Budgeting Models in Healthcare Setting

Budgeting Models in Healthcare Setting
Name
Institution
Course Code and Title
Instructor
Date
Budgeting Models in Healthcare Setting
Advantages and disadvantages of Top-down and bottom-up budgeting methods
Planning for a financial budget is important to improve efficiency, goal attainment, and planning for profit. The two types of business budgets are the top-down and bottom-up both with their advantages and disadvantages. A top-down budget is usually prepared by the senior management for the entire organization then the departments are expected to make their budget within the allocated amounts. A top-down budget considers previous years' budgets and existing trends and growth strategies to ensure alignment with the departmental objectives and goals.
The advantage of this type of budget is that it enables the heads of departments and their team members to have a clear picture of the organization's expectations and plans. The process is time-saving considering the departments have been allocated with the amounts to plan for and few departments are engaged (Mukherjee et al., 2016). Also, the senior management has more information on the company finances compared to the department heads thus more strategic planning. Besides, the approval process is more guaranteed, and easy to make changes.
However, the budgeting method limits the communication process since the departmental managers are not involved which might lead to creating unrealistic expectations. It is hard to accurately measure the departmental budget and not involving lower and middle-level management might lead to a lack of motivation.