budgeting for various units and levels.pptx

Budgeting is a economic plan process before orgergenized the function .

1. GOVERNMENT COLLEGE OF NURSING RAJNANDAGAON (C.G.) SUBJECT : NURSING MANAGEMENT SEMINAR ON : BUDGETING FOR VARIOUS UNITS AND LEVELS GUIDED BY MRS. MAMTA NAIK ASSOCIATE PROFESSOR OBSTETRICS AND GYNAECOLOGY NURSING GOVT. COLLEGE OF NURSING RAJNANDGAON (C.G.) PRESENTED BY MRS CHANDRIKA SAHU MSC. NURSING FINAL YEAR GOVT. COLLEGE OF NURSING RAJNANDGAON (C.G.)

2. A budget is a forward financial plan. It provides a prediction of expected flows of money in and out of the firm in the immediate future. Normally, a budget will be prepared in advance of a period of time, usually a year but could be on a monthly or quarterly basis. Meaning of budget Literally the word budget means a leather bag to carry official papers in. This word is derived from the old English word “ budgettee ” which means a sack or pouch. Budget is the heart of administrative management. It is a formal expression of policies, plans, objectives and goals laid down in advance by top level authorities of the organization as a whole in a given period of time. INTRODUCTION

3. According to H M Donovan “Budget is a concrete, precise picture of the total operation of an enterprise in monetary terms”. According to Taylor “Budget is a financial plan of government for definite period.” Hospital budget : A hospital budget is designed to meet future service expectations, to provide quality patient care at minimum cost. Nursing budget: A nursing budget is a plan for allocation of resources based on preconceived needs for a proposed series of programs to deliver patient care during one fiscal year. DEFINITIONS OF BUDGET

4. To direct all employees to the goal of the organization and plan activities to meet the goal. To forecast the income or inputs from various sources to the organization. To anticipate various activities and requirements for the coming year. To calculate the expenditure and cost required for all the activities and requirements in coming year. To promote and motivate activities of different operations to obtain maximum efficiency. To allocate the activities to various members of the organization in an effective way. To exercise a good control over the expenditure during various activities in the organization. OBJECTIVES OF BUDGETING

5. A budget is a financial plan that includes estimated expenses as well as income for a period of time. Budget is at best a prediction, a plan and not a rule. Budget planning requires flexibility, ongoing evaluation and revision. If a budget is not properly written, the hospital may be unable to deliver medical services at all. So many expenses and sources of revenue must be taken into consideration, so the budget process takes an expert to get through it successfully. Let's find out how to start budget planning- PLANNING HOSPITAL BUDGET

6. A Budget Plan for health care institutions, which is simply a plan for future activities, generally consists of four components- A revenue budget: is summarizing the income, the management expects to generate during the planning period. An expense budget: is describing expected activity in operational financial terms for a given period of time. A capital budget: outlines the programmed acquisitions, disposals and improvements in the institution's physical capacity. A cash budget: consists of money received, cash receipts and disbursement expected during the planning period.

7. Analyzing activities for appropriateness. Focusing on the future rather than just the present. Anticipating problem or opportunities in time to deal with them. Reinforcing motivation to work toward organization goals. BUDGETARY PLANNING IS IMPORTANT FOR

8. Managing Resources : How to manage your existing budget? Review health facilities vision, mission, objectives and its relation to the importance of budgeting. Identify / discuss steps in preparation of budget showing: Monthly goals Outline specific actions that will be taken Target date or time frame Return of investments Price Index. BUDGET APPROACHES

9. 3. Manage intra-organizational network to complete an effective budget statement, it is essential to have a working link with different departments / cost centers / key people within the organization. Example: Review of stock levels of hospital supplies to ensure that they are not wasted and misused. Develop a model to display why require an X amount of staff, to defend staffing levels and requirements. Determine patient dependency to determine the patient need, planned nursing hours, available nursing hours and the cost of nursing for each patient.

10. 4. Manage and control spending. a. Identify controllable and non controllable costs as well fixed and variable costs. Example: A controllable cost is an increase in price by a supplier, use less expensive supplier could control this. A non controllable cost would be a general increase in the cost of utilities such as electricity, water etc. b. Monitor Spending Keep a file of all budget statements received; expenditures trends can be highlighted and examined.

11. The two most basic types of budgeting are the Centralized and Decentralized budgets. Centralized budget: Centralized budgeting is developed and imposed by the comptroller, administrator and/or director of nursing with little to no consultation with lower level managers. Decentralized budget – Decentralized budgeting, has the middle level manager Involved in the planning and budgeting process. TYPES OF BUDGETING

12. Manpower budget: This consists of the wages and salaries of the regular employees and the fees paid to outside registries through which the institution contracts short-term employees. Capital expenditure budget: This involves the large expense of purchasing of lands, buildings, and major equipment meant for long-term use. Operating budget: This indicates the cost of supplies, minor equipment repair and maintenance as well as other overheard expenses. COMPONENTS OF TOTAL INSTITUTIONAL BUDGET

13. Assessment Planning Implementation Evaluation 1. Assessment: Assessment is the first step involved in the budgeting process. It consists of need identification, a composite of unit need in term of manpower, equipment and expenses should be identified during this phase. Instructions: 1. Determine hospital revenue.   Revenue can come from patient payments, donations, insurance credits. Be sure to deduct a percentage of the patient bills that will remain uncollected, the charity work expected by the hospital. BUDGET PROCESS

14. 2. Figure out expenses. Start with the physical facility. How much does it cost to keep up the building or buildings. What is the maintenance cost of each department, engineering, air-conditioning, heat, water, other utilities. Know what equipment costs, how much must be replaced per patient day. 3. Cost of personnel Personnel, all employees and ancillary staff, including consultants, outsourced contracts, perhaps laundry or nurse staffing services. For all employees of the hospital, from janitorial to hospitalists, figure the fringe benefits the hospital must pay for each. Continue..

15. 4 . Add all medical equipment costs, ongoing and expected expansion or replacement of new diagnostic equipment. 5. The medical costs of hospital bed.   How many staff hours are spent on each bed, occupied or not. Use this figure as an average to get a cost per patient year. Add to that the non medical costs per bed. Include every possible cost that keeps that bed in the hospital. Don't forget replacement costs per annum for any and all patient needs. Continue..

16. 6. The expansion of hospital Are you planning a new wing, or the renovation of an old one? Are you expanding into a new specialty that could bring in extra revenue? Estimate that revenue when planning your budget. 7 .Don't forget parking garages, lots, landscaping, grounds keeping or window washing. 8. Include all insurance for the facility and personnel. Continue..

17. 2. Planning: the steps of planning budget for nursing units are as follows: Assistance of his/her subordinate Review of the budget Preparing requirements Summary of new need Submitting to institutional administration 3. Implementation: In implementation ongoing monitoring and analysis occur to avoid inadequate or excess funds at the end of fiscal year. If a major change is indicated, the entire budgeting process must be repeated. 4. Evaluation: the budget must be reviewed periodically and modified as needed through the fiscal year. Continue..

18. Nature of expenditure Budgeted figure Actual expenditure during the year Average expenditure during last three years Salaries Equipment Contingencies Medicine Entertainment Surgical equipment Service charge HOSPITAL BUDGET

19. The following steps illustrate how the nurse executive can prepare the nursing division budget. Step one: Review past performance : As a starting point, the nurse executive will require to review the following The financial records from prior financial periods as a basis for planning. The present activities of the nursing division. The activities that the division plans to institute during the projected financial period. PREPARATION OF THE NURSING BUDGET

20. Step two: Review the organization's goals and projections : The nurse executive has to study the organization's goals and financial projections thoroughly. Items in the major budgetary report that affect the nursing department should be determined. Example of hospital goals and projections:"This division is going to lose 4 beds from February to November and then gain 12 additional beds after that. A gerontologist and clinical specialist in gerontology have been added to the staff. This division will then admit older and sicker patients. If the shortage of nurses continues, nursing service will have to consider alternative staffing pattern to deal with this situation".

21. Step three: Review of the variances with higher levels of management: Once the goal statement is finished, it (together with the actual versus budget analysis done earlier) should be reviewed with higher level management. The departmental goals proposed should be carefully considered as well as the variances, their causes, and proposed corrective actions should be reviewed. Once the final statement for the department is in place, the new budgeting process can begin in earnest.

22. Step four: Actual preparation of the budget : The actual preparation of a new budget can be done based on a previous budgetary plan, or newly proposed plan (if a newly developed or modified service). To complete the budget, a budget worksheet is essential. Worksheet is "a tool used by managers to prepare their budget". It includes a number of columns including information about: Historic information with old budget. Actual numbers with comments explaining the variances. Revenue and costs.

23. Types of patient admitted. Personnel policies such as hours/day on duty per week, vacation, sick leaves. Size of hospital, number of patient services given. Kind and amount of care. Proportion of nursing care provided by the professional nurse and nursing aides. Methods of performing nursing procedures, charting, record keeping. FACTORS AFFECTING THE NURSING SERVICE BUDGET

24. Continue… Standards of nursing care. Responsibility of nursing service for non-nursing functions such as dietary or housekeeping. Method of reporting required by the administration whether simple or complex. Method of appointment of medical staff size and activities, frequency of treatment and orders. Affiliation with medical, nursing and midwifery school.

25. Review the goal of hospital. Review the objectives of the existing programs. Prepare a budget proposal. Revise the existing programme with the revised programme Compute the expense for each programme. Adopt the alternative approach for realizing the proposed plan. Compare the proposal to identify the effective one. Prepare a budget request which details a fiscal plan for the preferred programme. STEPS IN PREPARATION OF NURSING BUDGET

26. The budget committee generally consist of a representative cross section of the major functional areas or divisions within the institution, with the designated budget director usually serving as the chairperson. Budget committee frequently include, among others those who hold the following position. Director of nursing Director of human resource Director of material management Director of engineering and plan operations Chief of medical staff Chief executive officer, chief operation officer, and/ or chief financial officer. BUDGET COMMITTEE

27. Visionary Planner Demonstrator Anticipator Role model Commander Facilitator NURSE ADMINISTRATORS ROLE IN BUDGETTING

28. School/college should have a separate budget, i.e. principal in charge of the school/college of nursing should be the drawing and disbursing officer and empowered to plan for operating the funds in all different heads (as per government rules and regulations and as seemed necessary for running an educational institutions). Both the school/college and hospital should have separate budget. The budget for the school or college is annually planned by the nursing director, principal and general manager and approved by the managing director. BUDGET FOR EDUCATIONAL INSTITUTION

29. The budget is classified into three heads as- Revenue Expenditure Capital   Revenue: It includes assets, fixed deposits, investments, loan, advances and income. Expenditure: It includes capital, recurring annual mandatory and non recurring.

30. In general, the items which are budgeted for the average government college/ school of nursing in India are- Salaries for professional, clerical and domestic staff and drives. Stipends for the students. New techniques and supplies. Office supplies include stationery and postage. Maintenance of library or setting up a new library. Contingency fund for educational tours, professional activities, capping and graduation ceremonies, prizes, entertainment etc. BUDGET PROPOSAL FOR NURSING EDUCATION INSTITUTION

31. The nurse administration is responsible for the preparation of the annual budget of the school of nursing In conference with the president and other budgetary unit head The administrator gets on over all view of the budget. In the proposal for the next financial year, when the budget allotted the amount should be made known the staff. So that they may establish priorities among items on which of is proposed to be spent purchase should be made, accounts maintained in accordance with the financial practice of the institution. PREPARATION OF BUDGET STATEMENT IN NURSING EDUCATION

32. Request the professor of various department and librarian to present their needs for the coming year by a specified date and confer with these who have presented such need Review the budget appropriation and actual expenditure for the current year in conjunction with statistical data Ascertain whether any change are contemplated Prepare the program for which the new budget is to cover STEPS IN BUDGETING FOR COLLEGE OF NURSING

33. Estimate the requirement for the coming year from the information supplied as the expenditure for supplies, equipments and repair to date Prepare a summary of new needs, both personal and material with data to support the request Implementation of budget Determine the percentage of salaries of personnel. eg . Principal, vice principal, professors, lectures, librarian, clerk, peon, etc

34. University Administration Fees – Rs. 50,000/- Affiliation Fees – Rs.3,00,000/- and every year Rs 50,000/- per course Inspection Fees Rs 25,000/- State council – Rs 7000/ every year for recognition. INC recognition fees Rs 50,000/ per course. INC inspection or affiliation fees is 7,500/- Re-inspection fees 7000/- Affiliation fees to other institution. THE RECURRING ANNUAL MANDATORY EXPENDITURE INCLUDES

35. University Administration Fees – Rs . 60,000/- Affiliation Fees – Rs.3,00,000/- and every year Rs 50,000/- per course Inspection Fees Rs 35,000/- State council – Rs 60,000/ every year for recognition. INC recognition fees Rs 25,000/ per batch. INC inspection or affiliation fees is 7,500/- Re-inspection fees 7000/- Affiliation fees to other institution. Revise

36. DME endowment Endowment Fund (property or income left to someone like insurance) Rs 20,00,000/- in two installments (before one year 10,00,000/ and second year Rs.10,00,000/) which is paid to the DME office. Security fixed deposit Rs.10,00,000/ with the joint account of registrar of the university and trustees. Solvency certificate (state of having more money than one owes) for Rs. 30,00,000/ from nationalized bank for a period of 5 years. Approximately the Revenue is Rs. 21,24,000/ and where as the Expenditure is Rs. 20,52,859/ Annual auditing is done to plan for the next year budget and to evaluate the current year. NON RECURRING EXPENDITURE INCLUDES

37. Participation in planning budget. Consult and take assistance of his/her subordinates. Request sufficient funds. Submit budget request with justification with proposed expenditure. When the budget is allotted, the administrator should support the budget. Since the nurse administrator who is responsible for budget, she/ he should cover the routine budget control. THE RESPONSIBILITIES OF PRINCIPAL/ NURSING ADMINISTERATION

38. SUMMARY