ON TARGET
Preparing Departmental Clinical Budgets
CLINICAL BUDGET PRESENTATION
Learning Objectives
Discussion Items
• Discussion Item One – Understanding Budgeting
• Discussion Item Two – How to Budget
• Discussion Item Three – Types of Budgeting Approaches
• Discussion Item Four – Applying Budget Approaches
• Discussion Item Five – Inputting Department data into the Budget
Module
• Discussion Item Six – Capital Budget Process/Budget Projections
Understanding Budgeting
DISCUSSION ITEM ONE
• What is a Budget?
• It is a list of all Planned Expenses & Revenue.
• A Budget is an organizational plan stated in monetary terms
• What is budgeting?
• The process of making the list is Budgeting
• The purpose of Budgeting is to provide a
forecast of revenues and expenditures
• This is a model of how a business might perform financially speaking
if certain strategies, events and plans are carried out
How To Develop A Budget
DISCUSSION ITEM TWO
How to Develop a Budget
Information Gathering
• Good goals are specific, measurable, realistic and
timely.
• Specific goals are clearly defined. “Make money” is
not a specific goal. “Make 100K profit” is specific.
• Set measurable goals defined in terms where you
can easily see whether you have attained them, and
check your progress. “increase clinic time” is not
measurable” “Increase clinic time to 55 Percent” is.
• Realistic goals are things you can reasonably reach
given the resources and realities of your department
situation. “adding 20 plastic surgeons” is not
realistic” “adding 2” is.
• Timely goals are set with a specific timeline for
progress. Without a timeline; It’s difficult to gauge
how much money to put into your budget for any
given quarter.
Review any existing financial
documents for our department
• Take time to review documents from your
department as it is today, including your income
statement, outstanding debts, assets, liabilities
and a projections of immediate cash flow. Pull
out any current budgets you use for your
department, as they can serve as a starting point
for your new budget
• What are the specific costs associated with each
of your goals. This is where you would break
down each goal into an annual tangible amount
of money, and then break it down by month.
• Budget estimation is a complex practice, with
potentially disastrous consequences if you guess
wrong.
Types Of Budget Approaches
DISCUSSION ITEM THREE
Types of Budgeting Approaches
Incremental Budgeting
Incremental budgeting is the
simple approach to building a
budget. You start your budget with
what you did last year and amend
it for the changes that you expect
for this year. Administrators like
this approach because it is quick
and easy. However, it can be that
last year’s workload or activity is
actually quite different from this
year’s
An example of a Incremental
budgeting mistake
An Administrator estimates the
budget for building maintenance by
reviewing the expenditure from the
previous year. What he/she misses
is the fact that a new contract with
a different supplier at a different
price has been awarded, and that
a different program of maintenance
has been planned for the year
Applying Budget Approaches
DISCUSSION ITEM FOUR
Revenue Budget From Scratch
Projecting Physician Charges
Methodology
CPT – Codes with explanations and times
Example of gathering data to build your physician revenue template
90801 Psych Diagnostic Interview Exam, no time listed in CPT manual
90804 20-30 mins
90805 w/ Medical Eval and Mgt. 20-30 mins
90806 45-60 mins
90807 w/ Medical Eval and Mgt. 45-60 mins
90808 75-80 mins
90809 w/ Medical Eval and Mgt. 75-80 mins
90862 CPT manual does not list time but per psych encounter 20-30 mins
90846 Family Psychotherapy w/o pt, no time listed in CPT manual
90847 Family Psychotherapy w/ pt, no time listed in CPT manual
90870 Electroconvulsive therapy
Regression Analysis to Project Budget Line Items
Contract Template
Example of gathering contract information by physician to later input
into budget module
Inputting Department Data into the Budget Module
DISCUSSION ITEM FIVE
Practice Plan Budget
1. Select PP Budget from top menu
2. Sort list by Unit Name
3. Sort list by Account number
4. Sort list by Department Name
5. Sort list by Net Revenue Amount
6. Sort list by Total Expenditure Amount
7. Sort list by Net Income Amount
8. Name of the Unit
9. Account number
10. Name of Department
11. Quick access to reports related to a department
• Budget Report
• Income Statement
Practice Plan Budget – Clinical Revenue
1. Tab for Clinical Revenue screen
2. Tab for Other Revenue screen
3. Tab for Income Statement screen
4. Click +Revenue to add a revenue line
5. Doctor’s Name
6. Comment
7. Collection Rate Office
8. Collection Rate Hospital
9. Collection Rate Contract
10. Office Rate
11. Office Visits
12. Office Charges
13. Hospital Visits
14. Hospital Rate
15. Hospital Charge
16. Contract Revenue
17. Drug/Product Sales
18. Save Button
Practice Plan Budget – Clinical Revenue
1. Sort by Doctor Name
2 – 11 Summary of data entered by physician
12. Edit the physician revenue line
13. Deletes the revenue line
Practice Plan Budget – Other Revenue
1. Click on Other Revenue tab
2. Click +Other Revenue to add a revenue code
3. Select Revenue code from drop down menu
Practice Plan Budget – Income Statement
1. Click on Income Statement tab
2. Click on +Expenditure to add an Expenditure code
3. Select expenditure code from drop down menu
Salary – Practice Plan employees
1. Select Salary from top menu options
2. Select tab for Practice Plan to load list of Practice Plan employees
Salary – Practice Plan employees
Add/Edit Employee Info
Salary – Add/Edit Employee Info
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Select the Home Department/Unit
First Name
Last Name
Hire Date
Employee number – must be 9 characters
Position number – must be 5 digit position number
Comment section –
Select correct Practice Plan Job Title
Employee Type – select PP (Practice Plan)
Position Type
Contract Type
Rank – does not apply to PP employees
Specialty – not required
Select Tenure option
Supervisor name
Base salary
Contract Salary – includes: time period budgeted; annual cell phone allowance; annual stipend
Pay rate – includes monthly stipend and cell phone allowance
Annual FTE
Grade/Step - applies to Classified
Merit Step - default to 0
Seniority Date - default to 1/1/1901 for all other employee types
Annual Stipend section: include BOTH annual stipend and annual cell phone allowance amount
Enter FICA code – select Y
Health Insurance – select appropriate Health Insurance plan for employee
Retirement Plan – select 5
SAVE/Update all entered data
Salary – Add Pay lines
1. Click +Payline to add a pay line
2. Account number – Enter the 11 digit account number – no dashes (xxxxxxxxxxx)
3. Earn Code – Select appropriate Earnings code for account line
Note: Only the Earning codes applicable to the Employee Type will appear in the drop-down
4. Start Date – Enter the account line start date (mm/dd/yyyy)
5. Stop Date – Enter the account line end date (mm/dd/yyyy)
6. FTE – Enter the account line FTE
7. Acct Amount - Enter the monthly amount to be paid on that account
8. Comment – enter comments if you wish
9. Save – click to save pay line information
10. Edit or Delete an account line
Salary – Data Checks
1. Verify the Total FTE for all pay lines equal the FTE in the employee information
2. The total monthly amount for all pay lines must EXACTLY equal the employee pay rate.
3. The total annual amount must be within .12 cents of the employee Contract Amount.
Earning Codes by Employee Type
• PP – Practice Plan
– PM1: Practice NFPRP
– PM2: Practice NFPRP Hourly
– PN1: Practice North
– PN2: Practice North Hourly
– PS1: Practice South
– PS2: Practice South Hourly
Health Insurance Plans
• Practice Plan employees {PP}
– HMO: Employee only
– HMO1: Employee + 1 dependent
– HMO2: Employee + 2 or more dependents
– PPO: Employee only
– PPO1: Employee + 1 dependent
– PPO2: Employee + 2 or more dependents
Conclusion
Budgets should be understandable and attainable. Flexibility and innovation is
needed to allow for unexpected contingencies.
Budgeting enhances flexibility through the planning process because alternative
courses of action are considered in advance rather than forcing less-informed
decisions to be made on the spot. As one factor changes, other factors within the
budget will also change. Internal factors are controllable by the departments
whereas external factors usually cannot be controlled.
Budgeting is planning for a result and controlling to accomplish that result.
Budgeting is a tool, and its success depends on the effectiveness to which it is
used by staff. A department may fail from sloppy or incomplete budgeting.
For any questions or concerns on Clinical Budgeting contact:
Kimberli Quinn
Email: Kquinn@medicine.nevada.edu
Phone: 775-784-6214