Health Care Business Analysis
Kelly Reilly
HCS/557
May 18th, 2015
Benjamin Ovando

Health Care Business Analysis
Budgeting is an extremely important task that takes time and a lot of input from many facets of a work environment. Many budgets are like forecasts as they may not be what actually happens throughout the year but it gives management a good idea of what goals need to be set and how to maintain their programs. Budgets also help in making decisions on how you run your business and in a health care setting that includes budgeting for staff salaries. The following analysis discusses how a CFO might go about budgeting for a hospital, such as the Patton-Fuller Community Hospital, assessing the departmental demands as well as community needs.
As a CFO you have to make some tough decisions in regards to where the belt might need to be tightened or if larger purchases need to be made in order to maintain the quality of care. The decision making process is an opportunity to set goals and decide if investments will be worth the cost or cause a financial downfall for the organization. “Among the fundamental concepts basic to the managerial decision process is the incremental concept—only changes in cash flow are important in evaluating decision alternatives.” (Owens, 1980)
Variance analysis is basically weighing risk to outcome and in this case the risk would be whether or not it would benefit the hospital long term to increase the nurse’s rate of pay. A CFO would have to think in terms of quality versus quantity as increasing salaries might cause the operating budget not to balance but in the long term this could be of great benefit to the hospital. Higher paid staff could equal higher quality of care and in turn solidify the hospital of having a high quality standard above all else. This could also mean retention of staff especially good staff that