The definition of budget is an estimate of income and expenditure for a set period of time. Community Health Centers (CHCs) are required to develop an annual budget, which gives the organization targeted goals for financial success. In developing a budget for CHCs there are several recommended steps to ensure a comprehensive departmental budget.

Revenue projections, staffing and expenses are the fundamental areas to be considered for analysis in budget development. Budgets should be estimates based on factual information and should create accountability within all departments.

The first step in creating a comprehensive budget is involving staff and leaders in the organization. This could include the Chief Medical Officer, Chief Operations Officer, Practice Managers, Directors, etc. Staff know what is needed in their particular department and their input is vital to the successful creation and implementation of the budget.

Secondly, it is recommended to build budgets based on productivity or projected visits. Involvement of the Chief Medical Officer in standardizing the number of patients seen by provider type is instrumental in establishing these targets. Using this information, and historical patient revenue by payor source from the practice management system, total patient revenue can be estimated. Other items to consider in developing projected revenue are funding sources such as grants, contributions, incentives, etc.

Thirdly, staff costs should be projected since this typically represents one of the most significant costs for CHCs. It is imperative that we consider staffing ratios and that we plan for increased staffing needs, including benefits, training, time off, recruitment, retention, and salary increases; both cost of living and performance-based. Again, this should be discussed with the appropriate staff in order to determine the needs of any particular department.

Lastly, expenses are typically based on historical costs, but it is important that the expenses are reviewed, analyzed, and determined if the cost will be ongoing.

Once this information is gathered the data is developed into a draft budget which is then reviewed and approved for submission to the board of directors. A comprehensive budget can be developed following the recommended steps and it is important to remember that a budget is a guide and should be flexible.