Healthcare Management Unit 3

Need for fiscal (relating to revenue/taxes/monetary aspects) planning

\-helps us define goals and ensure that resources are directed to achieving those goals

Healthcare budgets are…

highly complex tools that help an organization achieve its mission and align with the law

Who sets the “big picture strategy” in regards to fiscal planning and budgeting?

Boards of Directors

Who makes the subsequent decisions that achieve alignment with the root goals set by owners or the board, in regards to fiscal planning and budgeting?

People in leadership positions at the various levels of the organization

The Revenue Cycle

consists of comparing money coming in with money going out

\-made complicated by numerous revenue sources and variations in numbers of patients

Most common healthcare sources of revenue

Operating: Medicare/Medicaid and private insurers

Non-operating: grants or donations

Factors causing unpredictability in revenue flow

\-fluctuation in number of patients served

\-variable payment practices of third-party payers

\-fines and penalties assessed due to billing errors

\-delays in collecting copay and deductibles

\-revenue never received (e.g. uninsured patients)

\-changes in reimbursement system

Major Budget Categories: Capital expenses

equipment

Major Budget Categories: Supplies

consumables (e.g. gloves, needles)

Major Budget Categories: Special Expenses

equipment lease or rental, contractual services, maintenance and repairs, specialty references (books and software), software license fees, staff training and development

Major Budget Categories: Personnel budget

wages, salaries, benefits

Factors in Wage and Salary Calculations

\-minimum wage, laws, state and federal

\-union contract stipulations

\-organizational wage and salary scale

\-cost of living increase

\-area wage and salary consideration

\-merit raise or bonus pay

\-special adjustments (e.g. longivity employment)

What are some of the challenges of implementing a healthcare budget?

\-laws and regulations (minimum wage - federal and state)

\-unexpected circumstances

Who is responsible for developing a budget?

\-owners and board of directors/trustees

\-shared responsibility: everyone is involved and responsible for the budget

Identify the __levels of responsibility__ from the board of trustees through ldle management level

\-development and implementation of the budget is a __shared responsibility__

\-*starts* with the **owners and board of directors/trustees**, *then* **top level management,** and *then* ele management, management, and department heads

A critical need for constant attention to cash flow means that…

Cash is king: enough cash must be kept on hand to cover the amount of outgoing bills and payroll

What is a budget?

a plan expressed in terms of projected activity and proposed expenditures

Requirements/principles of a successful and sound budget

\-sound organizational structure: clear budget responsibility

\-a consistent, defined budget period

\-the development of adequate statistical data

\-a reported system that reflects the organizational structure

\-a uniform code of accounts

\-an audit system for timely explanation of variances is implemented

The budget as a plan is…

a **statement of anticipated results**, a basis for future or continuing plans, and a **statement of intended accomplishments** (it is more than a forecast or a guess)

The budget as a control tool…

**provides accountability and a basis for monitoring the use of resources** and a basis for **comparison of planned vs. actual performance**

What is the budget period?

how long you have your budget set for

\-can be the fiscal (calendar) year, with 12 accounting periods

\-possible in increments of 13, 4-week periods (e.g. payroll)

What are Long range budgets generally associated with?

special projects and/or capital improvements (may cover three to five years, or longer)

Periodic moving budget

As a time period (e.g. 3 or 6 months) is completed, an equal time period is added; it allows the manager to use the most up-to-date projections

Milestone budgeting

Type of budget period that is associated with major initiatives; its budget periods are not uniform and they are tied to the projected timeframe for the major activities of the project

Types of Budgets

\-master, composite

\-departmental

\-revenue and expense

\-personnel and labor

\-production (activity forecast)

\-fixed

\-variable (including the step budget)

An operating budget includes…

\-statistical (or activity) budget

\-expense budget

\-revenue budget

\-capital budget

\-cash budget

A Personal Budget includes…

The position, worked hours, and calculated FTE (full time equivalent)

What is a factor that makes a budget successful?

accurate statistics! to keep track of spending and personnel funds

What are some ways that a budget is used in healthcare?

for long range budgeting

Characteristics of Zero-based or Planning-Programming-Budgeting System (PPBS)

is **planning oriented**

\-past $ allocations are not the basis for new projections

\-cost justification based on various aspects of project

\-have **longer time periods** (as years, or a major project)

\-time consuming: all basic assumptions questioned

\-best used for a one-time, major project

Potential downside of Zero-based or Planning-Programming-Budgeting System (PPBS)

reopening of old conflicts

What is Incremental budgeting?

when the immediate past year(s) budget is increased by some percentage, where ongoing programs, methods, and practices are NOT challenged

Characteristics of incremental budgeting

\-**generally used with annual budget period**

\-an efficient, practical approach when **no major changes anticipated**

\-**object oriented:** categories of personnel, materials, etc.

Potential downside of incremental budgeting

significant changes might be overlooked

What occurs in the **Initial preparation** of the budget process?

\-overall limits are set by top-management

\-department manager reviews and updates assumptions

\-priorities and initiatives for coming year noted

\-detailed projections of income and cost development

The Budget Reference Portfolio

Is a part of the overall management reference portfolio that contains specific information on the budget

Contents of the Budget Reference Portfolio

\-details to use for line-item justifications

\-wage and salary and benefits details

\-directives from Human Resources, Supply Chain manager, etc.

\-list of all equipment: purchase or lease date, maintenance contracts

\-vendor quotes for needed new equipment

What occurs during the **Review and Approval** of a Budget

\-a budget justification review with senior officials

\-compromise and bargaining

\-cost containment review

\-external review by public review boards, if program is subject to such analysis

Budget justification is…

support documentation for specific requests

examples include: equipment specifications, projected training needs, cost comparisons between options, and detailed calculations of dollar amounts

What occurs during the **Implementation** stage of the budget cycle?

\-the approved allocation is activated and budget variances are accounted for

\-there is a periodic (e.g. monthly) reconciliation of planned vs. actual expenses

\-there is a periodic internal and external audit (inspection)

\-a potential for budget cuts or a budget “freeze” now exists and a contingency plan is made

What are the middle manager’s responsibilities in developing a department budget?

to create/maintain the budget reference portfolio (where all of the documentation is kept to stay organized and used as a reference)

What is the difference between incremental budgeting and zero based budgeting?

Zero based budgeting is starting from scratch and incremental budgeting is done by looking at data from the last year

What are the steps of the budget cycle?

initial preparation

review and approval (justification)

implementation

The Budget Cut

reduce or eliminate specific expenditures

\*tied to budget justification information

Steps of the budget cut:

\-identify categories of desired vs. essential expenditures (e.g. optimal level of employee training program vs. necessary patient care supplies)

\-identify categories that cannot be cut (e.g. contracted sign-on bonus; a software license agreement fee)

The primary purpose of __variance analyses__ is to…

obtain **information** with which to **improve financial planning** and to **correct practices that affect expenditures**

Why is variance analysis helpful in budgeting?

The *percentage variance* in the chart is helpful to see *percent* ***correlation between budget and what is actually spent***

(Each supply/category is given an object code in the variance analysis chart and compared)

Functions of budget variance analysis

\-verify the accuracy of posting

\-review specific object codes in terms of over/under budget for the period and the rest of the year

\-review codes where actual costs are under budget (Will money be spent by the end of the year? Can money be shifted to another category? Look for codes reflecting major costs not yet posted.)

What does the audit trail do?

tracks each expenditure from its approved budget entry through its actual expenditure

Things found through the audit trail

\-sign-on bonus not activated

\-early termination of equipment lease

\-dual listing as employee and as contractual agent

\-supply shortages have lead to an increase in the expense of imaging contrast or other supplies

How does budget variance reporting help ensure that budgets remain under control?

It allows for mistakes to be found as well as for more educated decisions to be made in the future in regards to budgeting

Employee development is…

…an **essential management responsibility** that **shapes and enhances employee behavior**. It is an important aspect of **continuous quality improvement** and a part of organization’s policy of internal promotion process.

\-required as part of licensure and accreditation and sometimes included as a labor contract stipulation

\-part of continuity of operations and succession planning and is an important aspect in promoting employee satisfaction

Advances in technology require ___.

continuous training

What is general orientation?

a brief history of the organization and its mission, an identification of the departments and services, and overviews employee policies

Employee policies include…

\-drug, alcohol, and substance abuse considerations

\-sexual harassment

\-nondiscrimination issues

\-conflict of interest prohibitions and gifts

\-dress codes

\-computer security and passwords

\-privacy and condentiality of all aspects of patient care

\-security, fire and safety, and disaster plans

\-infection plans

Departmental Orientation

introduces the department mission and goals; may show an organization chart of the department

overviews the department policies and procedures

productivity and quality improvement monitors

Standards of Conduct and Behavior address what issues?

\-conflict of interest

\-use organizational assets and information

\-referral practices

\-employee privacy

\-patient confidentiality

\-employee relationships

Email and the Internet Disclaimers

**Policy statement:** for business use only

\*reminder - no expectation of privacy

\-clear statement of examples of prohibited use

\-issues stemming from use of social networks in the workplace

Factors in the identification of training needs

compare job requirements with current or new employee skill set; analysis of performance ratings, personnel records (e.g. lateness, absenteeism, safety), short/long term plans, and current trends, laws and standards

Components of training objectives

\-statement of focus

\-level of mastery or acceptable performance

\-any conditions associated with the work tasks

\-a time frame or performance standard for each stage of the training program

Training methods/techniques

job rotation, formal lecture presentation, seminars and conferences, role playing, committee assignments, case studies, mentoring and peer pals, coaching

“Just in time” training is used

in situations where worker is pulled from regular duty, to assist with immediate/urgent need

“just in time” training is…

intensive with highly specific steps to follow

examples: disaster situations, weather-related cancellations

Addressing diversity

\-attentive to diversity in the workforce and in clients

\-acknowledges cultural diversity and cultural proficiency

\-need for visible support, involvement of top management, and repeated and reinforced diversity training

Clinical affilation is often used because it fulfills the mission of many healthcare organizations: _____

research and education

_____ will need to determine the overarching policies for receiving students and management will prepare the department and staff for receiving them.

Organizational leadership

Receiving students not only helps fulfill an organizational mission, but it allows sites … and students …

to see potentially **good future employees**

to identify good **potential employers**

Elements of a clinical affiliation contract:

\-importance of definition of trainee

\-liability insurance is covered by the academic institution

\-intellectual property and copyrights

Tools for the evaluation of outcomes

\-direct before-and-after comparison

\-fact tests

\-performance tests, based on the usual work content

\-evaluation in stages: practice activities → real work activity with continuous supervision → real work activity with decreasing supervision

Resources for training

\-professional association materials

\-distance learning

\-shared learning activities among departments

Adaptation and Motivation is

the need to get work done efficiently and effectively, leads to a need to motivate workers and help them fit the organization, leads to a decrease in need for control and disciplinary action

Fostering integration into the organization includes…

work rules (policies, procedures, customary practices), sanctions (to induce compliance), selection (for organizational fit), training (for technical readiness), identification with organization (enhanced), and the work group (and its reinforcement)

The Bases of Motivation is

questioning and observation of existing work situation (Why are people staying in their current job?), review of cultural expectations concerning work, and studying the work of management theorists

Motivators

sense of accomplishment

acquire new knowledge

work is challenging and interesting

work is meaningful

can staff assume responsibility

are staff involved in determining how the work is done

Dissatisfiers

salary administration is not perceived as fair

there is no potential for promotion or growth

personnel policies do not seem fair to individual and/or relative to other employees

working conditions don’t seem to promote well-being relative to what is expected

communication in all its forms is lacking: responsiveness, regular feedback, confidentiality, organizational plans

Motivational Strategies

\-performance appraisal

\-job rotation, enrichment, and/or enlargement

\-delegation

\-awards and honors

\-career ladders are parallel-path progression system

Motivation in Critical Incidents

\-after negative observations in surveyors’ report

\-after trying to meet highly restrictive requirements

\-during budget cuts and freezes

Appreciative inquiry is an approach to …

organizational change, development, and assessment

What does appreciative inquiry do?

identifies what is working well by actively recalling successes, affirms the best of the individual and group experiences, build on the positive outcomes to envision continued improvement

Model for analyzing organizational conflict includes

\-the basic conflict: overt, hidden agenda; source of conflict

\-the participants: immediate, secondary, audience

\-provision of arena

\-development of rules

\-strategies for dealing with the conflict

Sources of Conflict

\-the nature of the organization

\-organizational climate and structure

\-individual vs. organizational needs

\-solutions to previous conflicts

Subcategories of The Basic Conflict

\-overt level (e.g. habitual lateness or absenteeism)

\-the hidden agenda (e.g. growing employee resistance to managerial authority)

\-the source of conflict (e.g. human needs vs. organizational need/organizational structure)

Subcategories of the Participants (in the conflict model)

\-immediate and primary participants (e.g. unit supervisor and employee)

\-secondary participants (e.g. chief of service, personnel director)

\-the audience (e.g. other employees with similar problems with work schedule)

The Conflict Model: The Provision of an Arena (example)

grievance procedure

The Conflict Model: Development of Rules (example)

work rules related to attendance, procedures for filing grievances

The Conflict Model: Strategies for dealing with organization conflict

limitation to unit members

The Conflict Model Applied to Whistleblower action

basic conflict: e.g. concern about potential fraud

participants: the whistleblower(s); internal chain of command; designated Human Resource manager

arena: policies and procedures outlining process

rules: confidentiality, no retaliation, no false accusations

strategies: limit conflict by using clear-cut policies and procedures

Collective bargaining agrement (union contract) will…

address all or most of the elements listed in the model agreement; in many instances, contractual conditions will limit decision-making flexibility, essentially providing “pre-made” decisions

Communication requires…

**skill on** both **individual** and **group** **level**, awareness of **increasing complexity as the number if people involved is increases**, and **conscious effort** to make communication effective

Definitions of Communication

It is the **exchange of ideas, thoughts, or emotions** between/among two or more people. It is the **transfer of meaning** and the development of **mutual understanding** and the process of **exchanging information** in such a way that **mutual understanding** is achieved between two or more people.

Communication may be the most … , …, and … skill

difficult, underrated, and overlooked

Verbal (oral) and nonverbal communication are ___.

inseparable

Verbal communication…

oral, spoken communication

Nonverbal communication is…

body language; can be both **intentional** (conscious) and **spontaneous** (unconscious)

Examples of a manager’s day-to-day communications

\-receiving/delivering orders, instructions, and directions from above/employees

\-coaching, counseling, disciplining employees

\-interviewing/selecting candidates for employment

\-relating to managers and employees and over departments

\-relating to patients, visitors, clients, customers, etc.

\-responding to questions and requires

Face-to-face communication

STRONGEST MEANS OF COMMUNICATION

involved parties hear the words, perceive vocal tones, observe facial expressions/body language, and **have the opportunity for immediate feedback and response**

Communication via Telephone

\-involved parties hear the words, perceive vocal tones, and have the opportunity for immediate feedback and response

\-using traditional tools, parties lack exposure to facial expressions and body language

\-video calls improve the ability to receive nonverbal communications

\-provides the opportunity for immediate feedback and response

Communication via voicemail

\
\-Facilitates speed of initial transmission and conveys information without having to connect directly.

\-Recipient can hear the words and perceive vocal tones, but facial expressions and body language are missing.

\-Timing of feedback entirely dependent on the recipient.

Communication via Letters and Memos

\-**only the words are available to convey meaning**

\-feedback and response are generally the **slowest of all means**

\-**highly dependent on accuracy in choice of words and phrases**

\-provides a **written record**

*have not diminished with the use of technology as the world has evolved*

Communication via Email and Texts

\-Only the words are available to convey the meaning.

\-Feedback and response can range from immediate to never.

\-Most highly dependent on accuracy in choice of words and phrases.

\-Can provide a written record if desired.

\-Editing and rewriting ate still necessary