In response to market volatility over the past few years, many healthcare organizations turned to rolling forecasts for their budgeting process due to the flexibility they offer. Some of our customers now use elements of rolling forecasting to create a more proactive approach – setting annual budgets while still incorporating rolling forecasts into their long-range financial plans. The main takeaway: Accurate and agile planning depends not only on developing and executing plans, but also on shifting those plans as circumstances change. 

As you prepare your hospital or health system for the next budget cycle, use these tips to improve the speed, accuracy, and agility of your budget process. 


#1 Leverage Workflow Capabilities

Your budget software should include workflow capabilities that allow you to define the budgeting and planning process steps, establish the owners of each step, and set automated alerts and notifications. This allows the finance and accounting teams to see where the budget process is at any point in time and, ultimately, keep that process on track.


#2 Provide Instruction

Provide educational materials on the budget process, such as instructional videos or end-user training, especially if your approach or budgeting tools have changed. The goal is to make the process as easy as possible for everyone involved, create a better user experience, and set up the team and organization for success.


#3 Assign a Finance Team Liaison

If you require input from various teams or departments, consider assigning a finance team member as a liaison for each department. Liaisons can help provide high-quality information, reduce the number of iterations, and move the budget process forward quickly and efficiently.


#4 Seed the Budget, Then Allow Adjustments

To expedite the budget process, seed the budget centrally with targets and financial goals for your managers, and then allow them to make adjustments. The ability to provide input and make changes helps managers understand expectations and garners buy-in. 


#5 Create Reporting Efficiencies

Where possible, start with standardized reporting templates that allow your organization to produce repeatable, consistent reports you can use for the month-end process. From there, you can create new, more tailored reports specific to your line of business. 


#6 Rely on a Single Source of Truth

Health systems benefit from a unified budget platform that serves as a single source of truth. You can improve budget process accuracy by setting up automated general ledger, payroll, and accounts payable imports into the central platform. This process lessens the need for data to move among multiple systems and reduces error-prone manual entry. A unified platform also makes it easier to produce reports and dashboards that reflect up-to-date data from all systems. 


#7 Make Historical Data Available

Make historical data available to your managers so they can compare last year’s actuals to the budget as a starting point. This provides the information needed to build a more accurate budget for next year. 


#8 Set Up Data Alerts and Warnings

Set up limits, data alerts, and warnings, so managers know if they are missing data or have values outside of norms or targets. 


#9 Provide Comprehensive Variance Reports

Providing comprehensive variance reports throughout the year equips leaders to manage their budget and performance. Variance reporting also encourages managers to see budgeting as an ongoing activity — providing monthly, weekly, or even daily analyses — rather than a once-a-year activity.


#10 Allow Comments and File Attachments

To improve data visibility, make it easy for managers to enter comments and attach files — for example, a pricing proposal from a vendor. This makes it easy to explain or justify expense items and allows superiors and the finance team to see key information, reducing the need for follow-up questions and additional iterations. 


Bonus Tip! - Set Realistic Deadlines

Try to budget in a three-month window, which may be an ambitious timeline for some organizations considering one-third (33%) of healthcare finance leaders say their budget cycles last six months or longer, according to Syntellis’ 2023 CFO Outlook for Healthcare.

Below is a sample three-month schedule that one Midwestern hospital system follows, with user training and the finance team’s behind-the-scenes work preceding the start of the budget cycle. The health system’s Controller says this approach makes the best use of everyone’s time. 

  • Month 1: Finance opens workbooks for three weeks for users in nonclinical areas, with clinical users receiving an extra week 
  • Month 2: Budget analysis and preparations for board meetings 
  • Month 3: Senior leaders approve the budget 

Interested in a solution that will help improve your budgeting and planning processes? Learn more about Axiom™ Budgeting & Forecasting for Healthcare. 

Learn other budgeting tips in healthcare