Online budget tools enable real-time analysis
Web-based budgeting systems can be an expansion of the spreadsheet or an enterprise resource planning system with sophisticated financial modeling. Nearly 60 percent of Most Wired hospitals and health systems say they use these systems, compared with 8 percent of the least wired hospitals, and they report increased employee productivity and have a better handle on business trends, opportunities and problems.Linking strategic and financial planning to the budget is the key benefit of an ERP system with financial modeling. Winona (Minn.) Health uses KaufmanHall Hospital Advisor for long-term financial planning and modeling, and KaufmanHall Budget Advisor for the operating budget. Hospital Advisor provides the financial data to feed the budgeting process. The system projects expenses and provides a starting point for budgeting. Budget Advisor provides reports directly to the desktop for paperless review. Data is exchanged between Hospital Advisor and the general ledger system to enhance data integrity and security.
“The budgeting system gets rave reviews from our operations directors, who like everyone else, dread doing budgets,” says Mike Allen, chief financial officer and treasurer. “We measure our variance from actual to budget for gross revenue, net revenue and total expenses. The average variance for the past five years is 0.5 percent, 1 percent and 0 percent [for gross, net and total] respectively. There is a combination of things at work to get those small variances, but I link it to a consistent and effective budget process.”
Productivity gains depend on process change, and there is often a lag in realizing these gains as staff adjust to the new systems. Health First, Rockledge, Fla., installed a Web-based ERP system in 2002 and has been increasing its capabilities ever since. “Our ERP system has provided us the ability to make changes and report those changes very quickly,” says Ginger Bonham, director of strategic management. “Loading the budget and extracting the data is performed in minutes rather than the days and hours required historically. Staff hours have been decreased dramatically while increasing productivity.”
Online budgeting allows for quick reviews of the enterprise budget numbers. Health First’s corporate leadership team can see the effects of budget changes across facilities and support areas. Prior to the online system, facilities looked at their budgets without being able to see their budgets’ impact on the organization as a whole.
Mon General Hospital, Morgantown, W.Va., takes another approach to automating operations budgeting. The hospital uploads spreadsheets to an application called Report2Web. “Managers basically key their own budgets into a spreadsheet obtained from Report2Web, which is then uploaded to the budgeting software in the accounting department,” says Linda Allen, vice president, quality and information systems. Mon General also has moved from a complex system of in-house spreadsheets for dashboards to an application called Active Strategy.
Web-based budgeting tools enable smarter business decision-making and help each department understand how it contributes to the bottom line.
This article first appeared in the Fall issue of HHN's Most Wired Magazine.
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