Budget

Budget management

1 Introduction

The NHS reforms have had far reaching implications for clinicians of all grades and specialties. Among other changes, it has been deliberate government policy that s enior clinicians should have more direct management and budgetary responsibility wit hin their own clinical areas. Trust hospitals have developed a directorate based manag ement structure and devolved budgets to clinical directors. A&E departments have eit her become directorates in their own right or associate directorates within larger direct orates. A&E consultants who take on clinical directorship responsibilities will have m ore direct control of spending within their own department. At first this may seem inti midating, but the advantages of having control outweigh the disadvantages of more ad ministrative activity.

This article aims to give some guidelines to help make the task less daunting, as well as some tips based on personal experience. I do not intend to cover fund raising a ctivity or the organization of postgraduate education and its funding. Brief mention wi ll be made of "business planning" at the end. And we have outlined what management budgeting is and how it differs from traditional budgetary control systems in health a uthorities; considered what it aims to achieve; and discussed the participation of clinic ians in the management budgeting process and its likely impact on their methods of w orking.

2 What is a budget?

Traditional budgetary control systems are based primarily on a structure of what are normally termed functional or departmental budgets. In this structure budgets are held by those people responsible for providing a service.

There is normally no participation of clinical staff in this budgetary control struct ure other than the possibility that the budget holders for pathology and radiology migh t be the consultants in charge. This seems strange given the considerable influence tha

t clinicians have over the use of hospital resources.

In any system of budgetary control a key principle is that individual budget holde rs should be held responsible only for those items of expenditure over which they can exert control. In health authorities this principle does not always apply. An extreme ex ample of this concerns the pharmacy budget, where the pharmacist is often held respo nsible for drugs expenditure even though he has no direct control over the level of spe nding.

Although a budget is a sum of money given to you to run your service (including salaries and wages of all personnel) it is important to realize it is essentially a paper e xercise similar to running your own bank account and receiving a bank statement. You will never actually see the money and the nitty-gritty of manipulating the account is d one by your management colleagues and the finance department. Your role as clinical director is to keep a watching brief on it and to make executive decisions as to how it i sspent. There are three broad categories of budget:

(1) Steady state-you are allocated the same amount of money each year with an a llowance for inflation. Although it offers predictability for future planning it is inflexi ble and does not allow for surges in activity or unfunded government and trust lead ini tiatives. The majority of A&E departments receive their funding in this way.

(2) Activity based-the amount of money provided reflects the work done. It is acc urate, flexible, and is the basis of much purchaser/provider contract activity. It is gene rally not available until the work has been completed and will vary from year to year.

(3) Lump sum-the government, region, or trust releases a lump sum of money for a sp ecific purpose (for example, to start triage or audit or to complete a waiting list initiati ve).This is unpredictable, often comes at short notice, and can rarely be used for long t erm planning.

Although the majority of A&E budgeting falls into the first category, lump sum money is available from time to time. An average department seeing 50 000 patients a year may hadean annual budget of approximately one million pounds. When taking o n a budget ask these questions: