BHA FPX 4008 Assessment 1 Developing an Operating Budget

BHA FPX 4008 Assessment 1 Developing an Operating Budget

BHA FPX 4008 Assessment 1 Developing an Operating Budget


Capella university

BHA-FPX4008 Health Care Budgeting and Reporting

Prof. Name


Developing an Operating Budget


Budgeting plays a crucial role in managing healthcare facilities effectively and facilitating their expansion. Administrators must maintain meticulous financial records to ensure that the facility operates within its allocated funds and generates anticipated income. Budgets are dynamic documents subject to regular analysis and adjustment to ensure alignment with organizational goals. Despite their challenges, budget cuts are indispensable for sustaining growth (Finkler et al., 2020).


This essay explores the importance of budgeting in the planning process at Vila Health, emphasizing the development of an Operating Budget. It delineates the distinctions between operating and capital budgets with illustrative examples. Additionally, it provides accurate revenue and expense estimates for the current period and evaluates their impact on organizational operations.

Why Budgets Are Important

Budgeting is integral to the planning process of healthcare systems as it offers a clear understanding of the organization’s financial status and guides decision-making regarding new initiatives. A well-defined budget enables strategic investments in hospitals and allows room for rectifying errors in unsuccessful endeavors. Without a proper budget, hospital stakeholders risk inefficient allocation of resources (Finkler et al., 2020; Glushchenko et al., 2021).

Difference Between Operating, Project, & Capital Budget

An operating budget forecasts anticipated income and expenses, akin to transactions in for-profit enterprises. It accounts for resources consumed during operations and the timing differences between resource utilization and cash inflows. Capital budgeting assesses potential ventures requiring significant investments, ensuring alignment with predefined criteria through financial analysis methods. Project budgets comprehensively estimate all costs incurred until project completion (Finkler et al., 2020).

Provide Correct Revenue & Expenses

Analysis of the fiscal year 2021 budget revealed a spending cap of $50 million for inpatient care revenues. With expenses totaling $23,123,516 million in the latter half of the fiscal year, projected actuals for 2021 are estimated at $46,247,032. Surplus funds can be utilized for staffing, employee education, equipment procurement, or other initiatives aimed at enhancing patient care (Vila Health Developing an Operating Budget, n.d.).

Estimate the Correct Revenue & Expenses

Current budget calculations indicate a surplus of $3,966,130, exceeding the operational budget of $40,895,000 with an actual amount of $44,861,130.

Balanced Budget for the Next Fiscal Year

While initially proposing a static budget or a 5% reduction, calculations for the upcoming fiscal year involved applying a 5% reduction to all current-year budget allocations. Approval of the revised budget is crucial to maintaining operational sustainability.


Budgeting is imperative for the growth and financial stability of healthcare facilities. Whether operating within an operational, project, or capital budget framework, effective budget management ensures alignment with expenditure and revenue goals, a responsibility integral to administrators’ roles.


Armitage, H. M., Lane, D., & Webb, A. (2020). Budget development and use in small and medium-sized enterprises: A field investigation. Accounting Perspectives, 19(3), 205-240.

Finkler, S. A., Smith, D. L., & Calabrese, T. D. (2020). Financial management for public, health, and not-for-profit organizations (6th ed.). CQ Press.

Glushchenko, A. V., Kucherova, E. P., Mosolova, N. I., & Mosolova, D. A. (2021). Algorithm of forming the operating budget of integrated agro-formations in the south of Russia. IOP Conference Series. Earth and Environmental Science, 839(3), 32014.

Vila Health Developing an Operating Budget (n.d.).

Yekaterina, D. (2020). Operational budgeting system in trade companies. Retrieved from