Improving the operating budget process at Abbott Northwestern Hospital.
To set an example for the organization, the senior management team at Abbott Northwestern Hospital used quality tools and techniques to improve a highly visible, problematic system--the operating budget process. Team members narrowed the root cause to a faulty, nonintegrated assumption process and identified additional problems, such as inadequate communication, unclear accountabilities, and lengthy timetables. Then, the team streamlined the budget process from a 6-month to a 10-week cycle, which aligned the process with one of the organization's shared quality goals--reducing cycle time.


RESULTS
Cycle time was reduced by 60 percent, from an average of 6 months to 10 weeks. Budget accuracy, which is measured by how close initial budget submissions come to targeted net income projections, improved by $12 million or 500 percent. The amount of rework, which is measured by the number of budget revisions made prior to Board approval, dropped from eight revisions to four. Overall satisfaction and familiarity with the budget process increased by 40 percent among managers and supervisors.
Abbott Northwestern Hospital, Minneapolis, MN 55407.
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Roovers
D002017:Budgets / Q000592:standards*; D003659:Decision Making, Organizational; D017598:Efficiency, Organizational; D005377:Financial Management, Hospital / Q000379:methods / Q000592:standards*; D006746:Hospital Bed Capacity, 500 and over; D008330:Management Audit; D008332:Management Quality Circles; D008910:Minnesota