Rush-Presbyterian-St. Luke’s Medical Center Budget Process Analysis, Coursework Example

A description of the budget process prior that was in place prior to the implementation of flexible budgeting included each department submitting an annual budget requests to hospital directors. The directors would allocate resources based on revenue and establish a working budget for each department. Department administrators were required to operate within the budget limits established. If respective departments did not use all of the allocated resources during the year, that proportion of the requested budget would reduce the following year’s budget the following year. If a department needs to exceed the allocated budget, they would have to submit a separate request for each overdraft. This process was in place for a number of years before it was clear that a change was necessary.

Directors found the process was cumbersome and limited the effectiveness of operations. What tended to happen was that department heads would limit the exploitation of resources early in the fiscal and encourage the exhaustion of resources near the end. Furthermore, department heads tended to overestimate their budget requests the following year to avoid being left with less the following year. What Rush needed was a way to effectively allocate budget resources to optimize outcomes.

During the changeover, the match between the level of participation and responsibility is most disparate between corporate governance and functional area managers. The match (or more properly mismatch) became salient as the Hospital began planning expansion. The department would need to live within this budget, and there would be no adjustments according to changes in the volume of patient days actually delivered. With low presidential participation in budget matters compared to the participation of the Od/Gyn director, the mismatch occurred when budgetary matters began to impact efficiency of service and the effectiveness of outcomes. The reality was that such a budget process interfered with operations and the overall goal of the institution. Projections for the new building project confounded daily operation in certain functional areas such that performance suffered. What happened was that the plan failed to provide sufficient budgetary slack. Instead of extending the timeframe for the building project to allow for differential between projected and actual budgetary realities, administrators succumbed to expansion pressures such that they threatened the organizational mission as a whole.

The effect switching to flexible budgeting was intended to accomplish this task. If Rush was to use W&C standards as a pilot for a refreshed paradigm within the entire organization as a whole the budget process had to change. The flex budget would optimize budgetary outcomes somewhat organically. The use-as-needed nature of the flex budget allowed department heads to exploit resources based on the given situation. That way, instead of worrying about next what was to come within the year or what was to come next year, they could focus on what was necessary to augment quality care within each immediate healthcare challenge. Instead of the budget process hindering performance, the flex budget supported it.

It is suggested that Rush implement a discounted cash flow method. It is less costly overall. The time that it takes to administer this type of schema is less costly, and it allows to each department to consume the resources they need at any given time. Furthermore, it helps administrators to understand the fiscal health of the operation at any given time more readily. A major disadvantage is that the detailed analysis of resources required to accomplish the method tends to be somewhat resource consuming. Also, it is less accurate and prone to error. Nevertheless, these limitations do not necessarily preclude use of the process itself.

Despite temporal resource requirements and projection variability, the method promises to help solve the problem. The main reason it should be used on the cost-benefit analysis of the feasibility study is that in the projection it accounts for depreciation, inflation, and fluctuations in wages. In other words, it more precisely represents the opportunity costs associated with the project over time. A flexible budget would have worked better during merger and expansion. Although some disparity could be mitigated through standardized accounting measures, the impact of rigid accounting could fail the expansion. As previously mentioned, greater slack would have reduced the problems associated with the expansion. Another method would be to reduce pressure to expand such that the funds needed to build would be available more or less organically. Financiers would invest available funds annually into low to moderate risk mutual funds which would at least partially the reduced impetus to build. Instead of aggressive fundraising, administrators could have looked to moderate investment opportunities which would have accomplishes the same goal in a similar timeframe.

Two suggestions for improving in the process other than switching to a flexible budget are to allow each department head to administer their budget department based directly upon their own revenue or to treat each department as a separate functional entity and do away with the budget request process altogether. What it would boil down to was that each department functioned as an independent fiscal entity or that they would be financially administered individually at the top. To allow each department to function as an independent entity would allow each department head to manage their own resources end-to-end. One of the disadvantages of this approach is that department heads may have to perform too much business instead of managing their units at the operational level. It is unknown how much this would be offset from not having to submit budget requests. To treat each department as a separate fiscal entity accomplishes essentially the same objective at the level of profit/loss but would require more participation at administrative level for directors and less at the operational level for department heads.

Although Rush has overcome some hurdles with respect to its budgetary process, some improvements can still be made. It is unnecessary that the budgetary process should act as a hindrance to operational objectives, and although some suggestions were made, strictly standard accounting methods may not be sufficient to support the requirments of the mission. In some cases, it may be better to use a mixed system. Creative accounting (not as a euphemism for fraudulent methods) may be the most effective measure.
Highlands School of Business

The Highlands School of Business, Media, and Technology are taking into consideration put into practice writing across the curriculum in the MBA program. The MBA program at present admits about 100 students and graduates about 70 per year. The current Strategic Management class offers training on how to write a major case analysis and is required of every MBA student to write and defend a major case analysis. Four classes within the MBA curriculum will be writing intensive. Faculty will establish a standardized grading rubric for all classes and writing assignments we be graded on the same basis across all classes. A study has been designed to determine if the new writing across the curriculum was effective in improving students’ writing skills. A description of your study that covers the measures, how is determine if the writing across the curriculum implementation improved writing independently of any other factors. A discussion of limitations of the design in both assessing the effectiveness and the efficiency of the writing program is proffered.

Measure

The faculty grading rubric will be the major measure involved in this study. It should be implemented first. Once the rubric is standardized, data will be collated previous to the implementation of the writing intensive requirments. The measure will be both internally and externally validated such that faculty is consistent with measurement criteria and that the criteria are consistent within themselves. Alternatively, student questionnaires may be used in future studies that include measures for instructional quality and student motivation. Ultimately, such factors will be responsible for the actual effectiveness of the program, but initially, only gross outcomes will be investigated.

Sampling, Pre-Test, Post-Test

The population we are interested in is the students of the Highlands School of Business. That is our sample. Available data prior to the implementation will constitute the baseline measure or, more commonly, the control group. That is the pre-test. After the implementation, the faculty grading rubric will be used again to collate data for the experimental group – the students who have been subject to the new writing intensive requirements. That is the post-test. This is a basic coorelational design. It is not strictly experimental in that there is no dependent and independent variables. There are however groups and conditions which make it a textbook correlation case. Thus, ANOVA might be in order.

Statistical Controls

In order to determine whether or not any effects detected can be attributed to the new course requirements, certain statistical techniques may be implemented. For example, a two-tailed t-test could be used to investigate the statistical significance of the impact of the requirements. Furthermore, findings could be compared to other known student data such as demographic, courses taken, grade point, and so forth. If other effects were found, they could be used to delineate the quantity of the impact of the new course measures. Typically, an R-square measure may be used to estimate the quantity by which each factor impacts the construct.

Limitations

The limitation of this design is the poverty of available data overtime. It would be better to implement data collection a few years prior to and after implementation of the new course requirments. In other words, in order to better gauge effectiveness, it helps to observe trends more longitudinally. In terms of efficiency, this design does not really address that construct. It cannot in its present form estimate the amount of benefit verses resource investment in the new writing standards. Nevertheless, it would be a good subject for subsequent studies. Within those studies, quality control measures between faculty instruction and assignment requirments could be governed.