BHA FPX 4008 Assessment 1 Developing an Operating Budget

BHA FPX 4008 Assessment 1 Developing an Operating Budget

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BHA FPX 4008 Assessment 1 Developing an Operating Budget

Student Name

Capella University

BHA-FPX4008 Health Care Budgeting and Reporting

Prof. Name


Developing an Operating Budget


Budgeting is a critical component of healthcare facility management, enabling effective operations and facilitating growth. Administrators must maintain precise financial records to ensure adherence to allocated funds and projected revenues. Budgets are dynamic tools requiring regular assessment and adjustment to align with organizational objectives. Despite challenges, budgetary allocations are essential for sustaining development (Finkler et al., 2020).


This paper examines the significance of budgeting in the planning process within Vila Health, focusing on the development of an Operating Budget. It outlines the differences between operating and capital budgets using practical examples. Additionally, it presents accurate revenue and expense projections for the current period and evaluates their impact on organizational functions.

Importance of Budgets

Budgeting is integral to healthcare systems’ planning process, providing insights into financial standing and guiding decisions on new initiatives. A well-structured budget facilitates strategic investments in hospitals and allows for corrective measures in unsuccessful endeavors. Absence of proper budgeting jeopardizes resource allocation efficiency (Finkler et al., 2020; Glushchenko et al., 2021).

Distinctions Among Operating, Project, & Capital Budgets

An operating budget forecasts anticipated income and expenses, akin to transactions in for-profit enterprises. It tracks resources consumed during operations and the timing disparities between resource usage and cash flows. Capital budgeting evaluates potential ventures necessitating substantial investments, ensuring alignment with predefined criteria through financial analyses. Project budgets comprehensively estimate all costs incurred until project completion (Finkler et al., 2020).

Accurate Revenue & Expenses Projection

Analysis of the fiscal year 2021 budget reveals a spending cap of $50 million for inpatient care revenues. With expenses totaling $23,123,516 million in the latter half of the fiscal year, projected actuals for 2021 are estimated at $46,247,032. Surplus funds can be allocated to staffing, employee education, equipment procurement, or other initiatives aimed at enhancing patient care (Vila Health Developing an Operating Budget, n.d.).

Revenue & Expenses Estimation

Current budget calculations indicate a surplus of $3,966,130, surpassing the operational budget of $40,895,000, with an actual amount of $44,861,130.

Balanced Budget for the Next Fiscal Year

While initially proposing a static budget or a 5% reduction, calculations for the upcoming fiscal year involve applying a 5% reduction to all current-year budget allocations. Approval of the revised budget is vital for maintaining operational sustainability.


Budgeting is imperative for the growth and financial stability of healthcare facilities. Whether operating within an operational, project, or capital budget framework, effective budget management ensures alignment with expenditure and revenue goals, a responsibility integral to administrators’ roles.

BHA FPX 4008 Assessment 1 Developing an Operating Budget


Armitage, H. M., Lane, D., & Webb, A. (2020). Budget development and use in small and medium-sized enterprises: A field investigation. Accounting Perspectives, 19(3), 205-240.

Finkler, S. A., Smith, D. L., & Calabrese, T. D. (2020). Financial management for public, health, and not-for-profit organizations (6th ed.). CQ Press.

Glushchenko, A. V., Kucherova, E. P., Mosolova, N. I., & Mosolova, D. A. (2021). Algorithm of forming the operating budget of integrated agro-formations in the south of Russia. IOP Conference Series. Earth and Environmental Science, 839(3), 32014.

Vila Health Developing an Operating Budget (n.d.).

BHA FPX 4008 Assessment 1 Developing an Operating Budget

Yekaterina, D. (2020). Operational budgeting system in trade companies. Retrieved from

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