Medicine Essay: Healthcare Budgeting

Healthcare Budgeting
Student's Name:
Institution:
Professor:
Unit Name & Number:
Date of Submission
Healthcare Budgeting
Top-down budgeting
A top-down budget is a type of budgeting process whereby the top management prepares the budget. The budgeting process is majorly based on organizational goals. Once it is ready, it is passed to departmental heads to implement. Upon creating the budget, the top management allocates funding to various departments, and each department is required to develop its budget allocation and objectives (Chapko et al., 2009). When preparing this budget, current market conditions and past experiences are taken into consideration. The management uses the previous year's financial statements and budget to allocate to different departments as a yardstick. They may also consider departmental heads' proposals to acknowledge subordinates' concerns before they implement the budget.
Benefits
The top-down budget incorporates the entire corporate functional methodology because the top management's concern is business growth. Therefore, it will enable top management to allocate resources, starting with critical to boost organization growth properly.
It saves time because the time spent preparing the budget from its initial stages is saved. After all, department managers are given an already prepared budget for implementation, thus saving resources and time that could have been used by the middle-level manager to formulate the budget.
It creates one budget at a time because lower management is not allowed to prepare their budget, which will be combined into one; hence the process becomes less tiresome as one budget is formulated, followed by all departments (King et al., 2010). The departmental heads will only be required to prepare their departmental budgets based on allocations of the budget formulated by senior management hence making the budget efficient than the bottom-up budget.
Drawbacks
The level of inspiration reduces because those mandated to implement the overall budget are not fully involved in formulating the budget. Since the departmental managers are not involved in the process, they may lack the motivation to implement it, affecting the organizational growth and budget success.
Top management is not involved in each departmental operations; hence, they may not fully understand each department's required resources; therefore, their allocation may be biased (Mukherjee et al., 2016). The target sets may be unrealistic and inaccurate, giving more pressure to middle-level managers as they may not understand how the allocations and targets were arrived at.
Bottom-up budgeting
It is a budgeting process technique whereby the budget formulation is done at the departmental level and then forwarded to senior management for approval. Under this method, every department is required to compile all the resources they require, their targets, cost estimates, and projects they plan to undertake in the next financial year. Once each department has finalized, their estimates are combined to develop one organization's overall budget (King et al., 2010). The departmental heads are engaged because they must contribute since they are the ones to implement and are aware of each ...