The Budget Process 2025
Page 1: Introduction to Fiscal Management
Overview of Fiscal Management Process
Importance of budgeting in financial operations
Key elements related to financial planning and reporting
Page 2: Fiscal Responsibility
Essential Knowledge for Managers:
Basic principles of finance and reporting
Understanding operational budgets
Analyzing financial statements
Basic economic concepts (supply and demand)
Handling contracts
Utilizing databases and information systems
Page 3: Budgeting
Definition: Process of preparing a detailed statement of expected financial results for a specific future time period.
Components include:
Estimating revenue and expenses
Determining staffing levels (quantity and mix)
Productivity assessment per unit cost
Page 4: Operational Budget
Planned estimate of revenue and expenditures related to daily operations.
Managed by department/clinic managers.
Importance of adhering to the operational budget.
Page 5: Budget Terminology
Fiscal Year (FY): A 12-month period; not always aligning with the calendar year.
Cost Center: A department/unit responsible for its costs; e.g., Physical Therapy, Radiology.
Line Item: Specific cost within a budget; examples include Rent, Supplies, Travel.
Page 6: Revenue
Definition: Money received for services provided or goods sold.
Page 7: Revenue Breakdown in Physical Therapy
Key payments models include:
Fee schedule (cost per unit billed)
Per visit (cash-based payment)
Per case (payment for one year)
Important to anticipate visit volume to project revenue.
Page 8: Revenue Considerations
Recognizes that billed amounts differ from actual payments due to:
Contractual agreements
Payer mix in insurance models
Need to understand payer mix to accurately project revenue and identify profitable services.
Page 9: Payor Case Mix Example
Overview of PT Clinic profitability based on payer mix.
Specific payer percentages and associated revenues are detailed, including:
BCBS, Medicaid, Medicare, Self-Pay, etc.
Assessment of net revenue, variable costs, collection rates, and contribution margins.
Page 10: Expenses
Definition: Money paid out for goods, services, and operations.
Page 11: Expense Categories
Direct Expenses: Directly related to producing goods/services (e.g., supplies, salaries).
Indirect Expenses: Necessary operational costs that are not directly related to production; often allocated percentages (e.g. rent, utilities).
Page 12: Expense Classification
Variable Expenses: Costs fluctuating with service volume (e.g., supplies).
Fixed Expenses: Constant costs irrespective of service volume (e.g., rent).
Page 13: Capital Expenses
Definition: Expenses for high-cost items (>$2,500); typically long lifespan equipment (e.g., machines).
Tax implications due to asset classification and depreciation considerations.
Page 14: Costs of Doing Business
Importance of knowing:
Cost per visit
Cost per unit billed
Understanding costs critical for negotiating reimbursement rates.
Page 15: Expenses Summary
Salaries and benefits are major direct operational budget components.
Financial viability relies on effective expense management and control.
Evaluating pros and cons of salaried versus hourly staff.
Page 16: Budgeting Examples
Examples include:
Budget workbook
Profit & Loss statements.
Page 17: Determining Staffing Needs
Importance of assessing staffing levels for operational efficiency.
Page 18: Staffing Terminology
FTE (Full-time Equivalent): Measurement of workload.
1.0 FTE = full-time employee; 0.50 FTE = half-time employee.
Page 19: Staffing Example - FTE Calculation
Illustration of staffing based on hours worked:
Total hours and derived FTE calculations:
Total of 10 employees results in 8.2 FTE.
Page 20: Yearly Productivity Per FTE Calculation
Steps to calculate productivity include:
Identify working days/hours and paid time off.
Calculate productive days and multiply by units produced.
Page 21: Productivity Example
Calculation breakdown indicating:
241 productive days/year
9 patients/day results in 2,169 visits/year, equating to 6,507 units/year.
Page 22: Projecting Staffing Needs
Formula to determine staff required:
Divide projected yearly treatment units by yearly productivity per FTE.
Page 23: Staffing Projection Scenario
Scenario: To cover expenses with 9,500 units,
Various staffing combinations to meet treatment responsibilities.
Page 24: Cost Per Unit of Service Calculation
Formula:
Total Expenses / Total Units Produced = Cost per Unit.
Includes all variable and fixed costs.
Page 25: Implications for Staff
Assessment areas include:
Productivity and efficiency.
Patient flow and service quality.
Accuracy in billing and effective scheduling.
Page 26: Starting a Business or Department Management Questions
Considerations include:
Market for services
Startup costs and funding sources
per unit cost considerations
Productivity standards and operational budget projections.