Improving Budgeting Procedures and Outpatient Operations in Nonprofit Hospitals

by V. D. Taylor, Joseph P. Newhouse

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An analysis of the budget of a nonprofit hospital and the costs and operations of its outpatient department. The problem addressed is: How can the hospital use the funds available to it to provide maximum benefit to the community? A methodology is developed to answer that question. The methodology shows what parts of the operation are inefficient, what parts should be expanded, what contracted, what the net cost of the teaching program is, and what an appropriate pricing policy is. A revised budget format focusing upon social benefit and social cost, rather than profit and loss, is also presented.

This report is part of the RAND Corporation Research memorandum series. The Research Memorandum was a product of the RAND Corporation from 1948 to 1973 that represented working papers meant to report current results of RAND research to appropriate audiences.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.