Budget

BUDGETS IN HEALTHCARE

1. BUDGETS IN HEALTHCARE By / Mahmoud Shaqria محمود محمد شقريه

2. Outlines: Definitions of budget. Characteristics of good budget. Types of budget. Importance of Learning How to Manage Budgets Steps of budgeting process. Steps In The Budgetary Process Director of Nurse’s Role for Financial Accountability in Managing a Nursing Budget Advantages and Disadvantages of Budget

3. DEFINITION Budget is a formal plan that is stated in money terms and includes proposed income and expenditures.

4. Characteristics of good budget: It should be: 1- Understandable and based on informational data based. 3- Flexible, and clear. 4- Based on forecasting of revenue. 5- Mathematical.

5. Types of budgets Capital Budget • Big item purchases usually planned for in advance 2. Supply and Equipment Budget • Small Equipment, Urological, Tube Feeding, Briefs, Cups….. Staffing Budget • Labor Hours may be FTEs (Full time equivalents) or PPD (per patient day)

6. Capital Budget (Higher Cost Items ) Keep a list of the items you know will need to be replaced Keep a list of the items you want Plan consistently to replace items you need for the resident population you serve Submit this list to the Administrator when they are preparing next years budget

7. Supply and Equipment Budgets •Medical supplies •Central supplies •Pharmacy •Office supplies •Small Equipment •Travel •Education •Other categories you may be responsible for

8. Supply and Equipment Budget •Usually the amount of money you have to spend is based on the average census and may also include the dollars spent the previous year plus the increase % •Each category is assigned a dollar amount per patient day •These are the usual categories and are assigned GL codes (General Ledger)

9. Staffing Budget •Staffing Budget is usually based on PPD-per patient day

10. Importance of Learning How to Manage Budgets • Nursing labor budgets are often one of the largest budgets •Nurse leaders control that budget •Your effectiveness can mean the difference in your organizations financial stability •You are the key between the nursing department and operations •You need to have a clear understanding of your budget

11. Steps In The Budgetary Process 1) Determine the requirements of the budgets : -personnel, equipment, and operating expenses are needed to determine the organizational budget. 2) Develop a plan: - Reviewing the established goals and objectives of the nursing unit, department, and the organization. - A fiscal year budget is a budget cycle for 12 months. May be subdivided into monthly, quarterly, or semiannual periods.

12. 3) Analyze and control the operation: To avoid inadequate or excess funds at the end of the fiscal year. Each unit manager is accountable for budget. Large deviations must be examined . Variance : the difference between budget and actual performance Example: Anything under 4% or 500$ is acceptable thus only variances over that percentage would be examined. 4) Review the plan: - The budget is reviewed periodically and modified as needed throughout the fiscal year.

13. Advantages of budget 1. Ensure the most effective use of financial and non-financial resources. 2. Establish a frame of reference for managerial decisions. 3. Motivate employees by bringing them together to achieve common goals. 4. Facilitate work coordination across the entire organization through communication by identifying who is responsible for what.

14. 5. Identify potential trouble spots so corrective action can be taken. 6. Help employees learn from the experience. 7. Help organization in evaluating its progress.

15. Disadvantages of budget 1-Budgets convert all aspects of organizational performance into monetary values for a single comparable unit of measurement. 2-Ignored important factors such a organizational development, and research effort. 3-Budgetary goals may supersede agency goals, and gain autocratic control of organization. 4-Danger of over budgeting; the budget becomes cumbersome, meaningless, and expensive. 5-Budget plan is time consuming and expensive.

16. Director of Nurse’s Role for Financial Accountability in Managing a Nursing Budget • Balance patient safety and excellent care within the budget •Manage existing budgets for supplies and labor •Always know where you are with your budget-what you spent and what is left •Be cognizant of “want” vs. “need” •Communicate current needs if existing budget does not meet the needs •Predict the needs for the future and be actively involved during “budget time”

17. THANK YOU