For healthcare leadership teams, the process of developing capital and operational budgets offers an opportunity to execute overarching organizational goals. In order to successfully align budgets with strategic efforts, leaders must begin by outlining long-term objectives to guide decisions.

Four-Questions.jpgWith constant changes in the healthcare industry and within communities, continuous updates to the budget are inevitable, but this process should coincide with reevaluating the strategy. If a health system’s finance and leadership teams have a path to follow, budget discussions can center on allocating resources effectively to stay on course or pivot to match new priorities.

While there are a considerable number of pressing financial issues to keep in mind when developing and reevaluating a budget, asking the following four questions will introduce key considerations to help identify top-priority programs that support the health system’s strategic goals.

Which community and patient needs are we addressing by dedicating resources to this program?

Effective allocation of resources depends on the unique needs of each community, which means budget priorities will vary depending on the population the facility or health system serves. Prioritizing funding to have sufficient supplies on hand to handle a hurricane, for example, will be more important for facilities that serve Florida communities than those that serve Michigan communities.

Before investing resources into a program, consider the expected benefits and how they will help meet the needs of the community. Oftentimes, the potential impact a program can have on the ability to provide high-quality care to patients will help determine its level of priority.

What outcomes do we expect this program to achieve that will further our health system’s mission?

Whether the focus is on growth, human capital or asset deployment strategies, all investments should tie back to the organization’s mission. When budget decisions are guided by a common purpose, health systems are able to keep their values ingrained within their investments and efforts.

Health systems can stay on track and measure their budget’s success by identifying a program’s expected outcomes that correlate with strategic initiatives over the course of a designated timeframe, such as a fiscal year. Designating markers for success will allow teams to update and improve the budget effectively over time.

How does this program anticipate long-term needs?

To prepare to meet emerging needs, healthcare leadership teams should evaluate available data to determine possible short-term and long-term developments. Then, they can shift their goals and restructure the budget to reflect necessary investments. All plans, strategies and budgets need to be thorough and flexible to accommodate an uncertain future and external challenges such as a natural disaster or disease outbreak.

Health systems must be prepared to adapt to their communities’ changing needs over time in order to continue best serving patients and maintain profitability. Understanding how needs are impacted by the type of community (urban, rural, or suburban), the average age of community members, and social determinants of health (economic stability, access to education, etc.) can help pinpoint unique issues and challenges to address. Depending on these factors, members of the community will have varying risk levels for developing certain conditions, such as members of rural communities having a higher risk for heart disease. Healthcare leaders can rely on this type of data to prioritize programs that will address anticipated needs.

How could we rescope this program to work within our available resources?

Ahead of designating funds to a program, associated costs must be measured against available resources and the potential return on investment. Limited resources often push healthcare teams to find creative ways to problem-solve. Instead of eliminating programs that don’t seem to fit within the budget, consider more efficient ways of utilizing assets to meet the same or similar goals.

Identifying cost-effective solutions by implementing new trends and technology can lessen the project’s impact on the rest of the budget. Continuous facility operations monitoring and analysis can help pinpoint less-than-optimum issues and areas for improvement. Medxcel Energy Building Analytics goes a step further by supplying sites with capital project decision-making data to ensure facilities operate at the peak of performance and efficiency.

To prepare for the future of healthcare, leadership teams need to adapt their budgets and allocate resources to directly align with their patients’ needs and organizational goals. Join the conversation on effective budgeting through initiatives-based planning by tuning in to our podcast episode, “S3 E3: Using Strategy to Shape Your Budget with Dr. Imran Andrabi and Dan Scher.”