F BUDGET Cancer Center Emerging Leader Program Ely Kuo-Vasher, MBA Finance Director.
-
Upload
haleigh-mcgrath -
Category
Documents
-
view
217 -
download
0
Transcript of F BUDGET Cancer Center Emerging Leader Program Ely Kuo-Vasher, MBA Finance Director.
ANATOMY OF A BUDGET
Cancer Center Emerging Leader ProgramEly Kuo-Vasher, MBA
Finance Director
Budget
Definition - from French bougette or purse-a list of all planned revenue and expenses
Used as a tool to assist in making operating decisions and provides a framework for future growth
Assists in setting expectations, targets and goals
Used to forecast or model based on strategies, events, plan or projects
Budget – Nuts & Bolts
Revenue/Income Expenses Margin Metrics
Revenue/Income
Definition – income or expected income from activities related to an organization including goods and services
Patient Services Research Investments Donations Other income
Gross vs Net Revenue/Income
Gross is total revenue/income generated.Net is the gross revenue/income less
taxes, allowances and deductions.
Net pay is gross income less taxes Net revenue is patient charges less
insurance allowance/reimbursement and bad debt
Research fund less indirect costs
Expenses
Definition – outflow of money to pay for an item or service, or for a category of costs
Payroll Benefits Supplies Other Operating Building
Expenses
Direct vs Indirect
Direct are expenses attributable to providing or producing specific product/service
Indirect/overhead are fixed or general expenses, examples include utilities, depreciation, management costs
Margin – Profit/Loss
Net Revenue/Income Expense = Margin -
How do you build a budget
Revenue
Define activity – patients, grants, gifts Breakdown of specific activity Develop revenue/income per activity, total gross
revenue/income Include growth/increase projections and assumptions Calculate net income/revenue based on projected
collection
How do you build a budget
Expenses
Develop cost/expense per activity Breakdown into specific expense categories Include growth projections/assumptions and inflation Calculate the total cost/expense
How do you build a budget
Time frame will vary depending on the type of budget
Operating – 1 year New programs/projects – 1 to 3years
Budget Review
Review actual versus budget variances periodically, monthly, quarterly, yearly
Use year end actual to plan for the next year
Review processes or strategies to increase income/revenue or decrease expenses
Budget vs Forecast
Budget is a static plan, does not change throughout the plan period until the next period.
Forecast is an updated plan and a prediction of performance. Supports flexibility to incorporate changes that may occur throughout the plan period.
Budget Cycle
Forecast
Metrics
“If you can’t measure it, you can’t manage it”
Develop measurements to evaluate performance, key performance indicators are used to develop targets/objects
Metrics are used to assess current financial position Metrics are ratios that present financial information and
makes it easier to compare/benchmark Metrics can be a combination of operational and financial
indicators Represented by ratios, example: Operating Margin = Net Income Sales Productivity = Sales Revenue FTE
Questions?
Metric Exercise