Zero Based Budgeting

Zero Based Budgeting: Windsor Regional Hospital

MHA 612: Financial and Managerial Accounting

Dr. Gary Hanney

October 13, 2014

Zero Based Budgeting: Windsor Regional Hospital

In today’s health care environment, health care organizations face many new challenges and concerns being driving by regulatory, reimbursement, quality, safety, and technology. Zero based budgeting is a process of planning and decision making that allows health care organizations to improve their performance by rethinking what is needed to deliver the highest quality of care without thinking about previous assumptions and focus on what is essential for cash flow, profits and the ability to run a successful business. Of course, there is always trade-off, with zero based budgeting it takes time to rethink your operations from the ground up. This paper will discuss zero based budgeting and as a consultant for Windsor Memorial Hospital recommendations for implementation will be provided to the Hospital Board of Directors for consideration. As the health care environment continues to grow in complexity and place a variety of challenges and burdens on organizations, health care administrators must have a clear understanding of how zero based budgeting techniques can be utilized to improve organizational performance in the areas of revenue enhancement, administrative and support services cost reduction, program consolidation cost reduction and program efficiencies to ensure financial viability of the organization.

In health care at one time or another, administrators are asked the question “Why are we in business?” You may get different answers depending on who you ask, but let’s face it profits are our blood line. According to Ross (2013) profits provide the cash flow in order to meet payroll, invest in capital and pay the bills. Zero based budgeting is a technique that can be utilized to improve the performance of any health care organization by...