Healthcare and Hospital Capital Budget
Healthcare has long been known as one of the only industries around the world that will continue to be needed in the future, but recently it has become even more important and part of the national conversation. Healthcare innovations have been responsible for curbing everything from population health concerns to a global pandemic. Today, especially as many healthcare providers begin the long journey toward financial recovery following COVID-19, they will look to new and innovative ways to provide quality care while eliminating waste and inefficiencies.
The Importance of Budgeting in a Healthcare Context
One key strategy for healthcare providers looking to drive revenue and curb costs will continue to be the capital budgeting process. While the capital budgeting process in healthcare has a history of being complex (and often political), leading organizations are realizing its importance in driving financial recovery following COVID-19. As providers plan for the road to recovery, they will need to leverage a strong capital budgeting process in healthcare as well as a leading strategic healthcare planning tool. Leaders will need to understand how they can use their capital budgeting tool and process in healthcare to maintain quality of care and help with financial recovery.
The Role of Financial Planning in the Capital Budgeting Process
Decision making is one important factor to long term success for healthcare providers, large and small, but is not the only aspect that hospitals and clinics need to take into account. Healthcare organizations who seek longevity, as well as heightened patient outcomes in the present, have to take financial planning into account. Healthcare organizations who brace for what lies ahead are better prepared for changes as they come. With uncertainty on the road to financial recovery that lies ahead, it is not always easy to determine where funds are best spent, and how capital budgets should be balanced. However, those who are ready for the many possibilities of what the future may hold for the healthcare industry, can better strategically plan their financial future. It will be imperative as organizations plan for the future that the capital budgeting process in healthcare become a critical component of their plan.
Financial security is made possible by those who plan where funds should be spent, while looking for areas where costs can be improved upon. There is typically a great deal of money wasted by healthcare providers who are not continuously looking for areas to increase efficiency. While some funds must be spent religiously on entities that are a must, other times substitute devices, contract analysis, vendor leverage and negotiations, and dozens of other metrics need to be looked at carefully. In these areas, money is often either being spent unnecessarily or there is a lack of input from some sectors that may be overlooked. Without a strategic, data-driven capital budgeting process in healthcare, leaders can often leave much of their budget on the table.
Strata Decision understands how imperative financial planning is to the success of healthcare providers. By taking a closer look at where hospitals, clinics, and healthcare organizations tend to fault in the planning and decision making stages, we have created a powerful system for improving the efficiency of any hospital or clinic. With increased efficiency comes improved patient outcomes, which value as much as our customers do.
Capital Budgeting Analytics
StrataJazz is our comprehensive, cloud-based platform that was created with financial planning, decision support, and continuous cost improvements in mind. The platform incorporates powerful analytics with data driven research, providing healthcare systems across the country with the ability to become more productive in all aspects of their business. Our customers see a vast change in the performance of leaders and employees across the board, reflecting in the positive feedback they receive from patients and their families. Not only do healthcare organizations see the impact of StrataJazz current day, but also in the long run.
One of Strata’s main focuses is on providing healthcare organizations with the opportunity to strategically plan ahead, financially. There are a few main metrics involved with financial planning, which we honed in on when designing our innovative platform. One area that is crucial for healthcare providers to consider is the capital budgeting process in healthcare. A budgeting process allows an organization to better understand which funds can be spent on a certain project or section, and how much spending should be allotted to each. Creating a sound capital budgeting process in healthcare allows for more useful investments and less room for error in purchasing.
StrataJazz incorporates proven methodologies and automated analytics into a hospital or clinic’s existing budget, saving time and money. Our system identifies risks and opportunities based on different budgeting scenarios, resulting in more precise action plans that are will produce intended results. Service line volumes combined with statistics depict the changes that are likely to arise with changes in differing quantities of volume. StrataJazz also gives healthcare providers piece of mind, as the platform sends notifications, integrates security management, and ensures multiple levels of approval so that the hospital’s capital budgeting process can be trusted.
Additionally, StrataJazz reports on the productivity and profit produced by monthly reports, holding those responsible accountable for budget discretions. Managers can now better understand any differences in the budget and actual output, with in depth reporting on performance. StrataJazz displays performance indicators in functional, easy to interpret graphs, forms, and year by year comparisons. Specific targets, like overtime, can be tracked against hours worked, so that departments can be made aware of any inefficiencies that can be improved. Patient volume can also be correlated to staffing, to determine whether or not overtime or call back is a necessity at a given time. If there is an area that needs developing, StrataJazz will make the need clear, allowing executives and leaders to bring facts about what needs improving back to their teams.
Best Practices for Improvements in Time and Efficiency
Without a capital budgeting process in healthcare in place, providers may be spending funds wastefully, not giving any thought to where money is best used. Strata Decision has produced a platform that takes the tough work out of financial planning and decision making for healthcare organizations. When our customers integrate StrataJazz into their healthcare system, the quality in performance and patient care increases dramatically, culminating in more desirable patient outcomes.
Capital distribution and use is a key part of a successful capital budgeting process in healthcare. Capital distribution and use must have definite value, such as apportioning funds for enhanced communications technology. This type of spending will equate to higher value in the near future than building more hospitals and purchasing additional lab analysis or imaging equipment. The reason for this is that better communications will ultimately result in higher quality coordination of patient care, which will alleviate the need for more imaging machines. Capital expenditures by hospitals structures long-term facility operating budgets, so the capital value achieved must last for the long term.
Ongoing hospital capital analysis by inhouse finance personnel is crucial to ensure good rates of ROI for each area of capital distribution throughout the facility’s operating budget. Current trends in modern healthcare are for shifting the care emphasis from individual patients to entire populations for both monetary allotments and budgetary categories. Subsequently, finely tuned monitoring and examination of all areas of financial investment for operational improvement are necessary.
Use of the modern concept and practice of social finance is growing in popularity today, which combines well-informed philanthropy and shrewd spending by management. The intent of implementing this practice is to designate “societal good” as a measurement for assessing the social impact of investing in certain areas of hospital operations. In addition, a reasonable amount of savings should be distributed among budgetary categories and operational projects that are designed to lower costs while improving performance.
In some areas of the country, use of solar power with stand-by electric power generators has proved to cut facility power bills while boosting overall hospital operation levels. Having some nurses, nursing aides, orderlies and other hospital staff work split shifts has shown to reduce the need to hire additional personnel while improving overall productivity and efficiency among workers who are better rested, alert and focused. Funds saved can be used for updating technology, testing and surgical equipment and staff training. By revealing to the public the results of performance vs. targets and goals, these health treatment centers can demonstrate good levels of effectiveness and efficiency in their use of capital.