Develop a budget for a new service (Smoke cessation and counselling service ) at out
patient department in an environment of scarce resources. Consider alternative options
using opportunity cost analysis.Annotate the document to show the sources of data used for
forcasting the expenditure for the budget period.
A Budget for Smoking Cessation and Counseling Service
The process of introducing a new service in any clinical setting involves developing an
appropriate budget which would ensure the necessary resources are availed to facilitate the
provision of the new service (Meigs & Robert, 2009). According to Sullivan & Sheffrin (2013),
budgeting process is without any doubt among the most imperative processes at the planning
stage of any new service introduction since it ensures that the fundamental functions or activities
are accounted for through financial prospects proposal and forecasting. As a result, this is
achieved through a critical consideration as well as appropriate allocation of resources which are
available whether scarce or in plenty to various activities envisaged to be carried out in course of
providing the new service (Garber & Phelps, 2013; Grossman, 2012).
As a result, it is important to bear in mind that development of a budget is a crucial process in the
delivery of health care services whether palliative or curative. This is attributable to the fact that,
the process enables preparation of tentative budgets and in case of scarce resources’
environments the possible alternatives based on opportunity analysis in order to ensure the
anticipated outcomes of the new service is achieved (Mittra, Sahu & Crane, 2009). Sullivan &
Sheffrin (2013) noted that participation as well as involvement of different stakeholders in the
budget making process is inevitable, especially those in the directly involved department, finance
or accounting department as well as management level to ensure sufficient research, feedbacks,
as well as reviews are provided before the final budget can be developed. However, considering
BUDGET PAPER 2
the daunting task involved in the process of developing budgets whether for new or existing
services, many organizations have adopted an annual budget development plan which may be
subjected to several reviews or amendments if need arises (Sullivan & Sheffrin, 2013).
For instance, in this proposed budget for a new outpatient service involving smoking cessation
and counseling service there will be an ultimate goal of making sure that tobacco smoking is
significantly reduced through motivation towards smoking cessation based on counseling
services. This is very imperative because of the benefits likely to accrue from such noble clinical
intervention bearing in mind that, it wouldn’t only be advantageous to smokers but it will also
benefit non-smokers through significant reduction of secondhand smoke (Grossman, 2012).
However, in with regards to budget development procedures it is always important to make sure
that there is a consideration of all aspects concerning expenses to be incurred in the
implementation of the project, how the project will generate income and how cash flows of the
project will be influenced by these two crucial factors (Sullivan & Sheffrin, 2013). Furthermore,
it will be essential to consider that the new service (smoke cessation and counseling service) will
be introduced in an outpatient department characterized by scarce resources meaning that
opportunity cost analysis will be vital in the determination of alternative options through which
the service can be offered.
Therefore, the expenses to be considered in the budget would involve that of setting up of a
centre for smoking cessation and counseling services within the outpatient department, and in an
environment characterized by scarce resources in order to prevent pulmonary or respiratory
disorders associated to tobacco smoking in the population. The objective is to introduce a new
clinical service as well as system changes through counseling service to promote smoking
BUDGET PAPER 3
cessation and treatment of tobacco dependence. As a result, both the guidelines as well as
specific recommendations with regards to intensive and brief tobacco smoking cessation
interventions can be implemented in an outpatient department with a challenge of scarce
resources shall be provided. The significance of this new service is because it will help in
addressing the chief public health and medical challenge of treating tobacco dependence, which
has been attributed to premature deaths of above 20 million people in America alone due to
diseases which are directly emanate from using tobacco (Huxley & Woodward, 2011).
According to US Department of Health and Human Services (2010), there is need for
introduction of an appropriate guideline of encouraging smoking cessation as well as counseling
services to motivate those willing to quit through a confluence of the necessary services and
circumstances. As a result, the new service will strive to incorporate a mix of effective
interventions in order to motivate smoking cessation by promoting consistent interventions by
physicians, clinicians or nurses as well as other health care staff. The primary goal of this new
service will be to encourage smoking cessation or quitting among current smokers as well as
discouraging new initiations to tobacco smoking among potential new smokers. The approach
will consider tobacco smoking as a chronic disease and not a habit using existing effective
treatment interventions as well as tobacco-use interventions and assessment, and to ensure ease
of access the new service will be based in the outpatient department.
In this project which concerns the introduction of a new service on smoking cessation and
counseling services at the outpatient department, it is important to consider that the environment
under consideration is a scarce resources one where the new service must be incorporated within
the normal running of the health care facility and utilize the least possible resources. As a result,
BUDGET PAPER 4
no rental or lease expenses to be incurred since the new service will be incorporated within the
outpatient department, but other expenses have to be considered as follows:
[Smoking Cessation and Counseling Service Center]
[Based in the Hospital’s Outpatient Department]
DEVELOPED BUDGET for ($3 million) period (01/01/2017 – 12/31/2017)
- Renovations and Partitioning (Total $ 200, 000)
Considering the smoking cessation and counseling service centre will be operating in a
premise provided by the government, this means that the rental expenses shall have already
been automatically waived. However, considering that the outpatient department premises
provided to house the smoking cessation and counseling service centre with an aim of
reducing smoking related disorders in the population, this means that the premises will need
to be renovated or partitioned in order to meet the intended purpose. This activity will be
allocated $200, 000 in order to ensure that the provided premises appropriately serve the
- Salaries and Wages (Total $800,000)
Irrespective of the fact that the smoking cessation and counseling service centre will function
under scarce resources environment, this doesn’t mean that it will not incur salary costs.
Hence, even though a number of volunteers can offer their services but some personnel will
be hired i.e. one lung health initiative coordinator, two clinical counselors, six nurses and
pharmacists, two lab technicians, ten support staff as well as four field staffs (advocacy and
BUDGET PAPER 5
- Fridge Benefits (Total $200,000)
From the perspective of labor laws globally, fridge benefits for local employees are
anticipated to be equal to approximately 25 per cent of the salaries or wages they earn. For
instance, fridge benefits cover a number of aspects including health insurance, life insurance,
social security, as well as retirement benefits which have to be totaled in order to get fridge
benefits employees are entitled to.
- Travel Expenses (Total $250,000)
There is always an inevitable need for logistics to facilitate movement of goods and people if
the smoking cessation and counseling service centre is envisaged to run effectively. This
means that the budgetary allocation for this purpose will be $250, 000 in order to make sure
that field staff (advocacy and mobilizing staff) moves smoothly to facilitate services delivery
to people in need of smoking cessation and counseling services.
- Supplies (Total $350,000)
For the purpose of ensuring that the smoking cessation and counseling services center
operations run smoothly it is essential for supplies to be considered in the budgetary
allocation including both medical and non-medical supplies. This is imperative in ensuring
that the smoking cessation and counseling service center has the capacity to appropriately
provide all the necessary services.
- Equipment (Total $600,000)
It is without any doubt that equipment are the most imperative items towards enabling
effective service delivery by the smoking cessation and counseling service center. Thus, in
BUDGET PAPER 6
the case of this smoking cessation and counseling service centre diagnostic machines as well
as office equipments such as drawers, tables, cabinets and chairs.
- Other Direct Costs (ODCs) (Total $350,000)
In addition, to all the expenses aforementioned, there are a number of other direct costs
which will be incurred by the smoking cessation and counseling service center and will
required a budgetary allocation of $350, 000. For this purpose, the smoking cessation and
counseling service center, the other direct costs to be included are utilities (e.g. water and
electricity bills e.tc.) as well as communication bills.
A breakdown of the budget is provided in the summary shown below:
SMOKING CESSATION AND COUNSELING SERVICES CENTER
Based in the Hospital’s Outpatient Department
Overall Budget for $3 million
Period between 01/01/2017 to 12/31/2017
Item Description Quantity Cost per unit Total cost
- Donations and allocations – – $ 3 Million
- Renovations and partitioning 1 $ 200,000.00 $ 200,000.00
- Lung Health Initiatives 1 $ 80.00 $ 80.00
BUDGET PAPER 7
- Clinical counselors
- Nurses and pharmacists
- Lab technicians
- Support staff
- Field officers (advocacy
and mobilizing staff)
4 $ 40.00 $ 160.00
Subtotal $ 800.00
- Fridge Benefits
- Lung Health Initiatives
- Clinical counselors
- Nurses and pharmacists
- Lab technicians
- Support staff
- Field officers (advocacy
and mobilizing staff)
4 $ 10.00 $ 40.00
Subtotal $ 200.00
- Travel Expenses
- Transportation of advocacy
and mobilizing staff
- Transportation of supplies
BUDGET PAPER 8
Subtotal $ 250.00
- Medical-related supplies
2. Non-medical supplies
Subtotal $ 350.00
- Diagnostic machines
- Office equipment
Subtotal $ 600.00
- Other Direct Costs (ODCs)
Subtotal $ 400.00
TOTAL BUDGET (OVERALL) $ 3 MILLION
Description of the envisaged budget application setting
The budget application setting will be consisting of a significant proportion of the population
who are smokers and in dire need for smoking cessation and counseling services for the purpose
of stopping tobacco smoking. The prevalence of respiratory and pulmonary diseases is very high
BUDGET PAPER 9
among tobacco smokers, but it can be reduced to a significant extent if smoking cessation and
counseling services are readily available. Hence, this smoking cessation and counseling service
centre will operate within the outpatient department and endeavor to ensure that this crucial
service is availed to those in dire need to quit smoking. Consequently, if the target client is
considered it is unmistakably clear that the setting for the budget application has a considerable
proportion of the population inflicted by tobacco smoking diseases. It is also imperative to
highlight that this setting for the budget application is without any doubt a low socio-economic
status, and this can be attributed by the fact that there is need to provided this new service in an
environment of scarce resources. This is usually not the case in high as well as medium socio-
economic status regions, where most of the population can afford to pay for smoking cessation
and counseling services thereby averting the menace of smoking related diseases as well as
deaths, but this is not the case in this scenario.
Alternative options using opportunity cost analysis
According to Henderson (2008), opportunity cost is concerned with what has to be foregone for
the sake of what is selected or chosen. It is without any doubt that, several other sources of
funding and projects were forsaken in order to pursue the smoking cessation and counseling
service center project (Miller & Buckman, 2007). In addition, there are alternative options that
can be explored based on opportunity cost analysis on how the smoking cessation and counseling
service centre for tobacco smokers can be effectively run.
The first option is to establish the new service separately as a non-governmental operated
organization. This will help in ensuring that more resources are mobilized from donors in order
to ensure that the activities envisaged to be carried out with regards to the new service are
effectively achieved. The second option is that, it can be run as a private entity private investors
BUDGET PAPER 10
pump in funds to avoid the challenge scarce resources and those who will be seeking this new
service from the smoking cessation and counseling services are required to pay for the offered
services (Primeaux & Stieber, 2007). The third option is to make sure that mobilization and
advocacy is carried out to ensure that the government pumps significant resources into the new
service in order to ensure that it fully fund the centre. However, this alternative option will
always not definitely lead to the desired outcomes because the government will rarely have such
sufficient resources to fully fund such new services’ centre to effectively provide smoking
cessation and counseling services. As a result, the opportunity cost here will be the need of
setting up a fully equipped hospital’s outpatient department to provide smoking cessation and
counseling service (Salvatore, 1989; Silver, 2000).
Fundamental document in forecasting expenditures
There are various documents which play an essential role in the forecasting of the expenditures
of the smoking cessation and counseling service centre for the smoking population considering it
has become a significant public health concern. This is due to the fact that the expenditures of the
smoking cessation and counseling service centre is expected to increase over time in the near
future leading to rising operational costs (Mittra, Sahu & Crane, 2009). A number of factors may
be attributed to this such as inflation rate as well as changing lifestyles. According to Sullivan &
Sheffrin (2013), the rate of inflation is anticipated to heighten in future resulting to an increase in
the cost of labor as well as goods and ultimately the overall expenditures of running the
organization. In addition, changing lifestyles may also lead to increased operational costs of the
smoking cessation and counseling service centre as more people may be expected to seek for the
new service in future.
BUDGET PAPER 11
Two crucial documents have been significantly helpful in forecasting expenditures for the
smoking cessation and counseling service centre for smoking population. The initial and most
important document is the government budget for the financial year under consideration which is
suggestive of a stunted economic growth attributable to increased inflation as well as other key
factors leading to increased expenditures for the smoking cessation and counseling service centre
within the outpatient department. The other documents utilized is a collection of public health
surveys which are indicative of envisaged continuation of increasing rates of people to seek
smoking cessation and counseling services in future. Combining the information or data gathered
from these two crucial documents, it was possible for the expenditures of the smoking cessation
and counseling service centre operations to be forecasted.
BUDGET PAPER 12
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