Budgeting in Healthcare

This chapter provides a comprehensive analysis of budgeting processes in healthcare organizations as not-for-profit entities. It emphasizes the significance of financial elements such as the reinvestment rate, financing rate, present value (PV), and future value (FV) in effective budgeting. The chapter introduces the Total Net Present Value (TNPV) concept, which includes both financial Net Present Value (NPV) and Net Present Social Value (NPSV). The TNPV emphasizes the importance of project proposals to achieve a balance between financial viability and social value. The manuscript stresses the importance of transparency and accountability when creating a budget. This budget serves as a guide for obtaining donors’ trust and helps make decisions for an organization. It explains the different parts of a budget, including the various revenue sources, allocation of expenditures, and direct and indirect costs. The manuscript also distinguishes between operating budgets, which show projected annual income and expenditures, and capital budgets, which cover projects with long-term effects and substantial costs. Aligning budgeting with strategic planning is emphasized as a means to help achieve organizational goals.