We are in the process of preparing the budget for GVMH’s new fiscal year that begins April 1, 2013. Budget preparation is an extensive process and it takes about three months. In the end the budget becomes a balancing act.
We must take into consideration current services, new and expanded services along with the rising cost of doing business. The difficulty with this year’s budget is the amount of uncertainty surrounding health care. As a part of the budget we do a best guess estimate of volume and then use the volume estimate to forecast revenue. The problem with forecasting revenue this year is that we have no idea what we will be getting paid for various services as the year progresses.
We do know that payments for Medicare and Medicaid will be decreasing but we do not know how much. We have no idea if the state will participate in the Medicaid expansion but if they do not, we know that revenue will be negatively affected. We know that federal reimbursement is decreasing because of program changes for Medicare Dependent Hospital elimination, therapy caps, DSH payment elimination and a whole host of other things.
We also know that supply costs are going up. Food costs are projected to increase 4%, drug costs are projected to increase 6% and other supplies are projected to increase 2%. We also know that we need to offer competitive pay to retain our great staff and we have expanded services and added staff in some areas so salary costs will increase.
We also must fulfill our commitment to our community to add new services, improve existing services and keep pace with technology. It costs money to stay current. The expense side of the budget is easy to figure but the revenue side is fuzzy.
Every year the budget is an educated guess but right now we are not very educated…