Creating efficient budgets is a vital process for the advancement of the quality of care and to create efficiency in any healthcare organization. This process lays out a plan for the expenses and revenues of each year and therefore all departments involved in a healthcare setting must be involved in identifying and utilizing the most effectual budget. Nowadays, healthcare funds are given to hospitals and providers. It is important that nurses understand that every penny received should be accountable for in the healthcare provision process. Therefore, nurses must be financially responsible and well-versed in the budgetingprocess.
One type of budget that nurses manage is the operating budget. This is a list of the costs and revenue that a department, organization or a project generates over a particular period in comparison to the goods and services offered (Penner, 2004). The expenses and revenue in a healthcare system result from providing health care services. This type of budget comprises of the day to day costs and revenue incurred in the provision of healthcare. It is highly recommended that organizations create, implement and monitor their operating budget. There are two types of operating budgets. Fixed operating budget remains constant despite any modification in the organization’s operations. Flexible operational budget on the other hand is designed to accommodate in accordance to cost, volume and expenditure changes. The process of creating an operating budget depends on the services offered, and how each patient and staff relate in healthcare transactions and the hours of care per patient. This data can be sourced from previous statistical reports, the objectives and strategic plans of the organization and the industry’s reimbursement and care trends(Lidia, 2014). After developing the budget, a forecast predicting the resources needed to offer the intended services is provided. The operating budget quantitatively represents the plans, intent and action of the management. After implementation, monitoring must be done in order to note variances that can be accounted for in the next budget.
Another type of budget in the healthcare setting is the capital budget. This budget is concerned with future organization investments such as renovating facilities and buying modern equipment(Michelon et al., 2020). This budget is normally handled in upper management levels but can affect a nursing unit’s operating budget. Fixed assets and the main movable equipment are included in the capital budget. One aim of this budge is to equip the facility with state-of-the-art equipment to substitute those that are outdated thus increasing the organization’s value.
Another type of budget is the staff budget. This usually itemizes all employees and breaks down the benefit costs and salaries of each one of them. It is also concerned with the cost of all employee salaries, cost of hiring new employees, per diem costs and any training of career development costs. The process of creating a staff budget depends on number of employees and their needs. For example, a unit that tends to more patients at night requires that the budget considers more staff at night.
Organizations use the budgets discussed above to assess their financial status. Since nurses are closest to patients, they are in the know of what is expected to provide quality care in their unit and it is therefore essential that nurse leaders take the initiative to be involved in these budgets.Nurses in leadership roles need to be cost-effective and can only achieve this by preparation and forecasting (Bensink et al., 2013). Nursing managers are more involved in the operational budget especially when it comes to managing personnel and supplies. Planning is an important aspect of budget development. In the planning stage, nursing managers settle on the objectives of the unit for a particular period. Then, they identify the resources needed and then forecast expenditures and revenues in line with the objectives set while taking into consideration the assumptions made. For example, a nursing manager might collect information on daily patients cared for, how long certain supplies last, cost of medical gear for their unit etc. Nurses managers also need to find strategic cost-cutting ways that do not negatively affect the care they provide to patients (Bauer, 2010). They can achieve this by reducing e-waste, creating schedules that avoid overtime and keeping, sharing and analyzing patient records in digital format. Nurse managers in their leadership roles are also required to use their skills in engaging their units and encouraging unit-based practices that endure the unit works as one. This ensures that the unit is equipped with the necessary materials and resources required to establish and maintain high quality care. For example, a certain unit might partner with another department for supplies. One such case is where a facility with a pharmacy on-site that supplies medications to the unit. These are logged as expenses patients would pay for the medication and then those payments would be recorded as revenue in the unit’s records.
Nursing leaders can also utilize variance data in developing budgets. It is critical that a nurse manager understands the budget variances in order to contain costs and manage expenditure within their units (Naranjee et al., 2019). This is the difference between the actual budget and the projected budget. For example, a nurse who notices that hand sanitizers cost in the projected budget is lower than the actual budget might do their investigation and conclude that the nurses prefer sanitizer during winter as opposed to scrubbing with water and hence account for the same in the next budget.For example, by controlling staffing and scheduling through keeping registry and overtime expenses inside the budget limits, a nursing manager can manage the price variance, a measure of the difference between the actual and budgeted expenses of non-personnel and personnel items in a budget report. Efficiency variance can be controlled by introducing staff training programs can help reduce excessive supply usage. A nurse leader might achieve this by regulate staff hours and combining nonprofessional and professional staff.
The problem of estimating nurse staffing is a complex and ever-present issue in healthcare settings (Rossetti &Gaidzinski, 2011). In order to address this problem, it is important to evaluate the number of patients, the service offered and the healthcare facility status with a view to justify investing in nursing personnel. The table below is a nurse staffing mock budget for a hospital. RN is registered nurse while LPN is a Licensed Practical Nurse. Approved is the number of personnel to be hired. Recommended is the industry recommendation.

Mock Nurse Staffing Budget

References

Bauer, J. (2010). Nurse practitioners as an underutilized resource for health reform: Evidence-based demonstrations of cost-effectiveness. Journal Of The American Academy Of Nurse Practitioners, 22(4), 228-231. https://doi.org/10.1111/j.1745-7599.2010.00498.x

Bensink, M., Eaton, L., Morrison, M., Cook, W., Curtis, R., & Gordon, D. et al. (2013). Cost Effectiveness Analysis for Nursing Research. Nursing Research, 62(4), 279-285. https://doi.org/10.1097/nnr.0b013e318298b0be

Lidia, T. (2014). Difficulties of the Budgeting Process and Factors Leading to the Decision to Implement this Management Tool. Procedia Economics And Finance, 15, 466-473. https://doi.org/10.1016/s2212-5671(14)00484-5

Michelon, P., Lunkes, R., &Bornia, A. (2020). Capital budgeting: a systematic review of the literature. Production, 30. https://doi.org/10.1590/0103-6513.20190020

Naranjee, N., Ngxongo, T., & Sibiya, M. (2019). Financial management roles of nurse managers in selected public hospitals in KwaZulu-Natal province, South Africa. African Journal Of Primary Health Care & Family Medicine, 11(1). https://doi.org/10.4102/phcfm.v11i1.1981

Penner, S. (2004). Introduction to Health Care Economics and Financial Management: Fundamental Concepts with Practical Application. Journal Of Nursing Management, 17(6), 768-768. https://doi.org/10.1111/j.1365-2834.2009.01034.x

Rossetti, A., &Gaidzinski, R. (2011). Estimating the nursing staff required in a new hospital. Revista Latino-Americana De Enfermagem, 19(4), 1011-1017. https://doi.org/10.1590/s0104-11692011000400021