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Dr. G's Fundamental Rules Of Budgeting

"Our annual battle with mental constipation" is how I used to refer to our interminable budget preparation sessions. For years I struggled, unsuccessfully, to find the right "laxative." Then one particularly grim season Dr. G., our new VP - Medical Affairs/CMO joined the team.

Dr. G was a newly-retired general surgeon and someone I'd always found more than a little intimidating. He was impatient, opinionated and occasionally blunt to point of rudeness...and absolutely the surgeon you'd want operating on yourself or a loved one.

The sessions dragged on, the days turning into weeks as we pursued those elusive EBITDA points. Though a careful observer, Dr. G said very little. Yet I noticed him taking lots of notes, sometimes with wry, little smile. As the sessions drew to a close I asked for his observations on the process.

In response, he handed me his notes, now typed and titled "The Fundamental Laws Of Budgeting." Believe it or not, they're actual comments and lines of argument, recorded as, one after another, beleaguered department directors defended their budget drafts before a cranky committee of executives and budget trolls.

How stupid did we sound? I'll leave that to you, dear reader, as I offer Dr. G's 23 laws:
  1. If we only have one of something and it breaks we're in real trouble; so we need at least two of everything.
  2. The actual number of FTEs budgeted is never the same as the number actually used.
  3. All equipment, no matter when purchased, is old, outmoded and in need of constant, expensive repair.
  4. Decreased turn-around time can be used to justify most any request.
  5. The relationship between revenue and expense, if any, can be emphasized or ignored at will.
  6. New technology is (a) always unreasonably demanded by physicians, and (b) can't be profitable until physicians are "educated" to use it.
  7. Not enough marketing is partly to blame for everything.
  8. Every choice has a domino effect and I am a domino.
  9. Management will grow at its own rate regardless.
  10. People who are retired or deceased can't be counted as FTEs.
  11. If there is no solid rationale for making a decision, a majority vote will do.
  12. All budget objectives are basically unattainable; any target actually reached was the wrong target to begin with.
  13. The more an issue is examined and discussed, the fuzzier it becomes.
  14. One person can never do the job of one person. A part of another person is needed to work vacations, sick leaves, breaks and other paid time off. And so it follows that full time is always part time which leads to overtime which then requires, you guessed it, MORE FTEs.
  15. All comparisons with external benchmarks that are unfavorable to us are demonstrably invalid.
  16. One thing you can count on: nothing ever gets better.
  17. At any individual's convenience, an increase can be a decrease and a decrease can be an increase.
  18. The statistic never accurately reflects the fact.
  19. You've got to know when to hold 'em and know when to fold 'em.
  20. The budget process is essentially a contest between squeaky wheels and knot holes.
  21. If appeals to reason don't work, mention your competition.
  22. Everyone's ox is gored.
  23. When all is said and done, there's only so much money.
Not a pretty picture, eh? The good news is that Dr. G's observations caused sufficient embarrassment that the next year's cycle got a whole lot better. Funny how that works.


Comments

smm said…
I remember these rules with great fondness (and great accuracy).

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