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Published by Jeremee John Pingco

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Published by: Jeremee John Pingco on Mar 29, 2010
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Fiscal Planning
Nurses are practicing caring in an environment where the economics and costs of health care permeate discussions and impact decisions.
 —Marian C. Turkel 
Fiscal Planning
Scarce resources and soaring healthcare costs have strained all healthcare delivery systems.There has never been a time when healthcare organizations needed tooperate more efficiently or be more aware of 
cost containment 
.Cost containmentrefers to effective and efficient delivery of services while generating needed rev-enues for continued organizational productivity.Cost containment is the responsi-bility of every healthcare provider,and the viability of most healthcare organizationstoday depends on their ability to use their fiscal resources wisely.It is critical that unit managers have expertise in managing costs.Of all formsof planning,many managers often perceive fiscal planning as the most difficult.Although familiar with the basics of fiscal planning,unit managers may encounterdifficulty with forecasting costs based on current and projected needs.Sometimesthis occurs because the manager has had little formal education or training onbudget preparation.Fiscal planning,like all types of planning,is a learned skill andimproves with practice.It is essential that fiscal planning be included in nursingcurricula and in management preparation programs.Historically,nursing management played a limited role in determining resourceallocation in healthcare institutions.Nurse–managers were given budgets withoutany rationale and were allowed limited input.In addition,because nursing wasclassified as a “non–income-producing service,’’nursing input was undervalued.During the last 20 years,healthcare organizations have grown to recognize theimportance of nursing input in fiscal planning,and unit managers in the 21st cen-tury are expected to be well versed in financial matters.Because nursing budgetsgenerally account for the greatest share of the total expenses in healthcare institu-tions,participation in fiscal planning has become a fundamental and powerful toolfor nursing.An essential feature of fiscal planning is
responsibility accounting,
 which meansthat each of an organization’s revenues,expenses,assets,and liabilities is someone’sresponsibility.As a corollary,the person with the most direct control or influenceon any of these financial elements should be held accountable for them.At the unitlevel,this accountability generally falls to the manager.The manager,then,shouldbe an active participant in unit budgeting,have a high degree of control over whatis included in the unit budget,receive regular data reports that compare actualexpenses with budgeted expenses,and be held accountable for the financial resultsof the operating unit.Because unit managers are involved in daily operations and see firsthand theirunit’s functioning,they generally have great expertise in forecasting patient censustrends as well as supply and equipment needs for their units.Forecasting involvesmaking an educated budget estimate using historical data. The unit manager also can best monitor and evaluate all aspects of a unit’sbudget control.Like other types of planning,the unit manager also has a responsi-bility to communicate budgetary planning goals to staff.The more the staff under-stands the budgetary goals and the plans to carry out those goals,the more likely goal attainment is.Sadly,many nurses have little knowledge of the nursing budgetmodel applied by their hospital system.
Roles and Functions in Planning
Fiscal planning uses many of the same concepts and rules that were discussed inearlier chapters.For example,just as each person’s value system determines how personal resources are spent,fiscal planning reflects the philosophy,goals,andobjectives of the organization.Fiscal planning must be proactive,flexible,and clearly stated in measurableterms;include short- and long-term planning;and involve as many people as feasi-ble in the budgetary process.This type of planning also requires vision,creativity,and a thorough knowledge of the political,social,and economic forces that shapehealth care.This chapter discusses the unit manager’s role in fiscal planning,iden-tifies types of budgets,and delineates the budgetary process.These roles andfunctions are outlined in
Display 10.1.
Leadership Roles
1.Is visionary in identifying or forecasting short- and long-term unit needs,thus inspiringproactive rather than reactive fiscal planning.2.Is knowledgeable about political,social,and economic factors that shape fiscalplanning in health care today.3.Demonstrates flexibility in fiscal goal setting in a rapidly changing system.4.Anticipates,recognizes,and creatively problem solves budgetary constraints.5.Influences and inspires group members to become active in short- and long-rangefiscal planning.6.Recognizes when fiscal constraints have resulted in an inability to meet organizationalor unit goals and communicates this insight effectively,following the chain of command.7.Ensures that patient safety is not jeopardized by cost containment.
Management Functions
1.Identifies the importance of and develops short- and long-range fiscal plans that reflectunit needs.2.Articulates and documents unit needs effectively to higher administrative levels.3.Assesses the internal and external environment of the organization in forecasting toidentify driving forces and barriers to fiscal planning.4.Demonstrates knowledge of budgeting and uses appropriate techniques to budgeteffectively.5.Provides opportunities for subordinates to participate in relevant fiscal planning.6.Coordinates unit-level fiscal planning to be congruent with organizational goalsand objectives.7.Accurately assesses personnel needs using predetermined standards or an establishedpatient classification system.8.Coordinates the monitoring aspects of budget control.9.Ensures that documentation of patient’s need for services and services rendered isclear and complete to facilitate organizational reimbursement.
Leadership Roles and Management Functionsin Fiscal PlanningDisplay 10.1

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