ON TARGETPreparing Departmental Clinical Budgets

CLINICAL BUDGET PRESENTATION

Learning ObjectivesDiscussion 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 BudgetingDISCUSSION 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 BudgetDISCUSSION ITEM TWO

How to Develop a BudgetInformation 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 ApproachesDISCUSSION ITEM THREE

Types of Budgeting ApproachesIncremental 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 ApproachesDISCUSSION ITEM FOUR

Revenue Budget From Scratch

Projecting Physician Charges Methodology

CPT – Codes with explanations and timesExample 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 TemplateExample 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 Name3. Sort list by Account number4. Sort list by Department Name5. Sort list by Net Revenue Amount6. Sort list by Total Expenditure Amount7. Sort list by Net Income Amount8. Name of the Unit 9. Account number10. Name of Department11. Quick access to reports related to a department

• Budget Report• Income Statement

Practice Plan Budget – Clinical Revenue

1. Tab for Clinical Revenue screen 12. Office Charges2. Tab for Other Revenue screen 13. Hospital Visits3. Tab for Income Statement screen 14. Hospital Rate4. Click +Revenue to add a revenue line 15. Hospital Charge5. Doctor’s Name 16. Contract Revenue6. Comment 17. Drug/Product Sales7. Collection Rate Office 18. Save Button8. Collection Rate Hospital9. Collection Rate Contract10. Office Rate11. Office Visits

Practice Plan Budget – Clinical Revenue

1. Sort by Doctor Name2 – 11 Summary of data entered by physician12. Edit the physician revenue line13. Deletes the revenue line

Practice Plan Budget – Other Revenue

1. Click on Other Revenue tab2. Click +Other Revenue to add a revenue code3. Select Revenue code from drop down menu

Practice Plan Budget – Income Statement

1. Click on Income Statement tab2. Click on +Expenditure to add an Expenditure code3. Select expenditure code from drop down menu

Salary – Practice Plan employees

1. Select Salary from top menu options2. Select tab for Practice Plan to load list of Practice Plan employees

Salary – Practice Plan employeesAdd/Edit Employee Info

Salary – Add/Edit Employee Info1. Select the Home Department/Unit2. First Name3. Last Name4. Hire Date5. Employee number – must be 9 characters6. Position number – must be 5 digit position number7. Comment section – 8. Select correct Practice Plan Job Title9. Employee Type – select PP (Practice Plan)10. Position Type11. Contract Type12. Rank – does not apply to PP employees13. Specialty – not required14. Select Tenure option15. Supervisor name16. Base salary17. Contract Salary – includes: time period budgeted; annual cell phone allowance; annual stipend18. Pay rate – includes monthly stipend and cell phone allowance19. Annual FTE20. Grade/Step - applies to Classified21. Merit Step - default to 022. Seniority Date - default to 1/1/1901 for all other employee types23. Annual Stipend section: include BOTH annual stipend and annual cell phone allowance amount24. Enter FICA code – select Y25. Health Insurance – select appropriate Health Insurance plan for employee26. Retirement Plan – select 527. SAVE/Update all entered data

Salary – Add Pay lines

1. Click +Payline to add a pay line2. 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 FTE7. Acct Amount - Enter the monthly amount to be paid on that account8. Comment – enter comments if you wish9. Save – click to save pay line information10. Edit or Delete an account line

Salary – Data Checks

1. Verify the Total FTE for all pay lines equal the FTE in the employee information2. 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

ConclusionBudgets 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 QuinnEmail: Kquinn@medicine.nevada.edu

Phone: 775-784-6214