Budget development is a critical step for any health care organization. A budget reflects the organization’s goals and objectives, contingency plan, and how outcomes of the proposed programs and initiatives are measures. The process of developing a budget requires management to choose between different initiatives and investments and “requires analysis of the scope and impact of any initiative” (Wager et al., 2017, p. 440). This discussion post will examine how a preliminary IT budget is formed, what should be included, and who should participate in the development. In addition, the most appropriate presentation format will be discussed.
A preliminary budget should include several categories to help organize the proposal. Wager et al. (2017) recommend including separate items for capital and operating budgets, support, ongoing and new IT costs, and proposals for improvements to current operations. These categories serve to structure the budget presentation and “provide a normative framework for both policy development and accountability” (Barroy et al., 2018, p. 3). Thus, the preliminary budget proposal reflects how the department budget is currently employed and can be improved to become more cost-effective in the next financial period.
The process of developing a budget for an IT department within a health care organization is a prolonged process. According to Brown (2017), the drafting of the financial plan can take as little as three weeks and as long as eight weeks. Specific items of the budget can be submitted at different times. For example, the operating and support budgets can be submitted for review first to ensure that new initiatives and proposals do not deplete them (Wager et al., 2017). The strategic IT initiatives should first be reviewed by the senior leadership of the department and the health care facility. Moreover, all-encompassing initiatives may require a formation of an executive committee, further delaying the approval of the overall IT budget (Wager et al., 2017). Thus, the approval of the project presented in the preliminary budget can take up to several weeks.
Several stakeholders should be included in the IT budget development. According to Wager et al. (2017), the management of the IT department reviews all proposals and initiatives and decides whether they should be included in the budget. Furthermore, the chief financial officer (CFO) and chief information officer (CIO) can be asked to assess the value of the proposal and advice on how to include it into the budget in a cost-effective manner. In health care settings, the clinical vice president can also participate in the budget development by providing the department with general organization-wide budget goals and objectives.
The budget of the IT department should be presented at a meeting with all stakeholders in attendance. It is generally shown in the same meeting as the financial plans of other departments within the health care organization in order to allow for the overall budget to be developed (Wager et al., 2017). The budget can be presented as a written report distributed to all people present and can be shown in a presentation format for clarity.
In summary, developing a budget for an IT department in a health care organization is a complex process. It requires the inclusion of several items, including the capital, operating and support budgets, ongoing and new costs, and proposals and improvement costs. Various organizational stakeholders can participate in budget development, with it being submitted in the same meeting as budgets for other departments. Generally, presentation and report formats can be utilized to introduce the preliminary budget.
References
Barroy, H., Dale, E., Sparkes, S., & Kutzin, J. (2018). Budget matters for health: Key formulation and classification issues. World Health Organization.
Brown, M. (2017). Metric of the month: Annual budget cycle times. CFO.
Wager, K. A., Lee, F. W., & Glaser, J. P. (2017). Health care information systems: A practical approach for health care management (4th ed.). John Wiley & Sons.