D.E. SOCIETY’S SMT. SUBHADRA K.

JINDAL COLLEGE OF
NURSING, PUNE.

FINAL YEAR MSc Nursing.

SUBJECT: NURSING MANAGEMENT

BUDGET MODEL
ON
100 BEDDED HOSPITAL

SUBMITTIED TO, SUBMITTED BY,

MRS. SHARDA CHAVAN MS. SHEETAL THAKUR

PRINCIPAL, MSC (N) FINAL YEAR,

DES SMT. SUBHADRA K. JINDAL DES SMT. SUBHADRA K. JINDAL

COLLEGE OF NURSING. COLLEGE OF NURSING

SUBMITTED ON:
 BUDGET MODEL

INTRODUCTION

Financial management is the essential element of Management. Financial management

is important for controlling financial activities of an organization. The term Budget origin from
old French budget' means little leather bag. Chancellor of the exchequer, UK first time used the
term budget in presenting annual statement in 18th century. Budget is a complete set of plans
expressed in quantitative terms by which objectives can be achieved for a definite period in
future. A budget is essential part of the planning process. Budget guides decision about
allocating resources toward the attainments of goals. The entire process of preparing the
budgets is knows as budgeting.

DEFINITION

"A budget is a formal quantitative expression of management plans."

Charles T Horngren

"Budget is a comprehensive and coordinated plan, expressed in financial terms, for the
operations and resources, of an enterprise for some specified period in the future."
JM Fremgen

"Budget is a formal presentation of expenses and revenues and capital requirements which are
expected in a certain future period of time with the resulting financial position expected at the
end of the period."
Phillip J Taylor and Benjamine O Nelson

PURPOSE OF BUDGETING
According to Riley, Purpose of budget is as follows:
1. Budget helps to control income and expenditure.
2. Budget sets targets in numerical term.
3. Budget provides direction and control ongoing activities,
4. Budget provides coordination in various activities.
5. Budget helps in allocating resources. 6. Budget is useful for motivating staff.
 7. Budget improves efficiency.
8. Budget ensures discipline as per plan.
9. Budget monitors the performance.
10. Budget providing incentives.
11. Budget is tool for decision making.
12. Budget process encourages innovation and efficiency.

FEATURES OF BUDGETING
1. Budget involves many people in drawing up a budget.
2. Budget is primarily a planning and control device.
3. Budget is comprehensive.
4. Budget is flexible.
5. Budget establishes the standard of performance.
6. Budget is prepared in advance for definite period.
7. Budget is expressed in quantitative form.
8. Budget is developing from the long-term strategy of the organization.
9. Budget shows income and expenditure.
10. Budget is realistic and attainable

ESSENTIAL FOR EFFECTIVE BUDGETING

1. Support from top level management
2. Clearly define policies.
3. Statistical information.
4. Adequate accounting system.
5. Formulation of budget committee.
6. Flexibility
7. Authority and responsibility.

PRINCIPLES OF BUDGET
1. Team work
2. Objective
3. Support from top management
4. Annually
 5. Documentation
6. Correct presentation
7. Coordination

PRINCIPLES OF BUDGET

1. Principle of objectives: Budget should focus on objectives & policies of the

organization. It must flow from objectives & give realistic expression to the way of
realizing such objectives.
2. Principle of team work: One person should not responsible to compilation of the budget.
Budget needs a teamwork and expert consultation. There are various activities in
budgeting; the activities should be divided among experts. Involvement by many people
in budgeting might slow the process down, but the answer is far more likely to be
accurate and dependable.
3. Principle of support from top management: The budget must have support from top
level management of the organization.
4. Principle of annuality: Budget should be prepared every year on annual basis. The
period of budget should be appropriate to nature of organization.
5. Principle of flexibility: Budget should be flexible. The success of the budget is depends
on whether budget is flexible or not. Flexible budget helps to organization to go ahead
with strategically plan.
6. Principle of coordination: Budget should be coordinated with various activities and
various departments.
7. Principle of correct presentation: Budget should be present accurately. Top level
management supports accurately presented budget.
8. Principle of documentation: Budget should be written and approved by the appropriate
authority.
TYPES OF BUDGETS
The budget is classified as follows:

1. Classification of budget on the basis of time

Current budget: Current budget is the annual budget prepared for and effective during
the present fiscal year. Current budget is pre-pared for short period of time.
Short-term budget: The budget prepared for short period of time is called short-term
budget. The budget is usually prepared annually.
Long-term budget: The budget is prepared for a longer period usually for 5 years called
as long-term budget. Long-term budget usually prepared by the top-level management.

2. Classification of budget on the basis of function

Capital budget: Capital budget is the method of analyzing and comparing substantial
future investment and expenditure.
Revenue budget; Revenue budget is the revenue receipt of the government and its
expenditure. Revenue budget includes the tax revenue and non-tax revenue.
Cash budget: Cash budget is the estimation of cash inflow and outflow in an
organization for specific period of time. Cash budget focused on the cash needed to
organization in specific period of time to meet expenses.
Sale budget: Sale budget is the management of estimate of sale for future financial
period. Sale budget helps to plan and control expenditure of resources.
Production budget: Production budget is the production during specific period and is
expressed in the units of output produced.

3. Classification of budget on the basis of Flexibility

Fixed budget: Fixed budget does not change irrespective of the level of activity. Fixed
budget is also called static budget. Fixed budget is based on set volume of sale.
Flexible budget: Flexible budget is change or modify according to level of activity.
Flexible budget is also called as variable budget. Flexible budget is based on current
actual amount of output.
IMPORTANCE OF BUDGET
1. Budget is essential for planning future course of action and control activities of institute.
2. Budget enables to monitor income and expenditure of institute.
3. Budget promotes coordination among various activities and department.
4. Budget serves as a guide of action in an institute.
5. Budget provides the basis for financial accountability and transparency.
6. Budget helps in decision making.
7. Budget as tool for communication.
8. Budget provides feedback of utilization of budget
9. Budget useful to identify problem area.

STEPS IN BUDGET
There are three stages of budget are as follows:
1. Formulation stage
2. Review and enactment stage
3. Execution stage

1. Formulation stage
Develop objectives and management plan.
Collect all financial and statistical data.
Analyze data.

2. Review and enactment stage

Prepare departmental budget.
Present departmental budget for approval.
Revise departmental budget, if necessary.
Combine departmental budget into organizational budget.
Present budget to budget council.
Revise budget if necessary
Present the budget to governing body.
 3. Execution stage
Direct and evaluate expenses and receipt.
Revise budget, if necessary

BUDGET PROCEDURE IN NURSING SERVICES

1. Determine the productive goal of fiscal year.
2. Forecast the workload.
3. Budget patient care hours.
4. Budget patient care hours and staffing schedule.
5. Planning of non-productive hours.
6. Estimates the cost of services and supplies.
7. Anticipate capital expenses.

ADVANTAGES OF BUDGETING
1. Budget helps to present the goals of all units.
2. Budget provides the standard of performance.
3. Budgeting guides for assigning the authority and responsibility.
4. Budget encourages for careful analysis of operation.
5. Budgeting exposes the weakness in the organization corrective actions.
6. Budgeting encourages the exchange of information.

DISADVANTAGES OF BUDGET
1. Budget is time consuming
2. Budget is expensive.
3. Budget needs specialized skill
4. Budget require forecast but uncertain
5. Budget converts all aspects in monetary term.

RESPONSIBILITY OF NURSE ADMINISTRATOR IN BUDGETING

1. The primary responsibility of nursing administrator is to provide and helps to take

nursing care to patients and responsible for patient’s safety and well-being.
2. Nurse administrator should be actively involved in hospital budgeting process.
3. Nurse administrator sets goals and designs the budget as per the needs of nursing
department.
4. Nurse administrator is responsible for preparation of annual operating budget of nursing
department.
5. Nurse administrator should take help from their subordinate to identify the needs of
nursing department.
6. Nurse administrator provides opportunities for subordinates to participate in relevant
fiscal planning.
7. Nursing administrator has to determine the revenue generated by nursing department
and cost of supplies, medications and staffing expenditure,
8. Nurse administrator is responsible for review and validates payroll re- port and
coordinate with human resource department regarding leaves, vacation and illness.
9. Nurse administrator demonstrates flexibility in fiscal goals setting in a rapidly changing
system.
10. Nurse administrator assesses the internal and external
environment of the organizations in forecasting to identify diving forces and barriers of
fiscal planning.
11. Nurse administrator co-ordinates the monitoring aspects of budget control.
12. Nurse administrator should know what services are currently offered by hospital and
will be offered in future.
13. Nurse administrator should collect information of hours provided per patient per day,
standard of care, services provided, average length of stay and resources utilization.
14. Nurse administrator should know what services are currently offered by hospital and
will be offered in future.
15. Nurse administrator identifies the importance of, and develops short- and longrange
fiscal plans that reflect unit need.
16. Nurse administrator requires sufficient fund to provide nursing services.
17. Nurse administrator has to inform finance department about planning for new services
and activities for next financial budget.
18. Nurse administrator needs to figure out how much cost would be for new services.
Budget should be formulated with new services in mind.
19. Nurse administrator should implement the new plan only after the approval of top-level
management
 20. Nurse administrator assesses the internal and external environment of the organizations
in forecasting to identify diving forces and barriers of fiscal planning. Budgeted
expenses and revenue will be compared to actual expenses and revenue.
21. Nurse administrator is responsible to monitor departmental budget mutiny basis in
consultation with finance department.

PREPARATION OF BUDGET FOR HOSPITAL

While preparing budget, nurse administrator should follow following steps:

 Collect relevant data

 Planning nursing services
 Implement plan
 Monitor budget
 Take corrective action, if necessary

Hospital budget divided into two parts, i.e, income and expenditure.
In budgeting process, the income budget should be estimated first and then estimate the
expenditure budget.
Factors influencing the hospital budget should be taken into consideration, before
preparing the budget.
Nurse administrator should have complete information regarding the requirement for
nursing services.
Nurse administrator should have knowledge of sources of income and expenditure of
hospital.
Prepare the plan for hospital activities in monetary term, e.g. number of procedure,
equipment used and investigations, etc. Prepare the forecast.
Formulate the goals of budget.
Prepare the budget for each department.
Present the budget to authority.
Revise the departmental budget if necessary Combine all departmental budgets.
Prepare operating budget for whole hospital.
Summarize the total budget.
Present final budget plan to governing body.
Communicate final budget plan to departments.
BUDGET PLANNING FOR 100 BEDDED HOSPITALS

The cost of building a 100-bed hospital in India can range from INR 50 crore to INR
200 crore or more, depending on the level of sophistication, technology, and infrastructure
required.
Bed strength – 100 bedded hospital
Cost – Rs1000 million
Multispecialty general hospital –
Curative, preventive and rehabilitative services
• Services –
• General specialties
• No high-end, capital-intensive services
• Facilities –
• Inward and outdoor care
• Special care units
• Diagnostic up to CT scanner

Particulars Amount budgeted INR in Millions

Land cost 15000 Sq. Ft / * 1000 *12 200
Building and auxiliary cost 459.4
Cardiology set up 50
Equipment planning Echo –
Color Doppler 1.8
Ventilator 3 3 2.40
Cardiac Monitor (NIBP) 30 3
Defibrillator: 5 1
TMT-2 0. 0.3
Central Line Oxygen 0.2
ECG Machine: 10 0.1
Pulse Oxymetre: 5 0.1
Centralized Monitor 0.1
Infusion Pump: 10 0.3
Pace Maker: 05 0.25
Computerized System 0.2
X-Ray :3 0.9
Cardiac Fowler Bed 0.75
USG: 2 0.8
Pathology Equipment 1.5
Other material & Medicines 0.2
CT scan 10
MRI 15
CSSD 15
Lab 20
Ambulance 4
Nos 2
Communication System 2
IT system 10
Miscellaneous 10
Total CAPEX 808.2

Amount budgeted (Monthly) INR

Working Expenses in Millions
1. Salaries
NURSES @ Rs. 7000/ *90 0.06
Physiotherapist @ 30000/*1 0.03
Pharmacist @ 12000/* 4 0.05
1Maintenance staff @ 6000/* 12 0.07
Security staff- outsourced 0.05
Technicians @ 7000/*63 0.04
Housekeeping -outsourced 0.05
dietary services @ 5000/ * 11 0.06
Administrative Heads @ 70000 /* 7 0.49
Med.Supr. 0.15
Assit.Med. Supr.@ 40000/ * 6 0.02
CEO 0.20 Administrations @ 20000
/* 12 0.24
Admin Others @ 8000 /*20 0.2
consultants @ 70000 /* 15 0.1
Surgeons' Visit @20000 / *7 0.14
RMO @ 15000/*18 0.27
Special Services @ 12000/*3 0.04
Fuel Charges (Ambulance and Generator)
@ 35 / * 30* 30 *12 0.31
Other expenses 0.6
TOTAL 70.04
TOTAL PROFIT = 16.17 Millions
CONCLUSION

Financial management is the essential element of Management. Financial management is

important for controlling financial activities of an organization. The term Budget origin from
old French baguette' means little leather bag. Chancellor of the exchequer, UK first time used
the term budget in presenting annual statement in 18th century. Budget is a complete set of
plans expressed in quantitative terms by which objectives can be achieved for a definite period
in future. A budget is essential part of the planning process. Budget guides decision about
allocating resources toward the attainments of goals. The entire process of preparing the
budgets is knows as budgeting.

BIBLIOGRAPHY

Rohini T, Jisa George T’s, “textbook of management of nursing services and education”,
vision health science publishers, 1st edition, 2021, page no: 156-157,169.
D. Elakkuvana Bhaskara Raj’s, “management of nursing services and education”,
Emmess publication, 3rd edition, 2015, page no: 285-288.
B. T. Basavanthappa’s, “Nursing Administration”, Jaypee Publication, 2nd Edition,2009,
Page No: 326-367.
Jogindra Vati’s, “Principles and Practice of Nursing Administration”, Jaypee
Publication, 1st Edition, 2013, Page No: 311-398.
Sharad Pandit’s, “Nursing Administration and Management”, Paras Medical Publishers,
1st Edition, 2021, Page No: 246-277.

INTERNET REFERENCES:

https://www.sciencedirect.com/science/article/pii/S1053482222000432
https://open.lib.umn.edu/humanresourcemanagement/chapter/1-1-what-is-human-
resources/