Budgeting and Finance Uncovered

Budget Concepts


The Alice Hyde Medical Center is a medical organization located in Malone, NY (Home Page). It contains various services to the public, such as laboratory, imaging, surgery, rehabilitation, pediatrics, etc., as well as, the Family Maternity Center, Hastings Hemodialysis Unit, In Touch with Health (a community wellness program), the Dental Center, a Nursing Home, the Reddy Cancer Treatment Center, and the Sleep Disorders Laboratory. A big portion of the financing for the services, such as laboratory, imaging, surgery, etc., is drawn from patients from other units. For example, patients from the Reddy Cancer Treatment Center are sent to the laboratory for tests to monitor medications and conditions. Each service department and facility is treated as a separate unit with its own revenues and expenses.


The organizational concept, or technical structure, shows the relationship that should exists between functions, levels and activities of human and material elements of an entity to maximize efficiencies within the plans and objectives (Theory concepts of budgets). It is emphasized with overall objectives of the organizational structure and can be defined as departmental, indicating units, such as the individual services and facilities. Applied to Alice Hyde Medical Center, it would show the overall budget with sections of departmental, or unit, budgets that add up to the total overall budget. Each service and facility would have its own budget showing revenues and expenses that would make up a part of the total budget for the organization. It could also break down the amounts of revenues and expenses that would stem from other services and units. For example, the laboratory could show a breakdown of the amounts of revenues and expenses that would stem from the Reddy Cancer Treatment Center patients, as well as other departments, with a part that would come from patients being sent to the laboratory from Doctor’s offices that would make up the total for the laboratory revenues and expenses.


The concept in coordination or integration is the development, maintenance, and achieving harmonious activities of the entity, in order to avoid imbalance between the different sections (Theory concepts of budgets). This concept could easily be applied to the maintenance department. The maintenance department services all the departments and service units, which would be an expense to the units and facilities, creating its own revenue that pays its expenses. This concept could also be applied to the Information System Department. All the computer equipment and systems are maintained by the IS Department, which is an expense to the other units and creates its own revenues to pay expenses.


“The basic process of zero-based budgeting is to justify budget requests every budgeting cycle, regardless of prior periods” (Droege). Managers make up decision packages that consist of analysis of costs, purpose, alternative courses of action, measures of performance, consequences of not performing the activity, and the benefits. The decision package identifies different levels for performing each activity and decisions at different levels of spending. They are ranked by order of importance to identify priorities, such as combined old and new projects into one ranking, and allow top management to evaluate and compare needs in individual units for funding allocations. The zero-based budgeting theory can be applied to cases of new equipment needed, expansion of services, or improvements in services. If new equipment is needed for the surgery department, the zero-based decision package could evaluate different designs of equipment, how each piece of equipment functions, and how it could meet the department needs. It would also evaluate the costs and financing measures to replace worn out equipment. With the different designs it could show different alternatives to the needs.




Droege, S.B. (n.d.). Zero-Based Budgeting. Retrieved from Reference for Business: Encyclopedia of Business, 2nd ed.: http://www.referenceforbusiness.com/management/Tr-Z/Zero-Based-Budgeting.html


Home Page. (n.d.). Retrieved from Alice Hyde Medical Center: http://www.alicehyde.com


Theory concepts of budgets. (n.d.). Retrieved from College University: http://www.centrorisorse.org/theory-concepts-of-budgets.html

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