Finance for Managers: Budgeting and budgetary control

Define/discuss budgeting as a critical financial management strategy in healthcare.

Budget is an essential practice that is carried out with an aim of planning and controlling costs. According to Bowman, health care performance has been positively skewed with the use of budgets. The health care facilities use budgeting techniques to make financial plans that influence the required outcomes. The essential of budget planning entails setting strategic goals, reviewing alternatives, and choosing the best alternatives among the available options. Through the use of a budget, four planning activities are achieved. The four essentials are anticipation, Formulation, determination, and assessment (Fischer, 2020). Health care provision is subject to unforeseen occurrences and therefore anticipation provides a forecast of the future requirements and the probability of occurrence. On the other hand, determination shows the capability of the health care facilities to provide various services. Determination of capabilities and anticipation of unforeseen occurrence helps the management to formulate objectives and efficiently allocate the necessary resources based on the needs of the health care facilities. Finally, budgeting helps to control the planning process by assessing the set objectives of the health care facilities. In essence, budgets are used as a planning and a control tool that helps to manage the finances for the health care facilities.

Part two

Having graduated as a pediatrician and dropping my CVs in several hospitals in New York City, some of the health providers have gained interest for my services. Castle Connolly is a renowned hospital in New York which has offered me a contract and I am in the middle of its negotiations.

Some of the expenses I will cover for the next 12 months are salaries, some employee benefits, tax payrolls, rent for the hospital premises, insurance cover for the hospital, repairs and maintenance, telephone operations services, postage services, and finally some of the office supplies.

Typical benefits on the compensation package

The employee will benefit from health services since most employers provide health benefits in terms of healthcare coverage, but many others provide on-site exercise facilities and stress-reduction programs (Falcettoni, 2020). Workers can typically choose from a variety of HMOs, PPOs, health savings accounts, and even on-site clinics when it comes to health insurance.

There will be paid vacations for all employees because the Fair Labor Standards Act (FLSA) doesn’t really require that time not worked, like vacations or holidays, be compensated. Some employers provide only a few days of vacation, while others provide no vacation at all for hourly or part-time employees. Nevertheless, to compete for highly skilled employees, the majority of businesses provide at least some paid vacation (Maroko, 2020). The amount of vacation days usually grows over time, which is one of the reasons why employees stay loyal to their firm.

Employees who participate in retirement plans receive a steady income when they leave the company. A strong retirement plan is enough of an incentive for so many people to continue with such a job, even if it isn’t very exciting. Pensions and contribution plans are the two main forms of retirement funds. Pensions provide retired employees with a steady, guaranteed income for the remainder of their life; spouses and children may also be eligible for retirement payments. Most firms no longer offer annuities, even though they were popular for many years.

Justification of the compensation package

According to cost of living in New York, (2020) Salary is $14,890 which is constant throughout month 1 to month 12. It is a contract which I signed and therefore will go for a period of two years. While rent is also fixed for the 12 months period. It is constant since the landlord has not increased rent for a very long period of time. Also food price fluctuates from one month to the other since one does not consume a fixed amount of food all the time. In most cases utilities is constant/ fixed since it provides some basic services which includes natural gas, electricity and water (Falcettoni, 2020). Phone expenses fluctuates in some months since there are other months which there are no many calls to be made.

What could go wrong with the budget?

The rent can increase in the course of the twelve months. If this happens then the budget will be affected since there will be less income left. Also, the miscellaneous expenses might go high causing a variation in the budget.

Ways of cutting down some expenses

There is a plan to cut down my expenses by moving to a cheaper house. Maybe move into a roommates. This will cut down on rent expenses (Fischer, 2020). Also by reducing on phone expenses since they carry a very huge expense.

Other means of income

Budget on starting a sole proprietor shop outside the rental premises which will contribute to an additional income. The main advantages of a sole proprietorship are pass-through tax benefit, ease of formation, and low maintenance costs. A sole proprietorship’s major disadvantage include unlimited personal liability that extends further than the business to the owner and also the difficulty of finding financial capital, particularly through existing mechanisms such as issuing equity and obtaining bank loans or lines of credit.

Budget

(Cost of living in New York, 2020)

References

Bowman, C. G. (2021). Living Apart Together. In Living Apart Together. New York University Press.

Cost of living in New York. (2020). Cost of Living. https://www.numbeo.com/cost-of-living/in/New-York

Fischer, C. S. (2020). APPENDIX E The 1918-1919 Cost of Living Study. In America Calling (pp. 292-298). University of California Press.

He, B. Y., Zhou, J., Ma, Z., Chow, J. Y., & Ozbay, K. (2020). Evaluation of city-scale built environment policies in New York City with an emerging-mobility-accessible synthetic population. Transportation Research Part A: Policy and Practice, 141, 444-467.

Maroko, A. R., Nash, D., & Pavilonis, B. T. (2020). Covid-19 and Inequity: A comparative spatial analysis of New York City and Chicago hot spots. Journal of Urban Health, 97(4), 461-470.

Falcettoni, E., & Nygaard, V. M. (2020). A Comparison of Living Standards Across the United States of America. Available at SSRN 3539893.