Budgets

Budgets are a financial plan to help keep the business on track with its financial goals. Four of the budget formats discussed in the chapter includes: line-item, program, performance and Entrepreneurial budgeting. Each one has its own purpose and function. Magnolia Healthcare (MHC), United Healthcare, and Medicaid are the three companies/agency’s budgets researched. Their choice of format varies according to the factors that are being stressed in a given political and managerial context. (Smith & Lynch, 2004) Medicaid budget format interest me most.

Magnolia Healthcare is a managed care company. It utilizes the line-item budget format. This type of budget format focuses more on accountability. It is concern with what the company spends its money on and not what the company should accomplish with its money. This budget control employees closely, but does not reflect the manger’s ability to direct and achieve program goals. MHC has approximate one hundred ten line items. It employs over 221,000 people and it service over eighty-one thousand members. The overall spending is normally over budget per budget year due to contract requirements imposed by the Contractor.

United Health Care is also a managed care company and one of Magnolia Healthcare’s

Competitor. They employ a line-item budget format also which is mainly concern with accountability. This budget serves the company well for exercising control. It dictates that the company spend it money on only acceptable expenditures. This budget does not help make better rational decisions. The company service approximately sixty-five thousand members and employs approximately one hundred and fifty thousand people. Whether this type budget format is the best depends on the analyst’s desired decision-making environment. (Smith & Lynch, 2004)

Mississippi Medicaid is a jointly funded, state and federal government program that provides health care coverage for eligible,...