Week 1 Discussion Response
Response 1
Maria Espenida
Inpatient Rehabilitation Facilities (IRFs) face unique strategic planning, budgeting, and forecasting challenges that directly impact the organization’s decision-making. Challenges such as reimbursement from the Center for Medicare and Medicaid Services vary under the Prospective Payment System (CMS, n.d.-a) that is tied to patient acuity and outcomes. Regulatory demands, particularly the Center for Medicare and Medicaid Services Inpatient Rehabilitation Facility (IRF) Quality Reporting Program (QRP), require consistent investment in tools, documentation systems, and staff training that can greatly affect budgeting. A two percent (2%) point reduction in Annual Increase Factor for the performance year if an IRF does not submit the required quality data (CMS, n.d.-b). These non-negotiable costs often limit flexibility in areas of the budget. In consideration of staffing, specialized personnel from nurses to therapists, there are rising costs associated with retention and overtime, which can further strain the budget. Technology integration, which is essential for improving workflows, particularly in documentation processes to meet compliance standards, requires significant capital and support from the hospital. Forecasting is also difficult due to fluctuating patient volumes and policy shifts, making long-term financial planning a challenge for the leadership team.
Approximately one in three individuals will require rehabilitation services during their lifetime. The global demand for rehabilitation has increased by 66%, primarily due to an ageing population and a rise in non-communicable diseases (Bossuyt et al., 2023). After the pandemic, the demand for rehabilitation care has significantly increased due to the debilitating effects of COVID-19. Inpatient rehabilitation facilities have seen an increase in demand for beds to accommodate these patients. The facility is foreseeing expansion to meet the demands in rehabilitation. Being in a leadership role, I believe in extensive planning and budgeting, not just as a financial exercise but as a strategic tool to meet the demands of patients and, at the same time, improve employee performance, consistent with the mission, vision, policies, and goals of the facility. Aligning budgets with organizational goals, such as unit expansion, mentorship programs, technology integration and training, quality improvement programs, and development of performance metrics to measure results, is just part of the strategic planning that the management team should consider. It is also important to get the feedback of employees during strategic planning, implementation, and evaluation of the program. For a healthcare organization to thrive, the management, together with employees and stakeholders, must engage proactively in strategic planning that involves evaluating key drivers, implementing strategies, and measuring results (Aburmishan, J., & Baum, N., 2022).
References
Aburmishan, J., & Baum, N. (2022). Strategic Planning for Healthcare Organizations. Physician Leadership Journal, 9(4), 40–43. https://doi.org/10.55834/plj.6555794318Links to an external site.
Center for Medicare and Medicaid Services. (n.d.-a). Prospective Payment Systems – General Information. Retrieved from https://www.cms.gov/medicare/payment/prospective-payment-systemsLinks to an external site.
Center for Medicare and Medicaid Services. (n.d.-b). Inpatient Rehabilitation Facility (IRF) Quality Reporting Program (QRP). Retrieved from https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facilityLinks to an external site.
Fransiska M. Bossuyt, Yelena Bogdanova, Kristine T. Kingsley, Thomas F. Bergquist, Stephanie A. Kolakowsky-Hayner, Zaliha Binti Omar, Evguenia S. Popova, Mari Tobita, & Fofi Constantinidou. (2023). Evolution of rehabilitation services in response to a global pandemic: reflection on opportunities and challenges ahead. Frontiers in Rehabilitation Sciences, 4. https://doi.org/10.3389/fresc.2023.1173558Links to an external site.
Response 2
Joshua David Bogusz
I work as the Head of Human Resources at a Veterinary Emergency Hospital, which I’ll call XYZ for the purpose of this post. XYZ is a multi-location organization with four hospitals, over 300 employees, and about $30 million in annual revenue. With being in business for over 50 years and having more than 180 private owners, transparency and financial discipline are essential. In my role, I work closely with our CEO and CFO, which gives me direct visibility into how strategic planning, budgeting, and forecasting influence decision-making at the organizational level.
Strategic Planning, Budgeting, and Forecasting in Practice.
Strategic planning helps our hospital system chart its long-term course while keeping daily operations aligned with those goals. Budgeting then translates those strategies into measurable financial plans, while forecasting helps predict likely outcomes based on trends and historical data. As Shim, Siegel, and Shim (2012a) explain, planning must link short, intermediate, and long-term goals while factoring in external influences such as labor market conditions and competition. For example, when we evaluate investing in new imaging equipment, we don’t just budget for the upfront costs; we forecast future caseload demand, staffing requirements, and potential revenue impact to confirm the investment fits our long-term strategy.
Budgets as Managerial Tools
For managers, a budget is more than a financial statement; it’s a performance management tool. Budgets establish expectations, create benchmarks, and highlight variances between planned and actual results. This allows us to spot both risks and opportunities. Shim, Siegel, and Shim (2012b) emphasize that comparing actuals against budgets enables leaders to identify problems early and adjust operations accordingly. For instance, if one of our ER hospitals exceeds budgeted overtime, it signals a staffing imbalance that may require scheduling changes or additional relief veterinarians.
Budgets also guide resource allocation by ensuring that funds are directed toward priorities that align with the organization’s strategy. Franklin, Graybeal, and Cooper (2019) highlight that budgeting is tied closely to planning, controlling, and evaluating performance, which builds accountability across responsibility centers. This is especially important in our decentralized structure, where each hospital must be evaluated fairly on metrics such as efficiency, cost control, and patient outcomes.
Why It Matters
Finally, forecasting strengthens risk management by allowing us to run “what-if” scenarios, such as how revenue would be affected if caseloads drop or labor costs rise unexpectedly. By combining forecasting with budgeting, leadership can anticipate challenges and communicate contingency plans to our owners, reinforcing transparency and trust (Shim et al., 2012b).
In short, strategic planning, budgeting, and forecasting are not just financial processes at Veterinary Emergency Hospital XYZ; they are decision-making frameworks. As a manager, I use them to measure performance, allocate resources effectively, and ensure that HR initiatives support the hospital’s long-term goals.
References:
Franklin, M., Graybeal, P., & Cooper, D. (2019). Why it matters. In Principles of accounting, volume 2: Managerial accounting. OpenStax. https://openstax.org/books/principles-managerial-accounting/pages/9-why-it-mattersLinks to an external site.
Shim, J. K., Siegel, J. G., & Shim, A. I. (2012a). Strategic planning and budgeting: Process, preparation, and control. In Budgeting basics and beyond (4th ed.). John Wiley & Sons.
Shim, J. K., Siegel, J. G., & Shim, A. I. (2012b). The What and Why of Budgeting. In Budgeting basics and beyond (4th ed.). John Wiley & Sons.
