How do you develop your organisation’s budget for Consumer Directed Care?
Let’s break it down:
Income estimation is based on:
Number of packages x applicable package funding x percentage of packages filled. For example:
50 Level 2 packages x $14,417.50 (this will increase from 1 July 2016 so include % increase). Then multiply by a percentage (based on percentage of packages filled), say 95%.
50 Level 2 packages x $14,417.50pa x 95% = $684,831
That’s the easy part done.
Expenditure estimation is based on:
Administration Fee (usually known as Corporate Overhead) – is based on the total expenditure of your organisation’s head office. The splitting of this across your programs, including your Home Care program is very subjective in my experience. Most organisations base the split on income or expenditure for each of the programs.
Case Management – is based on your salary budget, including on costs. You will have to include other related expenditure such as travel costs/motor vehicle costs (if provide vehicles) and specific equipment costs.
The remaining costs that need to be included in your budget is the package balance. You calculate that as follows:
You presume the balance of $445,140 will be spent on goods and services so it will be allocated to a general CDC expenditure line in your financial accounts.
I know you’re thinking that there’s a lot more to it than that, well not really. It should be that simple for budget purposes. If you want to break it down further you certainly can. For example, if you provide your own personal carers, you might allocate a percentage of the balance to your salary line including on costs.
You might also be thinking, what if the consumer doesn’t spend their total package in the financial year, how do I factor that in? No problem. If the package isn’t all spent, the balance will sit on your Balance Sheet, which is where you should be allocating until it is spent. That way you won’t inflate you Profit & Loss incorrectly.
Remember, it is crucial that you include a margin in your charges to the consumer, otherwise you won’t make any profit.
Contact Debra Ward at Care Collaborator if you need any assistance with any aspect of Consumer Directed Care. I can be contacted via my web page: www.carecollaborator.com.au or email firstname.lastname@example.org.