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BHA 4008 Assessment 1 Developing an Operating Budget

BHA 4008 Assessment 1 Developing an Operating Budget

Sample Answer 

BHA 4008 Assessment 1 Developing an Operating Budget

Part 1: Medical-Surgical Department Operating Budget

Part 1 Medical-Surgical Department Operating Budget

Part 2: Importance and Types of Budgets

An operational and capital budget are different in regard to how they are made and also at the same time what they entail. In essence it is knowing how to decify the attributes. It is highly critical to have a budget process in the planning phase and evaluate monthly expenditure against the budget. The importance of budgets cannot be understated and over time it gives an organization the full picture on what needs to be done on matters pertaining to the budget and overall financial health and or welfare of the organization. The importance of an operational budget cannot be understated and any organization that does so understands and appreciates its importance.

Importance of Budgets in the Planning Process

Budgeting is defined as the process of creating a strategy or plan on how money will be spent in the organization. It is simply the spending plan of an organization. Creating the budget allows an organization to assess and determine beforehand whether there will be enough money to do things that need to be done or would like to be done (Clarke, 2019). It is simply ensuring that there is a balance in the expenses and the income generated. If the two do not balance then one will spend more than what it is made by the organization leading to problems. If there isn’t enough money to undertake tasks, it is then best to prioritize spending and categorize tasks on what are the ones that should focused on extensively before humping on to the rest of the expenses.

Budgeting helps this process to be undertaken and brings to the fore, areas of priority for the business. Some business organizations commence their operations with a high level of optimism but without having a well thought out plan of action and this can lead to incredibly grave results (Moro Visconti, & Morea, 2019). Budgeting allows an organization to exercise prudence, to look at the available scenarios and factor in the risks associated with execution of these scenarios bringing a higher level or higher probability of succeeding in the plans or scenarios. When running a business, it is no mean fete to be successful. Success comes with a plan and structure on how to execute those plans.

Plans cannot be executed without money and money can never be enough therefore a budget is used to marry the two and exercise synergy that eventually leads to the successful execution of the plan. Successful businesses ensure that they give time to create and also manage budgets, prepare and evaluate the business plans and continuously monitor their financial goals through the budget and eventually analyse the business performance (Nowicki, 2018). Budget identifies current and available capital and gives an estimate of expenditure and equally anticipates the revenue ahead.

By referring to the budget of the business, one can measure performance in relation to the expenditure and as such ensure that the available resources are used to the maximum to drive and or generate revenue. It can also give organizations an opportunity to look at costs and assess which areas need to be reduced or improved (Tabari, & Memariani, 2019). A budget is a plan to control the monetary aspect of the business and ensure that the money funds the current commitments or what is at hand within the budget to be paid. It equally enables the business to fund and fulfill its current commitments and it allows the business to meet its goals and also confident enough to make financial decisions and ensure that the business has money for future projects.

Differences Between Operational and Capital Budgets

Inference is made to both names in that the operational budget primarily looks at the day-to-day operations of the organization whereas the capital budgets look at the capital budgets of organizations through the investment aspect of it (Clarke, 2019). A capital budget mainly outlines what the investment strategy for the organization is and will be. It depicts how an organization plans to invest its funds from a long term perspective and is normally updated annually by the organization (Clarke, 2019). However, a common feature of most capital budgets is that it depicts how the organization tends or plans to invest its funds for over five to ten years. An operating budget on the other hand, maps out the day to day running of the enterprise. It simply details how the organization anticipates how the organization will manage its funds in one year. It simply matches the revenue with the expenses and this also extends or factors into the short term and long-term goals of the organization.


  • Clarke, C. (2019). Strategic planning in healthcare. In Textbook of Medical Administration and   Leadership (pp. 31-46). Springer, Singapore.
  • Moro Visconti, R., & Morea, D. (2019). Big data for the sustainability of healthcare project       financing. Sustainability11(13), 3748.
  • Nowicki, Michael. (2018). Introduction to the financial management of healthcare organizations. Health       Administration Press, Chicago, Illinois, 2018.
  • Tabari, M. Y., & Memariani, A. (2019). Developing a decision support system for big data      analysis and cost allocation in national healthcare. In Healthcare Data Analytics and      Management (pp. 89-109). Academic Press.


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BHA 4008 Assessment 1 Developing an Operating Budget

For this assessment, you will develop a 2-4 page review on the importance of the budgeting process to a health care organization, as well as demonstrate an understanding regarding the differences between an operational budget and a capital budget. Additionally, you will prepare an operational budget for the medical-surgical department at the St. Anthony Medical Center.

BHA 4008 Assessment 1 Developing an Operating Budget

BHA 4008 Assessment 1 Developing an Operating Budget


Note: This assessment uses Vila Health: Developing an Operating Budget as the context for developing your budget. Please make sure you have reviewed this multimedia before you complete your assessment submission.

Financial management is something that touches us all. We are each responsible for our own personal and family budgets, and many of us are also responsible for budgets at work. Regardless of your experience with financial management, it is a critical skill to have, and it will be necessary to master this skill as you move forward in your health care administration career. Almost all health care administrators will be responsible for a budget at some point in their careers. Administrators must also know how to read basic financial statements and reports to assess the performance of their organization, other organizations, or their department.


The assessment has two distinct parts:

Part 1: Medical-Surgical Department Operating Budget

Relevant scoring guide criteria:

  • Provide this year’s correct revenue and expenses.
  • Estimate the correct revenue, expenses, and net revenue/expenses for the next fiscal year.

For Part 1 of this assessment, you will use the information presented in the Vila Health: Developing an Operating Budget multimedia as context to create your operating budget. Using the data provided in the first three (3) columns, you will be developing an operating budget for the medical-surgical department at the St. Anthony Medical Center for the next fiscal year, as well as estimating the revenue and expenses for the remainder of the current fiscal year. (Assume that next year’s revenue will be unchanged from the current year’s revenue; however, the department will need to cut operating expenses by 5 percent for next fiscal year.)

You may download and use the Excel spreadsheet from the multimedia as your template for this part, or the Excel spreadsheet Medical-Surgical Department Budget [XLSX] can also be found under “Resources.”

Part 2: Types of Budgets and Their Importance

In the second part of the assessment, you will demonstrate your understanding of the importance of budgets within the context of financial and strategic planning for health care organizations. A comprehensive analysis of the budget consists of your interpretation of the numbers: What are the numbers telling you? Use the readings from your Financial Management for Public, Health, and Not-for-Profit Organizations as well as the independent research you conducted to fully develop a 2–4 page (excluding cover and references pages) response to the relevant scoring guide criteria:

  • Explain why budgets are an important part of the planning process.
    • “Explain” means to make something (an idea, situation, or problem) clear to someone by describing it in more detail or revealing relevant facts or ideas.
  • Explain the difference between operating, project, and capital budgets.
  • Analyze the impact of the budget on the operations of the organization.
    • “Analyze” means to examine methodically and in detail the constitution or structure of something (especially information), typically for purposes of explanation and interpretation.
  • Adhere to the rules of grammar, usage, and mechanics.
    • “Grammar” refers to the basic rules for how sentences are constructed and how words combine to make sentences (for example, word order, case, and tense).
    • “Usage” refers to correct word choice and phrasing, particularly with regard to the meanings of words and phrases.
    • “Mechanics” refers to correct use of capitalization, punctuation, and spelling.
  • Apply APA formatting to in-text citations and references.
    • Be sure to include a separate References page.

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