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article – My Assignment Tutor

The article I found was based on hospitals implementing new ways to budget operations for their organization in response to the Covid-19 pandemic. The hospitals suffered from financial planning disruptions due to the pandemic. During the pandemic voluntary and involuntary elective surgeries and procedures disrupted the revenue streams for many organizations (Eramo, 2021). A survey was conducted in October of 2020, by 132 healthcare finance executives, which showed that “21% are considering or have implemented rolling budget forecasting and 20% are thinking of future budgets in different ways” (Eramo, 2021). Hospital organizations are struggling to accurately predict the impact that Covid-19 caused. Trying to make a budget plan for the next year is extremely difficult. St. Joseph’s, a regional non-profit healthcare organization in New York, shifted its budgeting style to a forecasting approach. They were originally using a traditional static budgeting methodology with month forecasting. However, they soon realized that as they approached FY21 their budget plan held little credence. Therefore, they decided to start a rolling forecast and focus on a quarterly basis due to the rapid changes (Eramo, 2021). The traditional static method of budgeting wasn’t allowing hospitals to stay on top of and respond to the current events that were occurring to Covid-19 and the continuance of them. A huge advantage of rolling forecast is increased agility. There isn’t just one plan locked in, the financial advisors or accountants are continually revisiting the plan. St. Joseph’s shift to rolling forecasts has allowed them the flexibility during the pandemic to drive daily performance (Eramo, 2021). After the healthcare system had to suspend elective cases in the spring of 2020, the rolling forecast allowed St. Joseph’s to “put in place different reporting mechanisms to respond to the halt in elective procedures, staffing perspectives and a revenue perspective and then reset their target” (Eramo, 2021). Hospitals began to learn that they needed to quickly adapt to the pandemic and learned that a rolling forecast is more efficient than traditional annual budgets. Rolling forecasts take less time to create and are more flexible. There are some misconceptions that healthcare organizations are going to have to overcome relating to rolling forecasting. Reaction Since I work in the healthcare industry, I found this article to be very helpful as it explained the value of switching from traditional budgeting styles to forecasting. Hospitals, including the one I work for, were losing revenue due to the cancelation of many surgeries and procedures because of safety measures. They couldn’t expose both doctors and patients to Covid-19. Those procedures, doctor visits, and surgeries brought in a huge revenue for hospitals. Then hospitals had additional unplanned expenses such as purchasing personal protective equipment (PPE) for the staff members and the patients, along with the additional costs of paying more employees to work as hospitals were short-staffed and overworked. From March 1, 2020, to June 20, 2020, the American Hospital Association (AHA) conducted an analysis on the impact of Covid-19 and found that the healthcare systems on “average lost 50.7 billion dollars per month” (Kermit, 2020). That meant that hospitals quickly needed to revise their budget planning. From what we’ve learned about preparing income statements and all the variable expenses that need to be taken into consideration this article shows that organizations need to be prepared for tragic events in the world that can have devastating effects on the organization. During the start of the pandemic is when the community needed the support of healthcare organizations the most. Since not many hospitals were prepared financially for the pandemic it affected access to care and caused harm to some communities. For feedback on the article, I chose to summarize does anyone have any personal experiences they want to share or have experienced due to lack of care from healthcare organizations? Also, I wonder how this affected insurance companies. Not everyone is insured and people without insurance still needed to get help if they had complications from Covid-19. References: Eramo, L (2021). $0% of hospitals reconsidering traditional budgeting amid pandemic: HFMA poll: An HFMA-Strata survey found two-fifths of hospitals and health systems were looking to overhaul their traditional budgeting process, with one in five moving to rolling forecasting. Healthcare Financial Management, 75(3) Question; You make several valid points that using historical data based on pre-pandemic information is not useful or beneficial. However, there must be some basis used for budgeting. Within your explanation, I do not understanding how the budget is being prepared on a yearly basis. Can you explain further, how a calendar year forecast is prepared? How does an organization determine its profit margin or short fall for the year?