Strategic Plan Part 3 Strategic Planning Process

Strategic Plan Part III – Financial Plan

HCS 589

Phoenix University

Strategic Plan Part III – Financial Plan – Veterans Health Administration

Finance is very important to all businesses. Businesses need to know what funds they have in order to operate their business and to make any expansions that are needed. Setting long-term goals, investing, spending, and saving is all that is involved in financial planning. Financial planning forecasts financial results for the future and assists in how the business financial resources should be used. Financial plans can show the business or businesses where to concentrate their resources so that they can build their revenues and manage their costs (Hill, 2016).

The determination as to what path the business takes is determined by strategic planning. Accomplishing tasks schedules and whom will be responsible for completion is all a part of strategic planning. Financial planning utilizes the actions that are defined in the strategic plan and transforms those actions into “dollars” (Hill, 2016). It is critical that realistic assumptions are developed for key variables like unit sales projections and pricing. There are many variables that affect a business financial results when creating a financial plan, for these variables are hard to predict (Hill, 2016).

According to Cleverley, Cleverley, & Song (2011), there are ten requirements that are very important to having an effective financial plan (p. 291). The ten requirements that are important in creating a financial plan are as follows:

Accounting system – provides revenue, data on cost, and investment.

No growth – because “no growth does not imply a zero-growth rate in assets” it is vastly overlooked(Cleverley, Cleverley, & Song, 2011, p. 291).

Working capital – a key element in figuring the needs of future assets.

Long-term solvency – accrual of funds for future investments.

Debt capacity ceiling – in the financial plan it is viewed as a balancing variable, and can move to the investment side.

ROI – in program selection, it is an important measure.

Non-operating sources – non-operating income is gains and investment income for most healthcare organizations.

Integrated with management control system – integrating with management control system is sometimes overlooked, however, it is a requirement.

9. Updated annually – financial plans should be updated annually because “business environments continue to change rapidly” (Cleverley, Cleverley, & Song, 2011, p. 293).

Board document – the financial plan should be approved by the board.

The four steps that are involved in creating a financial plan are assessing financial position and previous growth patterns. The second step, for the planning period the growth needs of total assets are to be defined. The third step for long-term and current categories, an acceptable level of debt must be defined. The fourth step, the growth rate in equity must be assessed (Cleverley, Cleverley, & Song, 2011, p. 300).

Fiscal Details of the Plan

The projected plan for the Veterans Health Administration is set out in a five-year plan. The five-year plan covers projections for 2 of the Veterans Health Administration. There are approximately 150 medical centers, almost 1,400 community-based outpatient clinics, which serve over 8.3 million Veterans yearly (“About VHA – Veterans Health Administration,” 2015). With breaking down the budget information that was researched, the financial plan/projected budget was created, along with capital improvements. The capital improvements were budgeted for every other year, and each of the expenses and revenues was carried throughout a five-year process. This was a long-range plan forecasted for fiveyears.

Assumptions used in Creating the Projected Budget

The following assumptions were used in creating the projected budget:

Assumptions:

Creating a budget projection is a way of translating the business goals into specific targets. It is a way of clearly defining a successful outcome and what it entails. The financial plan suggests a commitment to making sure that the “targeted results happen” (“Financial Projections – Small Business Encyclopedia,” n.d.). The plan also provides the business with a “feedback and control tool,” and anticipate issues (“Financial Projections – Small Business Encyclopedia,” n.d.). The assumptions that were made in this plan were to show what was assumed to be an increase and or decrease in expenses and revenue. The revenues continued to increase based on the assumption that expenses would increase, and it is better to have more revenue than expenses. The increases and or decreases for expenses were increased or decreased where needed in all categories at different percentages based on the assumption that suppliers will increase their prices and that materials for different categories will have a price increase or decrease for purchases over the years. The increases and or decreases for revenue was based on the assumption of changes in funds received from different contributions, and or funds received in the increase of patient/Veterans care.

The capital expenditures includedshelters for homeless Veterans, transportation for Veterans that live to far from Veteran facilities, and clinics for those that need minor medical attention. The capital expenditures are assumed to be completed within five years. A contingency plan for the Veterans Health Administration provides for a buffer zone.However, a contingency plan is not needed. The Veterans Health Administration will be able to meet its budget goals. Planning for contingencies may cause services, and costs to be overestimated (Way, n.d.). Contingency planning can be essential.However, it can also be avoided during “economic turbulence.” Developing a contingency plan is complex and involves various stages and isolated activities (Way, n.d.). The budget projection predicts that the Veteran Health Administration revenue will increase each year by 10% and that they will make a sizeable profit at the end of each year.

Budget Summary

The Veterans Health Administration current business model would be based on the “Beveridge Model” or what is called a “Socialized Medicine Model” (“Models-of-health-care-systems,” n.d.). The Beveridge Model is one that is the healthcare is financed and provided by the “government through taxes.” The patients do not have medical bills, for the medical care is like a public service. Although the Veterans Health Administration business model could be based on the Beveridge Model, their business model also could be more of an employer-based model, which was developed during WWII. However, there are other business models that could be said to be the model that the Veterans Health Administration follows (“Models-of-health-care-systems,” n.d.).Recommendations for the Veterans Health Administration is for them to change and or to extend their present business model. The employer-based model to be changed to “patient-centric,” a business model that is in the health care industry as a data-centric, experience-focused, behaviorally savvy, revenue flexible, and holistic model (McBride & Beato, n.d.).

The Veterans Health Administration makes sure that healthcare is provided to United States Veterans and is the largest healthcare system in the U.S. the impact of internal resources and its financial capabilities on the VHA’s business model implementation seems to have been effective in that their leadership approach, and providing direction for their vision and mission statements. The VHA’s internal resources and its financial capabilities affected the financial plan by providing the information needed to assist in making effective decisions on expenses and revenue. It was a guideline or a laid out path to what was needed, and analyzed it internal resources and financial capabilities it was a guide to assist in creating the plan, although difficult, the financial plan was created with as much information that was retrievable.

The implementation of the plan will not be easy, for all that are involved will need to be on board. The internal resources and the financial capabilities are there. There is no resistance to what the plan brings about it will not be easy work, and it will take the involvement of everyone to assist with the implementation. The strategy to increase volume is to continue to provide quality care to all Veterans and its family members and to improve and add facilities that will beneficial. The plan shows revenue that is possible to meet all the needs of the Veterans and benefit the employees as well.

Conclusion

The budget assumption highlights the importance of having a healthy environment for all Veterans and its families. The VHA provides a variety of services and provides services that are patient centered and evidence based. Care is delivered by collaborative teams, in an environment that supports discovery, learning, and continuous improvement. The VHA contributes to the nations “well-being through education, services in National emergencies and research” (“About VHA – Veterans Health Administration,” 2015).

References

About VHA – Veterans Health Administration. (2015). Retrieved from http://www.va.gov/health/aboutvha.asp

Cleverley, W. O., Cleverley, J. O., & Song, P. H. (2011). Strategic Financial Planning. In Essentials of health care finance (7th ed., pp. 287-312). Sudbury, MA: Jones & Bartlett Learning.

Financial Projections – Small Business Encyclopedia. (n.d.). Retrieved from http://www.entrepreneur.com/encyclopedia/financial-projections

Hill, B. (2016). About Business Financial Planning | Chron.com. Retrieved from http://smallbusiness.chron.com/business-financial-planning-2675.html

McBride, A., & Beato, C. (n.d.). Five Recommendations to Improve Veterans Healthcare During the Second Term of the Obama Administration | Political Appointee Project. Retrieved from http://www.politicalappointeeproject.org/commentary/five-recommendations-improve-veterans-healthcare-during-second-term-obama-administration

Models-of-health-care-systems. (n.d.). Retrieved from http://www.healthcareforalltexas.org/models-of-health-care-systems.html

Way, J. (n.d.). The Advantages & Disadvantages of the Budget Contingencies Method | Chron.com. Retrieved from http://smallbusiness.chron.com/advantages-disadvantages-budget-contingencies-method-41296.html