Budget Development
Olha Storozh
Chamberlain College of Nursing
NR533: Financial Management in Healthcare Organizations
November, 2017
In today’s day and age of big data and statistics, organizations require effective ways of combining it in order to create an effective budget. Countless studies have shown that with an appropriate nurse staffing, patient outcomes improve. Only with proper fiscal management and responsibility can a hospital really provide the highest quality of service to its patients. This paper will review methods of creating an effective budget as well as analyzing and improving the budget sample of the St Louis Medical Center (SLMC) cardiac unit,
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First off, past data must be looked at. Financial records from previous years are a great indicator of future trends and so they must be taken into account. These records would contain any activities that must be continued or are being discontinued and so those should definitely be considered. After this a general review of one’s organization’s goals is important. Making sure that the budget reflects what the hospital wants to achieve is crucial, including any upcoming new projects and their priority. Also, a nurse manager needs to make sure they account for variances when they create a budget. A budget has to be able to handle changes that occur as the fiscal year trudges on. Finally, since the budget is such an important framework for the hospital, any leader must ensure that they take into account the views of their employees. If everyone on the floor is on the same page with how the hospital is going to effectively spend, there can be more cohesion and a more effective work environment (Hunt, …show more content…
Assimilating patient acuity into the staffing mix can permit SLMC better control of expenditures and staffing allocation, as well as improve patient outcomes (Barton, 2013). Varying levels of attention must be devoted to each individual. If this data is used when making nurse staffing decisions, there is more equity and a more effective use of the budget (Andersen, Lønning, Bjørnelv, & Fagerström, 2016). Furthermore, in order for a budget to really be successful, there must be input from those who it is affecting. If people are involved in the creation of the budget, they’ll be more accepting of its outcomes and be more willing to adjust to variances that occur throughout a volatile year. Nurses should also participate in purchasing of equipment and other supplies necessary for the unit. By doing so nurse manager can not only create a financially responsible budget but also assist employees to be aware of the cost of what they use. That awareness prevents unnecessary expenditures and helps keep costs lower (Finkler, Jones, & Kovner
I attended the Saturday Lab 1 session discussing the Denison Specialty Hospital case study. In our session, we had a through discussion into the different budget terminology. I learned about the difference between accrual and cash accounting methods, which is based on the timing of when the revenue and expenses are recognized. I also learned about responsibility centers as an organizational unit under the supervision of a manager, who is responsible for its activities and results. In addition, the manager is accountable for the budget of the department that they head. Therefore, a centralized form of management in developing the budget because it makes easier to because the information for the department budget is located
The purpose of financial measurement in healthcare is to provide the community with the services it needs, at a clinically acceptable level of quality, at a publicly responsive level of amenity, at the least possible cost. This is done by providing healthcare finance managers with accounting and finance information to help accomplish the purpose of the organization (Nowicki, 2015). When making accounting decisions about budgeting and inventory control, an understanding of economics, statistics, and operations research is needed. Major Financial Measures
The nurse executive is responsible for budget planning for the division. Areas of focus include strategies to improve productivity and feasible tactics to reduce agency staff and overtime (OT) for the division. Identified in this paper is the importance of operational and financial performance indicators for the organizations internal goals. Focus on benchmarking through data analysis is vital. In addition, setting realistic goals that are compulsory to promote cost savings, while maintaining patient safety as a priority is important in creating an improved patient experience. In planning for modifications to obtain a favorable budget, adjusting full time equivalents (FTEs) to fluctuating volumes is important. To improve the productivity plan effectively are evaluation and management of scheduling, staffing, and skill mix are necessary to obtain favorable productivity.
Finkler, S. A. & McHugh, M. (2008). Budgeting concepts for nurse managers. (4th Ed.). Philadelphia: W.B. Saunders.
A nurse manager plays an important role on a hospital unit. Evans defines the role of a nurse manager as one who makes sure all the needs required on a daily basis are accomplished (Evans, 2011). Evans goes on to say that one primary responsibility of a nurse manager acting in the position of a leader is to “raise the level of expectation and help employees reach their highest level of potential excellence” (Evans, 2011). With this said, it is important to identify potential barriers and problems that a nurse manager would face on a given unit and create or adopt evidence-based interventions to eliminate these problems. When this is accomplished, it will help to foster a work environment that maintains safety to patients as well as staff.
Budgets are a resource that a nonprofit can utilize to develop strategic plans and tactical operational management plans to achieve their mission. Budgets can be used as a communications mechanism with internal and external stakeholders. “In most settings, budget and budgeting are overly feared exercises [however] with the proper knowledge they can be used as the management aids they are intended to be” (McLaughlin, 2016, p.176). The National Council of Nonprofits points to a budget as “a guide that can help a nonprofit plan for the future as well as assess its current financial health” (Council of Nonprofits, n.d.).
It makes for more cost effective decisions because the staff has input into new equipment and procedures that will be instituted on the unit. This empowers the decision makers and nurses have more control over their nursing practice by being an accountability-based governance system for professional workers. (Marquis & Huston,
Since the 1990’s, the interest in nursing and the profession as a whole has decreased dramatically and is still expected to do so over the next 10-15 years according to some researchers. With this nursing shortage, many factors are affected. Organizations have to face challenges of low staffing, higher costs for resources, recruiting and reserving of registered nurses, among liability issues as well. Some of the main issues arising from this nurse shortage are the impact of quality and continuity of care, organizational costs, the effect it has on nursing staff, and etc. However, this not only affects an organization and community, but affects the nurses the same. Nurses are becoming overwhelmed and are questioning the quality of care that each patient deserves. This shortage is not an issue that is to be taken lightly. The repercussions that are faced by both nurses and the organization are critical. Therefore, state funding should be implemented to private hospitals in order to resolve the shortage of nurses. State funds will therefore, relieve the overwhelming burdens on the staff, provide a safe and stress free environment for the patient, and allow appropriate funds needed to keep the facility and organization operational.
Nurse leaders must have a thorough understanding of variance reporting because these reports provide information about the differences between an actual budget and a forecasted budget (Finkler, Jones & Krover, 2013). A nurse leader can use data gathered from these reports to better understand budgetary deficiencies, hence allowing him or her to develop more accurate budget forecasts in the future. Variance reports can also help a nurse leader identify the causes of variances. By recognizing the causes early on, nurse leaders can put appropriate actions in place to prevent further exacerbating existing variances. Nurse leaders can also use variance reports as a tool with which to gauge work center productivity.
...ills of the manager can be divided into simple categories of: leadership skills, people skills, budgeting and finance, quality of care skills, and information technology skills. According to Porter-O’Grady (1997, 1999), he observed that advanced knowledge of technology has provided and changed the traditional hierarchy of leadership (Susan O. Valentine, 2013). Today’s technology takes grammar, spelling, and punctuation to a new level of error prevention, which can help reach out to key individuals and other staff member’s. For nurse managers, people skills include interviewing new employees and conducting staff meetings with others on future employees. Understanding the financial state of a health care unit is vital in finding a way to help keep other nurses and to keep them satisfied. Managers should analyze the situation and the budget crisis of all employees.
Through the research, it demonstrated that nurses are also benefited by an acuity tool. As staffing levels change, it can cause stress for the nurse to the workload. By prioritizing cares, it helps the nursing staff size to balance patient cares based on the quantity of patients and their complexity levels (Andrade et al., 2017). Though a nursing staff may be low on nurses, using an acuity tool assists them to effectively coordinate their cares among the different complexities
A company's budget serves as a guideline in planning and committing costs in order to meet tactical and strategic goals. Tactical goals such as providing budgetary costs for daily operations, and strategic objectives that include R&D, production, marketing, and distribution are all part of the budgeting process. Serving as a guideline rather than being set in stone, the budget is a snapshot of manager's "best thinking at the time it is prepared." (Marshall, 2003, p.496) The budget is a method in which to reign-in discretionary spending, and will likely show variances between what costs have been anticipated and what costs are actually incurred.
Traditional Budgeting is still a very popular technique and is widely used by the organizations across the globe.(Dugdale & Lyne, 2006).Environment is changing and hence the budgets should promote the innovations and keeping key employee need rather than restricting them (Daum, 2002).
Bedside nurses want to change staffing levels to assure that they have enough time to both keep up with the constantly evolving health care and to provide safe patient care. Yet, healthcare employers consider that reducing nurse patient ratio is an unnecessary expense that has not been proven to improve quality of patient care (Unruh, 2008). Employers emphasize that raising nursing staffing level is not cost-effective. In fact, in accordance with ANA’s report (2013), a study, in the Journal of Health Care Finance, confirmed that reducing patient-nurse ratios increased hospital costs, but did not lower their profitability. Higher hospital costs were attributed to wages and benefits allocated to newly hired nurses. Yet, according to Cimiotti et.al (20112), it is more costly for hospitals to not invest money on nursing.
Finkler, S. A., Kovner, C. T. & Jones, C. B. (2007). Financial management for nurse