Budgeting Process

• Defined as a systematic business activity

that encompasses the development,
implementation and evaluation of a plan
for the provision of services and capital
assets including fixed resources, such as
money or time, during a given period to
achieve desired financial targets.
Types of Budgeting
 Capital Budget
• Fund needed for the capital items for the
growth.
• New supplies, facilities, and repalcement of
worn out equipment, machinery and
furniture.
• The decision is primarily based on: Needs of
patient and existing alternatives, effects of
additional equipment on income and
expenditure
 Operating Budget
• Overview of an agency’s functions by
projecting the planned operations, usually for
the upcoming year.
• It includes: Personal salaries, employee
benefits, insurance, medical-surgical supplies,
office supplies, rent, heat, light, house-
keeping.
 Personel Budget
• Estimate the cost of direct labor necessary to
meet the nursing needs of the estimated
patient population.
• The current staffing patterns, number of
unfilled positions and last year’s report can be
a basis.
 Cash Budget
• Cash are planned to make adequate funds
available as needed and to use any extra funds
profitably
• To ensure the agency has enough, but not too
much, cash on hand during the budgetary
period.
Budget Process
 Budget Calendar
• The entire budgeting process is given a
specific time frame and a target is assigned for
each step.
• 3 stages : Formulation, Review, Execution
 Formulation
• The main functions are: Develop objectives,
gather all financial, historical, and statistical
data, and analyze data.
 Review/Enactment Stage
• Prepare unit budget, budget for approval,
revise/ combine into organizational budget,
present to budget council, revise and present
to governing board, revise and distribute to
cost-center managers.
 Execution
• The nurse administrators who planned the
budget execute it.
• Execution of the budget involves directing
and evaluating activities.
Costing Out Nursing Services
• Is the process of estimating the monetary
value of providing nursing care to patients.
 Benefits of Costing Out
• Charging out nursing services makes it
possible for the patients to pay for the care
• Patients start to realize that direct care has a
price value
• Charging a fee for services helps enhance the
professionalism of nursing through the
reimbursement for services.
• Using a cost accounting system to assess and
change the nursing department helps
establish a reputation for innovation and
leadership
 Methods of costing
• Cost per day – calculated by dividing the total
nursing care cost by number of days
• Cost per diagnosis – categorized based on
patients case
• Classification system of patient – method that
grouping patients according to some
observable characteristics
•
Stages of Cost Effectiveness
• Cost awareness – focuses on the employee
• Cost monitoring – focuses on how much will
be spent where, when and why
• Cost management – focuses to what and
whom will contain costs
• Cost incentives – motivate cost containment
and reward behavior
• Cost avoidance – not buying supplies,
technology services, the cost of them should
analyze carefully
• Cost reduction – it means spending less for
goods and services
• Cost control – through careful forecasting,
planning, budgeting, budget preparation,
reporting and monitoring.
Health Care Financing
• Mobilization of funds for health care
• Allocate of funds to the regions and
population groups and for specific types of
health care.
 Health Financing Source
• Private
• Public
 Public
• Includes all the expenditure on health services
by central and local government. The ownship
facilities used whether government by
government, social insurance, non-profit
organizations.
 Private
• Consumers voluntarily choose to purchase an
insurance package that matches their
preference.