Mc connell pp_ch27
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Mc connell pp_ch27 Mc connell pp_ch27 Presentation Transcript

  • Umiker's Management Skills for the New Health Care Supervisor, Fifth Edition Charles McConnell
  • Chapter 27 Budgets and Cost Control  
  • The Supervisor and Cost
    • The cost-containment measures imposed on health care providers have greatly increased the importance of cost control. Supervisors are key people in the control and reduction of expenses.
    View slide
  • The Supervisor and Cost
    • Essential parts of the supervisory role are participating in the preparation of departmental budgets, suggesting cost-cutting measures, and directing the application of control measures.
    View slide
  • Functions of Budgets
    • Planning
    • Controlling
    • Evaluating
  • Planning
    • The preparation of a budget is part of the planning function. A budget is itself a plan, a financial plan for the conduct of business in the near future.
  • Controlling
    • The administration of a budget is part of the controlling function, and the budget itself is the most powerful tool available for controlling.
  • Evaluating
    • Performance appraisals of supervisors usually include the assessment of how accurately they forecast their expenses and how well their expenditures match the monies allocated.
  •   Principles and Rules of Budgeting
    • Expenses are always charged to the department that incurs them.
    • Every item of expense must be under the control of someone.
    • Supervisors must participate in budget preparation.
    • Supervisors must not be held responsible for expenditures over which they have no control.
  • Principles and Rules of Budgeting
    • Unused budgeted funds are not carried over from one annual budget to the next.
    • Unused funds for capital expenditures may not be transferred to operating expenses or vice versa.
    • Requisitions for individual expenditures require approval by some authority.
    • “ Slush funds” or contingency funds not specifically identified are not permitted.
  • Revenue Budget
    • Depending on the budgeting approach of the organization, revenue ­figures may come from the finance or information services departments
  • Preparation
    • A budget cannot be adequately prepared the week before it is due. To prepare an itemization of expenses, collect expense figures for several months.
  • Capital Equipment
    • There is usually a separate budget or a section of the overall budget that is set aside for capital equipment. Many organizations project their capital equipment budgets out for 2, 3, 4, or 5 years into the future
  • Wages, Benefits, and Overhead
    • The figures for salaries, benefits, and overhead come primarily from the finance department and human resources.
  • For Controlling:
    • Review budget reports soon after receiving them. If an item is not clear or may be in error, seek clarification. Be prepared to discuss the variances with your immediate superior.
  • Causes of Overtime
    • Variations in workload.
    • Absenteeism.
    • Tolerance of substandard performance.
    • General acceptance of overtime as a normal practice rather than an exception.
  • Causes of Overtime
    • Lack of supervisor accountability.
    • Rigid scheduling practices.
    • Bargaining unit work rules
    • Inappropriate or insufficient equipment and inefficient physical work area.
  • Toward Control of Overtime
    • Regulate demand
    • Analyze and improve staffing practices
    • Analyze and improve work methods
    • Control absenteeism
    • Manage responsibly
  • Cost Control
    • Cost control involves more than cutting staff and working more efficiently. It can also involve improving inventory control and seeking price relief from suppliers.
  • Before Considering Layoffs
    • Eliminate temporary staff.
    • Close down unfilled positions.
    • Consider full-timers who will go part-time.
    • Consider part-timers who will reduce hours.
    • Ask for voluntary separations.
    • Ask for retirements.
  • Process Reengineering
    • Reengineering may prove to be the most cost-effective mechanism in health care institutions. Without reengineering, cost-reduction initiatives will achieve only modest results.
  • Benchmarking
    • Benchmarking is the search for best or preferred practices and is accomplished by comparing current systems or processes with highly successful ones. Your goal is to increase efficiency, cut costs, or improve service.
  • Benchmarking Approach
    • 1) a data-collection phase that may include literature searches or site visits,
    • (2) an analysis phase, and
    • (3) an action plan.