Budgeting in Health Care Overview

Subject: Healthcare Financing
Pages: 3
Words: 917
Reading time:
4 min


Budgeting can be defined as the allocation of resources to different sectors in an organization to improve productivity. Since the health industry is a broad scope comprising private and public sectors, the government is involved in the allocation and formulating of the budgetary protocols to be followed. The government decides what amount of money to allocate to the health sector after a consensus has been reached between various stakeholders. The budgeting process begins with preparing the budget proposals, which involves negotiations between the ministry of health and finance. After an agreement has been reached, the motion is moved to parliament for review and approval. Although this budget is controlled by the authorities involved, the civil society and the general public can influence its definition by engaging with the legislature or executive. In this paper, we will try to analyze how demands of financial stability, growth, and profitability margins can balance patient care quality.

Financial Stability and Growth

As new technological advancements are being incorporated in the health sector, ranging from pharmaceuticals to medical devices, there is a need to budget to not ever spend on new technologies that health care organizations cannot afford. The well-thought-out budgeting helps make clear decisions concerning how an organization will spend its available resources. Without budgetary plans, a firm can go broke, leading to closure within a few years. When making these decisions, the patients’ needs and difficulties may arise during the implementation phase. After execution, the budget managers are held accountable by the citizens and legislature for mismanagement and failed implementation plans.

Health organizations experiencing financial crises may struggle to provide quality patient care and health outcomes, leading to patients’ loss in the hospitals that can provide better health care. The proper planning strategy is vital to balance financial stability, growth, and profit margins correctly with the demands of high-quality patient care. According to Akinleye et al. (2019), quality health care financial performance reciprocates to quality healthcare results. This is measured by patient outcomes, patient-centered care, and quality and safety processes involved in the health setting. Hospitals are faced with tough decisions when asked to lower costs while maintaining quality health care. When the financial aid of the hospital decline, so will the quality of health care being provided. The initiative to improve hospital quality and patient safety are costly and will make institutions rely on the capital given to them by the government and donors. To be able to balance the two, one has to have qualified personnel tasked with managing the resources owned by the firm.

When a health care facility has managerial staff that is not corrupt and focuses on the organization’s wellbeing, this reciprocates to quality patient care. In some instances, hospital margins can provide misleading data about financial health. Some firms possess limited liquid assets to cater to quality improvements (Roberts et al., 2018). Strong financial standards help in acquiring equipment that increases patient care and safety while storing wealth. This ensures standard patient care as there are fewer cases of readmission.

Due to the rapid rise of new diseases whereby some are generic, others caused by environmental hazards, the days of taking health care situations to be business-oriented are over. Health facilities worldwide are struggling due to the intensifying costs and patchy quality. This is why policymakers and leaders in different organizations have sought various ways to solve problems like fraud, enforce practice guidelines, and reduce errors found in health care practice. Organizations with a correctly stated plan that outlines the goal are crucial in the health sector. Health is a vital topic, more so in the American state and hence the organizations that increase value tend to be the most competitive ones. Those who fail to improve their worth, regardless of how prestigious they are, will face much pressure to push them to grow.

Profitability Margins

Organizations that are well equipped financially have the most knowledgeable and skilled practitioners, which depicts the gradual improvement of patient care. Other organizations finance their investments using debt to provide efficient health care, which means they will look for ways to repay the liability. In so doing, practitioners can provide substandard care while charging much to their patients. This reduces their chances for referrals due to their cost, making them liable for losses in the future. With heavy machinery comes quality care and high-paying clients, and such investments are vital to any health care organization as chances of incurring losses or readmissions are minimal. When a firm manages to create a good rapport with the patients they provide care for, growth becomes steady. This influences attention from all parts of the nation hence creating a good name for the organization. With a good reputation comes large profit margins, and this calls for improvement in the quality of health care being provided as senior officials and large business owners start seeking medical care from the health facility.

To sum up, the chase for more significant profit margins leads to enhanced technological advancements, quality healthcare services and lack of financial strength results in poor health services. This entertains health officials to monitor the premise regarding the quality of health care services they provide to their patients. Hospitals experiencing financial crises experience less favorable patient care and high numbers of readmissions. For an organization to provide quality health care, investment in the workforce and technological equipment must be considered. Also, managerial staff has to be goal-oriented and work as a team to achieve better results in the quality of care.


Akinleye, D., McNutt, L., Lazariu, V., & McLaughlin, C. (2019). Correlation between hospital finances and quality and safety of patient care. PLOS ONE, 14(8), e0219124.

Roberts, E. T., McWilliams, J. M., Hatfield, L. A., Gerovich, S., Chernew, M. E., Gilstrap, L. G., & Mehrotra, A. (2018). Changes in health care use associated with the introduction of hospital global budgets in Maryland. JAMA Internal Medicine, 178(2), 260-268.