budgeting and finances

importance of the budgeting process

determines how to allocate funds to accomplish nursing goals and provide the tools to ensure effective quality/quantity of nursing care

Role of Nurse Leader and Managers in Budgeting

gain high quality value for every dollar spent, monitor financial status, cost effective care, budget responsibility, proper resource allocation

Cost Containment

methods used to control the cost of healthcare

Cost-Effectiveness

Requires consideration of the costs and value of information

what is important to note with cost containment and effectiveness

there is a link between quality performance and reimbursement

three parts to nurses role in cost containment/effectivness

have, recognize, engage

Have

have a direct impact on costs w/ pt care and financial stability

Recognize

recognize they have control over activities that contribute to the budget

Engage

engage the staff in budget process and emphasize financial impact

budget process

systematic plan providing the best estimate of nursing expenses/revenues

how is the budget process carried out

stated in terms of attainable objectives in financial terms with specific time frames (similar to nursing process)

steps to budgeting

Assessment, diagnosis, planning, implementation, evaluation

assessment

what needs covered in budget based on data

diagnosis

nursing productivity goal

planning

determine effective use of resources

implementation

keep unit functioning within budget, and collaborate with staff

evaluation

assess for deviations from budget and develop strategies for them

productivity

output (pts)/input (money spent)

equation for productivity (HPPD)

nurses/pts = productive nursing hrs/pt days x 24

direct expenses

cost directly related to amount of pts (ie. the more pts the higher the direct expenses)

indirect expenses

overhead cost not directly r/t pt care (like electricity)

necessary activities

essential for pt care, but no direct benefit (calling MD/documenting)

Value-Added Activities

direct benefit to pt (wound care, meds, edu)

Non-Value-Added Activities

no real benefit to pt (looking for equipment/waiting for transport)

Fixed Costs

costs that remain constant as volume changes (building/equipment depreciation or morgages)

Variable Costs

costs that vary with volume of pts

non-productive activities

time paid but not r/t direct expenses (sick/vaca/edu time)

effectiveness vs efficiency

provide care that truly helps pts while not over/under utilizing resources

how to practice effectively and efficiently

EBP, identify problems/outdated processes, take into account necessary/value added/non-value added care activities

operating budget

budget for day-to-day expenses/revenues - includes all unit expenses/revenue

personnel budget

part of operating budget (also largest) - expenses directly r/t nursing personnel

how can personnel budget be carried out properly

vigilant monitoring of pt census and acuity to over staffing issues (lot to do with managers ability to monitor staff)

what goes into a personnel budget

staffing needs/plan, salary expenses/OT/nonproductive time, FTEs

what are FTEs

full time equivalent - staffing the unit for 24 hrs, 7 days a weeks, 52 weeks/yr

capital budget

costs r/t equipment, furniture, tech, hard/software, and building renovations

is capital budget included in the operating/personnel budgets

no, occurs separately

Incremental Budgeting

projecting expenses for next year based on different cost factors by multiplying current yearly expenses by certain figure

Performance Budgeting

looks at outcomes in unit area and determines cost/resources to improve quality

Zero-based budgeting

start from 0 each year w/o assuming prior funding/refunding