zero-based budgeting
Zero-Based Budgeting
MHA 612
Dr. Kathy Wood
October 14th, 2013 Zero-Based Budgeting
Introduction
As the zero-based budget consultant for Windsor Memorial Hospital I will make recommendations to the Board of Directors on how to create a solid plan to reduce costs and increase productivity. This will be a team based solution. In order to sustain the plan for years to come, it will require continued effort and a commitment from all current and future employees.
Zero-based budgeting is one of the most efficient ways to allocate resources. One of the main reasons people turn to this particular type of budgeting is because when managers are forced to account for each line item, they are usually able to find more creative ways to utilize limited resources. Even though working through a zero-based budget will involve more time, the efforts with be worth it because in the long run it will pay off immensely.
Over the last ten years Windsor Regional Hospital has grown exponentially but this increase has also increased their operational budget by 300 %. As a result they accumulated so much debt that their working capital deficit stands $55 million dollars (Windsor, 2008). Considering the effects that the increase in demand and a reduction in supply have had, it is now time to take the necessary steps to turn things around.
Without drastic measures, the hospital may soon be forced to close its doors. The closing of a hospital this size would cause a negative impact on the town and the people in the community. In order to be part of the solution I will be recommending the steps needed to assist the organization on making the decisions not only to make a full comeback but also to be able to continue their success for many years to come.
Recommendations and Justifications My recommendations along with the reasoning behind it are as follows:
1. Make every dollar count
We will account for every dollar. For every dollar spent and/or gained we
MHA 612
Dr. Kathy Wood
October 14th, 2013 Zero-Based Budgeting
Introduction
As the zero-based budget consultant for Windsor Memorial Hospital I will make recommendations to the Board of Directors on how to create a solid plan to reduce costs and increase productivity. This will be a team based solution. In order to sustain the plan for years to come, it will require continued effort and a commitment from all current and future employees.
Zero-based budgeting is one of the most efficient ways to allocate resources. One of the main reasons people turn to this particular type of budgeting is because when managers are forced to account for each line item, they are usually able to find more creative ways to utilize limited resources. Even though working through a zero-based budget will involve more time, the efforts with be worth it because in the long run it will pay off immensely.
Over the last ten years Windsor Regional Hospital has grown exponentially but this increase has also increased their operational budget by 300 %. As a result they accumulated so much debt that their working capital deficit stands $55 million dollars (Windsor, 2008). Considering the effects that the increase in demand and a reduction in supply have had, it is now time to take the necessary steps to turn things around.
Without drastic measures, the hospital may soon be forced to close its doors. The closing of a hospital this size would cause a negative impact on the town and the people in the community. In order to be part of the solution I will be recommending the steps needed to assist the organization on making the decisions not only to make a full comeback but also to be able to continue their success for many years to come.
Recommendations and Justifications My recommendations along with the reasoning behind it are as follows:
1. Make every dollar count
We will account for every dollar. For every dollar spent and/or gained we
References: Lynch, P. K. (2010). Budgeting-an innovative approach. Biomedical Instrumentation & Technology, 44(3), 188. Retrieved from http://search.proquest.com/docview/366815669?accountid=32521 Peacock, S. J., Mitton, C., Ruta, D., & Donaldson, C. (2010). Priority setting in healthcare: Towards guidelines for the program budgeting and marginal analysis framework. Expert Review of Pharmacoeconomics & Outcomes Research, 10(5), 539-52. doi:http://dx.doi.org/10.1586/erp.10.66 Windsor Regional Hospital. (2008). Zero Based Budgeting, Windsor Regional Hospital, Retrieved from http://www.wrh.on.ca/Site_Published/wrh_internet/RichText.aspx?Body.QueryId.Id=18389&LeftNav.QueryId.Categories=267