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Spreading Budget Involvement

Clint Maun, CSP

Spreading Budget Involvement. What does that mean?

In the past, a healthcare institution employing only a handful of people who understood the organization’s financial issues was deemed to have a well-run business. The clearly-defined hierarchical and compartmentalized workforce structure was the expected mode of operation. Not everyone needed to know-nor were they expected to know-about reimbursement guidelines, revenue sources, staffing expenditures, allowable costs, billing procedures, money collection, variance reports, or profit and loss statements.

Such a situation no longer serves to provide the highest quality healthcare services for the best price. If you are not involving co-workers in an open-book management approach regarding finances, you will be missing real bottom-line benefits. Bringing employees into "corporate and/or departmental planning . . . can generate increased profits and improved employee satisfaction, at virtually no cost to an organization" ("Involving Employees").

It’s vitally important to remember that "employees are often the first people to turn up useful information" (MSN ’Your Business’). The front-line workers whose everyday work world involves dealing directly with situations that reflect budgetary issues can most easily spot existing problems. But for them to formulate and offer useful information, they need to see the whole picture clearly, and that means having knowledge about the organization’s financial issues and budgetary process in relation to providing healthcare for the customer.

At minimum, it’s necessary to involve workers in the two most important financial areas that affect every healthcare organization: revenue and expense. Revenue, of course, is directly related to volume, occupancy, and the number of people we need to serve on a daily or weekly basis to remain financially sound. Every employee-front-line, ancillary, or administrative-needs to understand this piece of the bigger financial picture.

Workers must also comprehend the major expense associated with generating revenue: labor costs. Involving co-workers in understanding and dealing with ratios of labor costs to revenue is critical for success in today’s healthcare climate. Labor costs associated with meeting the needs of the revenue source (i.e., patients) require flexibility to match those needs. If those fluctuating needs are not measured frequently-preferably daily, but at least weekly-success will elude you. Adjusting this month’s and next month’s budgets based on last month’s results-especially if those numbers don’t come out until the 15th or 20th of this month-rarely proves useful because the needed flexibility does not exist.

The traditional "top-down management style is slow and inflexible . . . . Survival in today’s time-starved, customer driven market requires rapid response . . . to [meet] the ever-changing customer needs." And that needed flexibility is greatly enhanced through employee involvement ("Employee Involvement").

Staffing issues are always a concern. If the cost of having the right number of staff to serve the customers is disproportionately high for the output in labor, something needs to be adjusted. Suppose you need seven people to serve a certain number of customers, but in staffing dollars spent, you’re paying for twelve people worth of labor. You may be incurring additional costs such as sick pay (sometimes for people who aren’t sick), overtime wages for someone to cover for the sick person, agency fees, and vacation costs. If the employees involved understand these dollar issues, can they make sound decisions to help manage and minimize these problems? Businesses have found that "by sharing the company’s numbers and teaching employees how to make their own decisions," implementing a "bottom-up" approach to budgeting can indeed cut costs significantly (Gruner).

The organization must, in the 21st century, share information and involve the co-workers in financial concerns. If workers in healthcare today can manage their own financial scenarios-"I’ve got twenty dollars ’til payday to buy food; I’ve got six bucks to go out and have a drink tonight; I got fifteen dollars to put gas in my car"-they can understand and be part of managing budget concerns at work. They need be involved in issues such as expense reduction plans, cost savings teams, management of wasteful situations, and supply cost problems as they relate to the labor costs associated with generating revenue.

"The trust of the workforce is earned by involving employees in the . . . process" (U.S. Office of Personnel Management). Through employee involvement, workers "become more creative problem solvers." Their participation also improves morale and motivation because they clearly understand they are valued and are being heard. And because they are involved, they refine their work strategies and take on a proactive mind-set, thereby bringing about positive changes in the corporate culture ("Case Study").

To get everyone working in concert to control unnecessary costs, all workers need to be brought in and educated in the financial issues inherent in providing quality healthcare. In today’s healthcare climate, these matters can no longer remain the concern solely of a handful of people in the financial department.

Works Cited

"Case Study: Consolidated Edison -- Process Improvement." 2003. Mindjet Visual
Thinking. June 2004.

"Employee Involvement -- A vital Aspect of Total Quality Management (Part 1)." 2003.
C&K Management Limited.

Gruner, Stephanie. "The Employee-Run-Budget Worksheet." 2004 (originally appeared in Inc. magazine in February 1995). Inc.com. June 2004.

"Involving Employees in the Planning Process." 2003. The Business Research Lab.
June 2004. http://www.busreslab.com/policies/goodpol5.htm

"MSN ’Your Business’ small business advice -- Tip Archieve: Fiscal Year." 2004.
Microsoft Corporation. June 2004.

United States Office of Personnel Management. Workforce Planning Evaluation Keys:
Seven Keys to Evaluating the Workforce Planning Effort. January 2003. June 2004.