;
News

5 Ways a Software Solution Can Help Your Budgeting Process

The hospital Budgeting and Financial Planning process has changed. The resource-intense annual budgeting process, while perhaps still a requirement for most organizations, becomes invalid within the first quarter of the year. The pandemic has only exacerbated this disconnect between the annual budget and reality.

Non-profit hospital operating margins decreased by almost 75% in 2020 per Moody’s Investor Services, while McKinsey & Company found that 43% of 127 CFOs surveyed want to streamline their budget planning process and 65% anticipate more use of rolling forecasts.

What to do?

It is imperative to apply best practice methodologies for your organization with a solution that can pivot to the ever-changing demands of the healthcare landscape. Empower your hospital staff with the tools to help expedite the budgeting and planning processes that include multiple options: bottom-up, top-down, service line, rolling forecasts, and more.

What is the single most important aspect of budgeting?

Fifteen to twenty years ago, in healthcare, the popular answers to this question were different than today. Responses would include terms like: import GL, detailed monthly variance reporting, ease of use, fast reporting, modeling, reliability, predictability, and so on. Today’s responses include terms like: agility, rolling-forecast, zero-based budgeting, activity-based budgeting, and beyond budgeting. Most of today’s responses reflect experiences associated with the pandemic as it has accelerated a shift in priorities and requirement.

There is an answer to this question that has not changed over time. It is a single word answer that encompasses all these features and capabilities. The single most important aspect is “Process”.

The Hospital Planning Process.

It is the creation, implementation, and maintenance of a budget. It involves people sharing and organizing data, information, and ideas to meet objectives that support your organization’s approach to financial planning. Utilization of budgeting software to manage the process is necessary because of the complexity and volume of information.

The Budgeting Software Solution.

Selecting a solution that best supports the nuances of your organization’s process is an important decision. The process is the priority and should guide the decision. Choosing budgeting software is a “best fit” decision, not a “most expensive” or “most complex” decision. Aligning your hospital’s planning process and budgeting software solution will result in a perpetual value gain.

What are 5 ways a budgeting software solution can help your process?

  • Agile – The ability to conduct rolling forecasts is essential in a budgeting solution as standard annual budgets have shown to invalid after the first couple months
  • Efficient – The hospital budget planning process is complex and tedious. Budgeting solutions need to streamline setup, adjustments, calculations, and the approval process to ensure maximum efficiency.
  • Dynamic – Every organization has some nuance in their budget process, and the solution must be able to support your process, whether that be a top-down or bottom-up approach, or a combination.
  • Adaptive – Your solution should easily support what-if modeling and integration of that model into the budget.
  • Comprehensive – A solid solution will enhance your process through capabilities that extend beyond the standard revenue and expenses to include service line volume and cost data.

The Result.

Utilizing an application that is easily implemented, intuitive, agile, and customizable to match the details of strategic plans will support collaborative information sharing. Purchasing and maintaining the software should not be an out-of-control expense of your budget. The price you pay to purchase and maintain software should only be a fraction of a percent of your total operating expenses. Otherwise, the solution becomes part of the problem.

What needs to be done now?

Architect a strategic plan that supports the mission and goals of your organization. Determine what data is required to build, implement and monitor the plan. Select budgeting software with functionality that aligns precisely with your hospital’s planning process. Implement the process and make the budget a reality. Move your organization forward.

Click here to sign up for the launch of Harris Affinity’s Budgeting and Planning Reimagined where we will continue this conversation by exploring in greater detail valuable insights to the budgeting and planning process.