Zero Based Budgeting for Windsor Regional Hospital

Zero Based Budgeting for Windsor Regional Hospital

Introduction

At Windsor Regional Hospital, the Board of Directors have witnessed exceptional growth along with a great increase in the demand for services, to fund this growth over the last 10 years it has made them to restructure their budget process. Therefore the board has chosen a new way to respond to the demands that they are facing through the use of zero based budgeting process.

Discussion

Implementation and Recommendation of Zero Based Budgeting

There are just few steps through which Winsor Regional Hospital can implement ZBB. The initial step is to establish decision packages which include the description and analyses of each item or activity (Carter, 1977). By the use of five essential elements provided by Peter A.Pyhrr the packages are ranked. In the development of ZBB for the hospital, it is important for the departmental managers to understand that a new thought process is needed which can make this implementation successful. ZBB is not based on the previous year's data or previous trends. Instead of that every item needs to be re-justified, analyzed and developed into a new package on yearly basis. Therefore the departmental managers should accountable for every money spent on any item or activity that is being done. With ZBB a manager needs to take tough decisions including personnel, policy, programs etc. In the establishment of decision packages, the hospital should review all the programs from the perspective of its revenue stream.

According to the developer of ZBB, evaluating the package must consider four measures. The first step in developing the decision packages is to review all current departments, programs, clinics, hospitals and initiatives. The objective of the evaluation should be focused on its effectiveness and benefits that the hospital would experience in the year ahead. After the program is evaluated, Windsor should move to the next step. In the next step, Winsor should focus on eliminating programs that are useless and ineffective. It can be observed from the nature that those branches of the tree which don't get the right amount of sunlight and nourishment either change their direction or die ultimately. In the same manner, any program or activity within the Windsor that is obsolete or ineffective should be eliminated or re-directed. In the development of packages the third step is to develop goals or objectives for every program or organization. For the justification of the existence of any program, it should have a goal. The purpose for existence is being laid through the development of mission or goal. Moreover the objectives should be tangible. It is good to have noble goals, only a few organizations will put money into those programs irrespective of their low return from the goal. The fourth and last step for the development of decision packages for the hospital is to get every departmental manager involved in the formation of policy that will regulate his or her department. These regulations should consider finances, activities that are linked with each cost, ...