1. Unit 4 FISCAL PLANNING " BUDGETS "

2. 2 A budget: “plan that uses numerical data, to predict the activities of an organization over a period of time” fiscal planning is the most difficult part. learned skill, requires vision, creativity, political, social, and economic forces that shape health care. written statement contains “resources, money, time, and people”.

3. 3 Role of the nurse manager in fiscal planning Historically, nursing management play a limited role in fiscal planning. Nursing input was shorthand and classified as a “non-income producing” service. Currently, nursing budgets more than50% of the total expenses in health care institutions, For nursing; fiscal planning is fundamental and powerful tool.

4. 4 Role of the nurse manager in fiscal planning To see that adequate resources are available to provide nursing services. Unit manager who can best monitor and evaluate all aspect of a unit’s budget control. Nursing managers at all levels must become proficient in the budgeting process, Good nurse manager who is in the best position to predict trends in census and acuity, supplies and equipment needs

5. 5 A budget helps management plan and control the distribution of resources within the organization. Note that the "when" is just as important as the (how much). The money has to be available at the right time. Used as controlling and evaluating the organization’s performance over the past year. In budget: expenses classified (fixed, or variable, controllable or non-controllable.

6. 6 Steps In The Budgetary Process 1) Determine the requirements of the budgets : -personnel, equipment, and operating expenses are needed to determine the organizational budget. 2) Develop a plan: - Reviewing the established goals and objectives of the nursing unit, department, and the organization. - A fiscal year budget is a budget cycle for 12 months. May be subdivided into monthly, quarterly, or semiannual periods.

7. 7 3) Analyze and control the operation: - To avoid inadequate or excess funds at the end of the fiscal year. - Each unit manager is accountable for budget. - Large deviations must be examined. - Variance: the difference between budget and actual performance - Example: Anything under 4% or 500$ is acceptable thus only variances over that percentage would be examined. 4) Review the plan: - The budget is reviewed periodically and modified as needed throughout the fiscal year.

8. 8 Types Of Budgets: 1) The personnel Budget: The largest of budget expenditures is the workforce “health care is labor intensive”. Includes : salaries, compensation for vacation time, sick leave, holidays, overtime, …etc. Personnel budget monitored closely to prevent under- or overstaffing, (be alert for numbers and types of clients). Manager must be aware: the most economical level of nursing care- that will cover pt needs can provided. The number of client's visits, or cases per day never remain constants, so manager must be ready to alter staffing.

9. 9 2) The operating budget or revenue-and- expense budgets. Includes: daily expenses as the cost of electricity, repairs and maintenance, and medical, surgical supplies, office supplies, laundry … etc The 2nd most significant component in the hospital budget. Formulation of the operating budget should begin several months before the beginning of the next fiscal year to provide sufficient data and time for planning.

10. 10 3) Capital Budget: Budget plan for buildings and or major equipments that has a long life (usually greater than five years). Cost effectiveness is The desired result of careful fiscal planning (unit manager’s goal) Cost effective does not mean cheap It means using the money for getting the most products. Takes into account factors regard Cost effectiveness: 1- Anticipated length of service. 2- Need for such a service. 3- Availability of other alternatives.

11. 11 Prerequisites To Budgeting: 1-There is need for sound or organization structure with clear lines of authority and responsibility. - Employees know their responsibilities and accountabilities about their actions. - Organization charts, job descriptions, Goals and objectives are available. - Then budgets developed to conform to the pattern of authority and responsibility 2- Statistical data: e.g..: No. of admissions, average length of stay, percentage of occupancy… etc. Are used for planning and control of the budgetary process.

12. 12 3- Revenues and expenses are reported for planning and evaluation. 4- Managerial support: essential for a budgetary program, done at the departments level and valued by top administration. 5- Formal budgeting policies and procedures are available in a budget manual. - Objectives, Instructions, Procedures for reviews of the budgetary program are defined & discussed in detail.

13. 13 Bye. Bye