Especially, in a private hospital, budget is important and it should not be taken lightly.
Annual budget is the projected revenues and expenses and incomes for the incoming year. It is a financial target. Thus, the annual financial performance outcome should be in the vicinity of the budget.
If there is a big variance, whether positive or negative, there must be explanations forwarded for continual improvement purposes.
The variance is usually due to the following:
- Inadequate planning leading to faulty projections
- Inadequate performance leading to targets not being met
- Unforeseen events like a disaster which was not adequately controlled leading to targets not being met
Commitment and training on proper planning budgeting and commitment on performance to reach target are of utmost importance.