MHA FPX 5006 Assessment 4 Operating Budget Proposal

Under the program, institutions that report more hospitalizations than the predetermined number for three weeks are vulnerable to financial penalties (Chen & Grabowski, 2017). The Hospital Readmissions Reduction Program (HRRP) of the Affordable Care Act (ACA) imposes fines on patients who have an excessive number of hospitalizations within a predefined timeframe for conditions including lung infection, cardiac arrest, elective principal hip replacement, and knee replacement (Gai & Pachamanova, 2019).

Modifications in conformity are another environmental factor that has an impact on a healthcare organization’s operating budget. Every healthcare organization must have a crisis preparation plan, according to the Center for Medicare and Medicaid Services (CMS) (Berwick & Gilfillan, 2021). No medical establishment is excluded from this crisis preparation law’s requirement to adhere. Provisions of the act apply to institutions that do not follow the program. Healthcare facilities must develop a contingency plan, experiment with it, implement modifications to their correspondence, and analyze their teleworking capabilities. They must also assess the entire plan as a component of the conformance initiatives. Developing staff competence through developing people using their own funds is one aspect of conformity (Cascardo, 2017).

Proposed Organizational Budget for Improvement

The investors’ intentions to purchase a billing system as well as MRI equipment as a component of the initiatives aimed at organizational changes are incorporated into the budget. The MRI machine will contribute to better patient care by aiming to cut down on misdiagnosis related to patient evaluations. The device produces incredibly sharp and precise photographs of the tissues. Additionally, the hospital’s customer base will rise because owning an MRI machine will allow it to serve more clients, given that few nearby institutions have one and can compete on price (Faria et al., 2018). By sending patients that require MRI scanner solutions to other medical centers immediately, the institution incurred losses; however, purchasing the machine will improve revenue and boost the clinic’s audience. In addition, a billing system will assist the health center in achieving one of its targeted client service enhancements. The software will make excellent service, such as fast billing issuance, possible. The program will also make it easier to track invoices, reduce time, and minimize documentation (Rosenbach et al., 2017).

The budgeting comprises the different charges that the healthcare facility expects to expend in the upcoming year. Operating costs, facility fees, and administration costs make up the expenditures. The expenses must be permissible, fair, payable, and regular to be classified as actual expenses. They consist of wages, extracurricular benefits, and machinery, among other running costs (Brooks et al., 2021). The expected expenditure for wages and other compensation for the upcoming year is as follows: wages are determined by dividing the proportion of efforts by the employee wages. The expected pay for 2017 would rise from $838,583 to $914,818 because the institution anticipates adding more staff who are going to focus on the MRI machines as well as the software.

The compensation computation takes rising inflationary pressure into account, which is an additional element that contributes to the rise in the forecast. The $1,287,853 cost of salary and employee benefits includes $110,948 for FICA obligations, $57,895 for extra hours, $57,895 for work compensation, $81,751 for insurance coverage, $70,155 for retirement, and $52,286 for anticipated FICA donations. The purchase of the MRI machine, anticipated to cost $150,000, including other associated shipping and the billing system, projected to total $80,000, will result in additional operational expenses for the hospital. A sum of $230,000 is given.

Budget Alignment with Organizational Target Profit Margin

The budget reflects changes created to help the healthcare organization reach its objectives of raising income and enhancing patient care. The budget has included expenses for purchasing MRI equipment, a purchase that is crucial to achieving several of the organizational objectives of increasing delivery services by lowering clinical mistakes. The billing program will also improve customer support (Faria et al., 2018). To ensure that new purchases contribute to achieving the established goals, additional funds are allotted for instruction and equipment management. The organization will be able to enhance its market share, which translates to more profit, by resolving the identified concerns. This will help the institution continue to work toward its long-term goal of providing improved health care (Adhikara et al., 2022).

The 2017 expenditure has