2. Definition
A budget can be defined as:
An itemized summary of estimated or intended expenditures for
a given period together with proposals for financing them.
A systematic plan for the expenditure of a usually fixed resource,
such as money or time, during a given period.
The total sum of money allocated for a particular purpose or
period of time.
5/13/2015Budget Preperations
6. Develop Revenue Budget
Definition:
A revenue budget is an estimate of gross or retail amounts invoiced for services rendered in a
given period. The main source of revenue is patient services. The revenue budget will be
prepared by estimating amounts invoiced to patients and due from other sources, which may
include but be not limited to:
Outpatient services
Inpatient services
Ancillary services for outpatients and inpatients (e.g., X-rays, Laboratory tests, Medication,
etc.)
Non-operating revenue (e.g., Rental revenue, cafeteria income etc.)
Where applicable, each department within the hospital must prepare a revenue budget. Such
budgets are an important tool for management to ensure that the required cash flow is available
during the budget period.
It should be assumed that revenue will be generated from every service provided to a patient.
Until such time as the insurance scheme is fully operational for all patients in Abu Dhabi, for
services rendered to patients not currently covered by health insurance, a notional charge will be
recorded.
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7. Kind of Revenue
Inpatient
Outpatient
Non- Operating
5/13/2015Budget preparations
Activity Base Mandate
Non- Activity Base Mandate
Sources of Revenue:
1. Internal
2. External (Grant, Donation, Finance)
10. Funding Process & Type
Revenue 10,000 10,000 10,000
Expense 10,000 15,000 8,000
Net Profit
+
Loss
0 <5000> 2,000
What can I do?
5/13/2015Budget preparations
Funding Type:
1. Giving by third party (Grant) 3000
2. Finance (Bank) 2000
11. Develop Manpower Budget
Definition:
Manpower forecasting is the prediction of future levels of
demand for, and supply of, workforce and specialties/ skills at
the department, hospital, and organizational level.
A variety of techniques are used in manpower forecasting,
including statistical analysis of current trends and the use of
mathematical models.
Manpower forecasting forms part of the manpower planning
process.
5/13/2015Budget preparations
12. Develop Man power Budget
Want Need Plan
5/13/2015Budget preparations
1. Doctors
2. Nurses
3. Engineers
4. Technicians
5. Accountant
6. Etc…..
13. Develop Expense Budget
Definition:
An expense budget is an estimate of expenditure to be incurred
for a given period.
Each department within the hospital must prepare an expense
budget. Such a budget is essential for hospital’s management to
ensure that adequate funds are available to meet the
requirements of the hospital and to ensure that expenditure is
appropriately controlled.
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14. Develop Expense Budget
Want Need Plan
5/13/2015Budget Preparations
1000
5000
60
contracts
100
500
6 contracts
15. Develop The Capital Budget
Definition
• An item of expenditure is considered to be capital when:
It’s value exceeds a certain monetary value (based on the organization’s capitalization policy); and
The life of the asset is more than 1 year.
• A capital expenditure is any significant expenditure incurred to acquire or improve land,
buildings, engineering structures, machinery and equipment.
• It normally confers a benefit lasting beyond one year and results in the acquisition of, or
extension of the life of, a fixed asset.
• An expenditure on repair or maintenance designed to maintain an asset in its original state
is not a capital expenditure and is considered routine maintenance.
• Capital expenditure may include any costs undertaken in connection with acquiring land or
constructing buildings.
• Examples of capital expenditure:
• Information Technology capital such as integrated HR and payroll software;
• Replacement/ maintenance capital such as MRI replacement;
• Strategic capital such as a new surgery unit;
• Construction or project capital, such as renovation of a wing.
5/13/2015Budget preparations
16. Develop The Capital Budget
Short Term:
Furniture IT
5/13/2015Budget Preparations
17. Develop The Capital Budget
Long Term:
Engineering Medical Equipments
5/13/2015Budget Preparations
