Zero-Based Budgeting
MHA 612
Dr. Kathy Wood
October 14th, 2013 Zero-Based Budgeting
Introduction
As the zero-based budget consultant for Windsor Memorial Hospital I will make recommendations to the Board of Directors on how to create a solid plan to reduce costs and increase productivity. This will be a team based solution. In order to sustain the plan for years to come, it will require continued effort and a commitment from all current and future employees.
Zero-based budgeting is one of the most efficient ways to allocate resources. One of the main reasons people turn to this particular type of budgeting is because when managers are forced to account for each line item, they are usually able to find more creative ways
4. Motivate Staff
Increase staff motivation by actively involving them in the process. Employees will go above and beyond when they are included in the “big picture”. They are more likely to become excited about the company’s goals and progress when they know they have helped play an integral part in some of the key decisions along the way. Find ways to involve and motivate staff. Creating a sense of camaraderie amongst staff can create an unbroken bond that can benefit the organization when relying on team efforts.
5. Identify the cost-of-ratio for each service
Many hospitals cannot identify their cost-of ratio. The cost-of-ratio for a service is calculated by comparing the original price paid for a service with the total cost of maintaining that service (Lynch, 2010). This is an important figure to understand because it provides insight as to what something costs and how much it will cost to maintain.
To provide a service without knowing what it is costing you is just foolish. For example, if performing a point of service lab costs more than it would to outsource this service then it is time to look towards outsourcing. It is never a good idea to provide a service you cannot afford to provide. Allocating resources by using a zero-based budget will be prove to be effective by reducing costs and strengthening the company as a whole.
6. Training
The development of effective priority setting methods to assist managers and clinicians in