Budget Battles

You work for the same organization. Right? That means you’re on the same team. Right? So why is the budget process so contentious between finance and service line managers?

During budgeting there is a natural tension produced by differing objectives, inconsistent levels of understanding and an unyielding timeframe.

The Finance Manager’s perspective

The finance manager is responsible for managing the budget. This involves determining the financial projections for the hospital, understanding the cost of services delivered, appropriating money to various departments so operations continue smoothly and funding projects for revenue growth. Naturally, the finance manager wants to control spending, will be vigilant for flawed assumptions and seeks innovative but executable new ideas.

The finance manager also drives the process of creating the budget. The timeframes are tight and there is much to be done. The finance team begins by providing instruction, schedules and templates then commands the proceedings to stay on schedule. Finally, at the end of the process, they have to assemble the pieces and resolve discrepancies (which can often send another round of changes to all involved). These unexpected, last minute reactions can fray the nerves of the most veteran managers but it must be done.

The Service Line Manager’s perspective

To the service line managers, the budget process can feel like a blindfolded walk on a tightrope. A lack of familiarity with the accounting process and/or the big picture leads to guesswork and uncertainty. While the finance manager appears to be building roadblocks on spending, the service line managers are trying to increase their available funds. There is never enough money. And there never seems to be enough time to do everything carefully…so why would anyone think there is time to redo it later? The expectations are confusing at best when the gap in understanding is too big.

Bridging the gap

So how can you bridge the gap? While the tension may be unavoidable, it can be avoided by following the guidelines in this graphic. There are plenty of actions that both the finance manager and service line manager can take to align more constructive.

So during this year’s budget cycle, why not take time to bridge the gap. It’s well worth the effort to work together. While you’re at it, check out the Polaris’ Budget Survival Kit.

By Marilyn Marchant, MS, CPHIMS