Springer Publishing Company.

• Chapter 5, “Reporting and Managing Budgets” (pp. 111–136)
• Chapter 6, “Budget Planning” (pp. 141–161)
• Chapter 7, “Special Purpose, Capital, and Other Budgets” (pp. 163–186)

Cross, V. (2019). The role of variance analysis in businesses. Retrieved from https://smallbusiness.chron.com/role-variance-analysis-businesses-22641.html

Garcia, M. (n.d.). What does an unfavorable variance indicate? Retrieved April 23, 2019 from http://smallbusiness.chron.com/unfavorable-variance-indicate-81570.html 

Investopedia. (2019, March 31). What is a budget? Budgeting terms and tips. Retrieved from https://www.investopedia.com/terms/b/budget.asp

Johnston, J. (2017, January 6). With so much uncertainty, how do you build your hospital’s budget? Retrieved from https://www.hfma.org/Content.aspx?id=51828

Johnston, K. (n.d.). How to develop a budget for a new product or service. Retrieved April 23, 2019 from https://smallbusiness.chron.com/develop-budget-new-product-service-38629.html

Document: Healthcare Budget Request Template (Word document)

Document: Healthcare Budget Request Workbook Step-by-Step Guide (Word document)

Required Media (click to expand/reduce)

Abyssal Spark. (2013, December 30). How to make a budget in Excel – Part 1 [Video file]. Retrieved from https://www.youtube.com/watch?v=AZbWLu5zzAo 

Laureate Education (Producer). (2012a). Budget forms tutorial [Video file]. Baltimore, MD: Author.

Assignment: Healthcare Budget Request – Budget Development

How do you make difficult decisions? Do you carefully consider the repercussions of each choice? Perhaps you discuss possible outcomes with others. Maybe you rely on tools for help, even if the tool is a coin that can help you reach a conclusion with a simple flip.

Healthcare organizations generally don't have an unlimited stack of coins, neither for flipping nor for spending. Therefore, they must be strategic in how they spend the resources they do have.  



Photo Credit: Getty Images

Budgeting is a process by which they can decide which projects or purchases are worth the cost involved and whether they should expand their operations, invest in new equipment or services, or pursue other projects with the potential to bring in additional profits.

For this Assignment, you examine how budgets are developed. After developing a sample budget for a product or service, you also examine how ratios can be used to analyze the budget and provide information that can guide choices.

To Prepare

• Reflect on the expenses and revenues you considered in the Week 4 Assignment. 
• Consider any other expenses that you have yet to account for in the development, launch, and implementation of the healthcare product or service you have proposed.  
• Consult with your internal finance counselor to help identify and estimate any hidden expenses that may not be obvious. 

The Assignment: Budget Development

Develop and analyze a budget for your proposed healthcare product or service. To do this, complete the following:

Part 1: Develop the Budget Worksheet:

Open your Healthcare Budget Request workbook that you created in the previous Assignment, and navigate to the "A4 Budget Development" worksheet. 

• Using the Healthcare Budget Request Workbook Step-by-Step Guide for guidance, create a 5-year budget for the healthcare product or service that records the projected expenses and revenues associated with the healthcare product or service you have proposed. Be sure to include startup and operating expenses in your budget. 
  
• Calculate the budget ratios as directed in the Healthcare Budget Request Workbook Step-by-Step Guide. 

NOTE: You will copy your worksheet and analysis onto the Healthcare Budget Request Template (Word document) for submission.

Part 2: Summary of Analysis and Interpretation of Results:

Create a brief (1- to 2-page) description of your budget and analysis that clearly describes the budget. Be sure to address the following:

• During the course of 5 years, is there an estimated surplus or deficit?
  
• What percentages of the budget are dedicated to various categories you have defined, such as startup costs, etc.?
  
• What does this budget mean for your organization?  

By Day 7 of Week 6

Submit your Assignment. 

Submission and Grading Information

To submit your completed Assignment for review and grading, do the following:

• Please save your Assignment using the naming convention “WK6Assgn+last name+first initial.(extension)” as the name.
• Click the Week 6 Assignment Rubric to review the Grading Criteria for the Assignment.
• Click the Week 6 Assignment link. You will also be able to “View Rubric” for grading criteria from this area.
• Next, from the Attach File area, click on the Browse My Computer button. Find the document you saved as “WK6Assgn+last name+first initial.(extension)” and click Open.
• If applicable: From the Plagiarism Tools area, click the checkbox for I agree to submit my paper(s) to the Global Reference Database.
• Click on the Submit button to complete your submission.