Running head: CREATING A BUDGET 1

Creating a Budget

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Creating a Budget

Creating and managing a budget for a healthcare institution can be a very challenging

task. Nurse leaders play important roles during budget development and implementation. When

creating a budget, nurse leaders should ensure they first think about the strategies and goals of

their departments. They can then take part in the budget planning by communicating the budget

plan to their team members, monitoring adherence to the planned budget and evaluating

outcomes of the budget planning. This paper discusses the nurse leader’s role in budget

development and implementation by giving a brief description of capital, operating and staffing

budget, and identifying the roles of a nurse manager in collecting relevant data, forecasting

trends, planning services and planning activities, implementing the budget, monitoring the

budget, taking corrective action and engaging staff.

Capital budget

Capital budgets are a financial tool used in healthcare institutions to plan for cash

intensive, major and long-term projects such as building new facilities, obtaining new equipment

and machines and also for funding long term research. Capital budgets are set aside not only for

purchase of fixed assets and equipment, but also for their maintenance. Nursing organizations

can conduct capital budgeting to determine which of the proposed equipment and fixed asset

purchases should be approved, and the ones which should not be approved. Capital budgeting is

very important in every nursing organization because large fixed asset investments can easily

cause bankruptcy. They should hence be keenly monitored before they are approved (Accounting

Tools, 2021).
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Operating budget

An operating budget is prepared by an organization to project what its revenues and

expenses are expected to be over a specific period of time. Healthcare institutions can come up

with an operating budget to determine all its revenues and expenses over a specific period of

time, usually one year. It is then used to show the activities that are expected to be completed

during the following year. Operating budgets are crucial for nursing institutions as they can help

them adapt to the changing conditions, achieve better performance and also update their

strategies and actions. An operating budget is made up of different components such s revenues,

variable costs, fixed costs, fixed costs, non-cash expenses, and non-operating expenses (Cynthia,

2019).

Staffing budget

A staffing budget refers to the budget set aside by an organization to spend on their

independent contractors and employees. A staff budget can often be one of the largest expenses

for an organization, especially for service companies such as healthcare institutions. For the

organization’s resources to be used efficiently, nurse managers should ensure they manage their

staff budgets properly. They can do so by coming up with a list of all their staff members and

their corresponding salaries in a spreadsheet so as to have a glimpse of their total current staffing

costs be it annually, monthly or weekly. They can develop their staff budget on the same

spreadsheet after summing up their total expenses and establishing how much expenditure they

spend on their staff. Staffing budgets are important because they help nurse managers determine

the amount of work conducted by every staff, and the need to hire more staff members. It also

helps nurse managers monitor the productivity of their current staff and make necessary

decisions regarding particular staff cuts and their budgets if need be (Louise, 2017).
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Roles of nurse managers in budget development and implementation.

Nurse managers play a crucial role not only in the development but also the

implementation of the budget. They ensure that all their units and departmental expenses fall

within the stipulated budget. The do so by sharing their financial expectations with their unit

staff so that all of them are made aware of their financial goals. Nurse managers also ensure that

all the staffing costs are as per the budgeted amounts. Nursing managers are not only mandated

to supervise nursing staff, but also to oversee patient care, make personnel decisions, coordinate

meetings, make budgetary and management decisions (Duquesne University, 2020). During the

budget making and implementation process, nurse managers take part in both collection of

relevant data, forecasting of trends, planning services and activities, implementing and

monitoring the budget, and engaging the staff and taking corrective action.

During the data collection process, nurse managers should take an active role in obtaining

data on adverse events and quality outcomes monthly. Once obtained, these data can be reviewed

by the nurse managers to determine some of the trends. Nurse managers also use quality and

safety measurement techniques to asses the quality of care that is received on their units. Every

nurse manager should be actively involved in the collection of relevant data. Nurses Managers

should also collect financial data to help them deliver cost-effective medical care in their units

(Al Rundio, 2020).

Once they take part in data collection, nurse managers can use the collected data in

forecasting trends. The nursing profession is constantly changing with new regulations and

healthcare practices being adopted on a daily basis. Some of the latest trends include use and

implementation of technological advances, the need to better understand the population being

served and much focus shifting towards quality-assurance practices. Forecasting these future
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trends will greatly help a nurse manager especially when coming up with an operating and

staffing budget. A nurse manager should actively participate in forecasting trends. By doing so,

they will be able to determine future needs for their units, and whether more staff are likely to be

needed or cut in future so as to come up with an appropriate budget (Al Rundio, 2020).

Nurse managers take an active role in planning services and planning activities during

budget development and implementation. Nurse managers are mandated and are responsible for

financial resources and managing humans within a nursing organization, ensuring the satisfaction

of both staff and the patients, ensuring a safe environment is maintained for the staff and the

patients, ensuring quality standards of care are maintained within the facility and aligning the

goals of their units to the strategic goals of the hospital. They take part in the planning process by

determining which types of services and activities are likely to be rendered during the next fiscal

year and communicating it to the financial department for inclusion in the budget.

Nurse managers set the design and the goals of the budget for their respective units in

collaboration with their financial departments. This budget is then submitted to the

administration for approval after it has been developed and updated. The budget plan is then

implemented by the nurse manager after it has been approved by the upper-level administration.

The nurse manager takes part in the implementation by providing the services stipulated in the

budget (Al Rundio, 2020).

Once a budget has been developed and implemented, it has to be monitored. Monitoring

of the budget is conducted through a routine accurate financial reporting. Nurse managers engage

in the monitoring process by using reports to compare the actual revenues and the actual

expenses to the budgeted expenses and revenues. A variance analysis is also conducted by the

financial department and sent to the nurse manager for analysis.

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Corrective measures need to be taken when necessary. Initial goals may need to be

modified according to the performance of the current budget. Sometimes, budget constrains may

require a change in the levels and types of resources and services used. The nurse manager

should come up with newer budget projections and recommendations. The nurse manager can

change the budget for their next operating period and also add more staffing to their shifts if need

be (Al Rundio, 2020).

All staff need to be engaged in the budget development and implementation process.

Nurse managers play an active role in ensuring all the staff including departmental heads,

director of the budget, vice presidents, CEO, board of trustees and finance committees are all

engaged in the process. The nursing manager confirms details from all departmental heads and

staff regarding their operating budget expenses and ensuring that they are all consistent with the

organization’s objectives and goals.

In summary, this paper has discussed the nurse leader’s role in budget development and

implementation by giving a brief description of capital, operating and staffing budget, and

identifying the roles of a nurse manager in collecting relevant data, forecasting trends, planning

services and planning activities, implementing the budget, monitoring the budget, taking

corrective action and engaging staff. Nurse managers play a crucial and active role during budget

development and implementation.

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References.

Accounting Tools. (2021). Capital budgeting definition.

https://www.accountingtools.com/articles/what-is-capital-budgeting.html

Al Rundio. (2020). Budget development for nurse managers. Nursing Centered.

https://nursingcentered.sigmanursing.org/features/top-stories/budget-development-for-

the-nurse-manager

Cynthia, Gaffney. (2019). What Is an Operating Budget? Chron.

https://smallbusiness.chron.com/operating-budget-61475.html

Duquesne University. (2020). Nurse Manager Leading the Nurse Profession into the Future.

https://onlinenursing.duq.edu/blog/roles-nurse-manager-leading-nursing-profession-

future/

Louise, Balle. (2017). How to Manage a Staff Budget. Biz Fluent. https://bizfluent.com/how-

7925742-manage-staff-budget.html