BOOKS OF RtfiDIfGS - PAHO/WHO

- .,1 -
Programming, Budgeting, and Control
in Health Care Organizations:
The State of the Art
RPc, rt A. Vraciu
The planning, budgeting. and controlling processes (PBCP) largely subsume all of the
planning and controlling activities of an organization. This paperdiscusses these activities
within the context of a single management control system, focusing on three topics.
First, a brief historical perspective of management concerns which relate to PBCP is presented
and several important external pressures currently imposed on the health care
industry are discussed. Second, normative models of the processes-progri'mming, budgeting,
and controlling-are presented. The discussion focuses on the elements and relationships
of these processes, and numerous references to the literature are provided. Third,
several issues related to the gap between the state of the art in PBCP for hospitals and the
current state of practice are discussed.
Much of the management control
process involves informal communication
and interactions. lni,. .uí
communication occurs by means
of memoranda, meetings, conversations,
and even by such signals'as
facial expressions. Although
these informal activities are of
great importance, ... most companies
also have a formal management
control system. [1, p. 191
I OGaamoNG, budgeting, and controlling
processes (PBCP) represent
the three major phases of such a formal
management control system. A simple
schematic diagram (Figure 1) illustrates
the relationships between these activities
as they occur in a regular cycle and
the role of strategic planning as a
starting point.
"Programming is the process of deciding
on the programs that the company
will undertake and the appropri-
ate amount of resources that are to be
allocated to each program" [2, p. 670].
' is aspec! of the planning process
lcludes the formulaticn ,f corporate
objectives and strategies based on marketing,
legal, regulatory, and social concerms,
as well as on the organization's
own perception of its role. During this
stage, health care organizations would
identify the types of medical services to
be provided, the types of teaching and
research activities to be conducted, the
service populations to be served, and
the general mode of operations for both
a long-run and a short-run planning
horizon.
The second phase is the budgeting
process which expresses the programming
decisions in monetary terms, and
covers a specific time period, generally
one year. The budget represents the
best plan for allocating resources to
achieve the objectives and implement
Address communications and requests for reprints to Robert A. Vraciu. Assistant Professor,
Program in Hospital Administration, School of Public Health, University of Michigan,
Ann Arbor, MI 48109.
0017-9124/79/1402-0126/$2.50/0