Hi Gedion,

   I think your question is really interesting, and I'd like to take a stab at answering how it works in the U.S. context. In short, no, that is clinicians do not have a direct impact on hospital budget decisions. In addition, the bottom-up approach you've described is also not as common as we might suspect, at least in the U.S. context. I do believe that, as you've laid out, department administrators submit their budget requests and that is part of the decision that top level managers ultimately make up the budget with. But, as may be the case in other contexts, the clinical budget is only a portion of the overall hospital budget, and other things like capital investments, foundations, acquisitions and the like also play a big role in how the budgets ultimately end up. In an effort not to get too lost in the weeds, I think it would be useful to be more specific about exactly what you are interested in exploring regarding hospital budgets. As you suggested, there are a great many ways that hospitals might go about constructing their annual budget. One sector within the U.S. context that might be a little more uniform is in the Veterans Administration (VA) hospital system. I hope you find this response helpful. Best of luck in your pursuit.

Thank you for the info Mr Geoffrey Silvera. it is very helpful. 

Your question is complex but straight forward from the standpoint of most organizations I have worked with. Most use the process you describe where the budget is created for each group/unit/process and cycles up the chain, but some do not. However, either way, the same issues seem to exist, which seem to all stem from no one actually knowing the whole process that occurs (not even the workers within it), only what ideally should occur or is documented to occur. Note that these are normally 3 different processes. So, this questions if you do not know what is actually occurring from the task workflow standpoint, how can you accurately budget for it.  Therefore, people account this by padding the estimates when doing their budgets, which throws your overall budget off. With most of our work, we have seen that even with the managers, which is only one degree of separation, there is a skew regarding what actually happens. The skew normally is associated with loss of detail, the actual "real" time to complete or effort or resources required for an event.

Requirement should be generated either by previous year experience Or if the hospital is new then a long exercise is required to identify the cost centers of Fixed cost,variable costs,consumablesand contigencies etc.In case of new again the commitment of organisation will determine against the background of long term strategic plan together with objective and goals.The income should be forecasted to reach reasonable expenditure plan.Bottom up planing is helpful in decisin taking help  - assess the possible requirements. The whole process is complex in begining which gradually smothens after analysis of situational factors.

Dear Gedion,

 I think your question is really interesting!

From my experience as a hospital director at public hospitals in Sweden, but also from research in health care services (Nordgren 2003, 2015, Nylinder 2012) I will underpin that the budget process at hospitals has to be managed as a creative and thrusted dialogue between those in management and those at the clinical level as well as with the hospital board and it has to be communicated all the time. There are many reasons for this co-creation of the budget.

The first reason is to create understanding of the conditions and context, i.e. the contingencies for the budget as well as for the hospital. In what economic situation is the hospital situated and how does the compensation system work? There are many contingencies that affect the budget control process. Therefore the budget Control process has become matched with circumstances concerning the specific environment where the hospital operates.

The second reason is to communicate and discuss openly the vision and goal for the hospital in terms which are understood of all people working at the hospital. So the language of communication is important.

The third reason is to work with quality and service as management concepts and tools in order to co-create value for patients and stakeholders and moreover to create good financial conditions for the hospital.

Fourthly it should be pinpointed that those professionals, which ‘have’ the highest positions and status at the clinical level influence the budget control process and the use of resources. Therefore they are positioned as responsible and have authority in exercising budget decisions. In this meaning the system could be described as decentralized. The role of central management is to exercise control of the total budget.   

There is a tendency of people to be influenced by the previous highest (or best) level of a factor in the budget process. This tendency means that it is quite hard to bring change into a budget. The focus is therefore often on minor changes since most of the budget is predetermined from previously decisions.

At last, In Sweden the professionals as a rule participate in the budget process and are perceived as responsible.