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hospital budget moneyDetermining the budget for a hospital is a monumental and often thankless task that is second only to the actual administering of medicine and medical care provided within its walls. Without a properly funded budget, no other activities could take place at the hospital – including providing medicine and medical care.


Any budget should begin with the revenue. How much money is coming in? Where are the sources of the income?

Hospitals traditionally make their money from billing patients, billing insurance companies, and tax revenue. Donations from wealthy individuals or trusts can also play a role in the hospital’s budget but are not typically a fixed source of income.

Another important factor to consider is how often the money is coming in. Monthly? Quarterly? Annually? All of these factors will affect the hospital’s budget.

Determine Expenses

A hospital has a lot of varied expenses, but like any other business or institution, there are some expenses that are fixed and mostly predictable from month to month and year to year.

Utility costs to heat and cool the buildings, routine building, and equipment leases and maintenance costs, and payroll budgets are some examples of fixed expenses that can be accurately budgeted for the most part.

These sorts of fixed expenses can also include the exterior parts of the hospital, such as the parking lots or parking garage, the windows and doors (and the service providers who clean them) and the janitorial department.

A good budget will also account for estimated patient treatment. There is a cost associated with each bed and room in a hospital. No matter which department or ward, no matter whether the bed is empty or occupied, each one will have to be accounted for.

Plan for Expansions and Renovations

Capital expenses are often in a category by themselves and can mean the purchase of large equipment – a very expensive proposal in a state of the art hospital – or building expenditures. Perhaps a new wing or new floor is being added. Don’t forget to factor in the new stream of income as well as the expenses.

Prepare for the Unexpected

Nobody can truly be prepared for a disaster, but it is kind of what a hospital specializes in. And in just the same way that the doctors, nurses, and hospital staff are flexible enough to respond to any and every crisis and emergency, the budget should have enough flexibility built in to withstand any uncertain times or monetary shortfalls.

While setting up the initial budget can be daunting and time-consuming, the process is made much easier by keeping good records and using the newest accounting and hospital budgeting software. Even the best budget should be closely monitored to identify areas that could be improved or made more efficient.

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