Healthcare budgeting for cyclicality: Structured literature review of accounting, public administration and ­­­health management

IMPACT

This article warns that cyclical stocks are affecting the delivery of routine healthcare services. Planning fails when a shock occurs and policy-makers and managers need to adapt to budgetary over-estimation. To ensure a sustainable level of services at all stages of the economic cycle, cyclical impact should be systematically determined. This would improve decision-making and help minimize institutional and political impediments. However, developing these capabilities is difficult, requiring a multi-year perspective to be incorporated into the annual budgeting process. An important prerequisite to do this is for stakeholders to understand the impact that cyclicality has on healthcare

ABSTRACT

Healthcare organizations are challenged to consistently deliver routine services during crises. This article examines how healthcare budgets are affected by business cycles, using a structured literature review to examine the public administration, public sector accounting and healthcare literature. The results demonstrate that budgetary techniques fail during a recession—requiring an emergency response. Complexities in forecasting accurate and credible targets, due to the difficulty of predicting the timing and magnitude of recessions, is leading to budgetary over-estimation. The authors call for more research on budgetary planning capabilities to measure the impact of the economic cycles on budgetary processes to minimize the need for forecasting. Interestingly, the authors found that European studies in this area tended to be published in accounting journals, while US studies were more likely to be published in public administration journals.

KEYWORDS:

• Budgetary planning
• business cycle
• forecasting
• healthcare expenditure
• political impediments

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.