The Budget Justification Process


The budget justification process can be a substantial exercise in strategy. All de- partment leaders in your organization are pursuing the same finite pot of money, and the budget committee is likely considering whether any budget requests can be reduced without substantially affecting services. The key to success in getting the budget dollars you request is being prepared, both financially and politically. You will need to understand who the key decision makers are, the role and impact that your physicians have in this process, and how to use that knowledge to your advan- tage. For example, if you are requesting additional staff in the neonatal intensive care unit (NICU) and the NICU physician director wields power in hospital politics, ask the NICU physician director to put in a good word for you or, if possible, attend the meeting when you present that portion of your budget. Take care to understand the goals of your organization and identify how your fi-


nancial requests can help the institution move forward to meet those goals. Current health care priorities include value-based purchasing, chronic disease management and prevention, patient satisfaction, patient-centered care, patient safety, and regu- latory compliance. As relevant, use these priorities to frame your budget requests. For example, if your department does not have enough weekend coverage to meet the facility’s nutrition assessment and follow-up policies, the facility is at risk of reg- ulatory noncompliance. Assuming that regulatory compliance is a priority at your facility, be sure to emphasize the potential risk in your budget justification. If you are requesting an increase in budget dollars for enteral products because an expensive new product may be added to the formulary, be sure to adequately articulate why that product is justified (eg, make the case based on peer-reviewed research, the potential for patient safety improvements, or potential hospital cost savings due to improved patient outcomes, such as decreased time on the ventilator). As you prepare for the budget justification process, investigate what your com-


petition is doing and try to identify community standards for service and staffing. For example, check out your competition before you ask for funds to implement a room-service program. After you review other menu and service programs, you will be prepared to show that you can provide a program that is cheaper, higher quality, and likely to get better patient satisfaction scores. Be prepared to negotiate. When you enter your budget justification meeting, you


should understand exactly how much money you really need to accomplish your goals and where you can afford to make concessions. People rarely get everything they ask for in the budget process. What can you really live with? Many things about the next year are uncertain, and many of them are uncontrollable. Successful budgets are those that will be approved, authorize the needed resources, and prepare managers to respond appropriately to inevitable surprises.6


Variance Analysis


One key responsibility of your role as a manager is understanding and managing controllable factors of your unit’s financial performance. A variance analysis is the primary way for you to understand the difference between what you have budgeted and actual performance. When preparing a variance analysis, you should under- stand the difference between variances to your static budget and variances to your flexible budget.


180 EFFECTIVE LEADERSHIP & MANAGEMENT IN NUTRITION & DIETETICS


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