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Introduction
Budgets are used to help improve the financial stability of an institution, whether corporate or in healthcare. Preparing an effective budget can help identify areas for improvement, areas that are effective, and overall cost-efficacy within the institution. Within inpatient settings, nursing managers are responsible for monitoring budgets. In some cases, unit managers also prepare budgets for their specific units. Nurse managers have a financial management function in public health care. They must have the necessary skills, knowledge, and competencies. Developing a financial budget is a process that requires teamwork to plan and implement. Through this discussion, information will be used from an interview provided by a unit manager from an inpatient facility. The main focus of the interview was the components of preparing a staffing budget for a unit. This paper aims to discuss how nursing managers proper planning and budgeting of staff can impact patient care and overall fiscal efficacy within an institution.
Overview of Budget Process
The budget plan is made to screen monetary well-being and financial health within an organization: it monitors any concerns, trends, or unwanted changes. Profit and loss can be calculated within a budget and can be compared to the previous years budget (Penner, 2017). Some key components that can be monitored within a budget are labor cost, shrinkage, profit/loss, and staff performance. The operation budget requires full-time equivalent personnel with all expenses and revenue for a day-in and day-out operation (Rundio, 2017). It is the most critical budget an organization develops, implements, and monitors. A nurse manager must take timely action when costs exceed revenues. A capital budget is a budget for long-term investments that are often high costs. A capital budget may focus on items as large and complex as the construction of a new budget, with millions of dollars of expense and decades of useful life (Penner, 2017). Inpatient budgeting uses capital budgets for medical equipment, renovation/construction, and significant maintenance repairs. When it comes to nonproductive hours, managers must follow policies and procedures that are in place to monitor nonproductive time.
As part of this interview, Ms. J. Grey, a nurse administrator, was interviewed to share her experience with operating budgeting in a private hospital. According to Ms. Greys responses (personal communication, October 25, 2019), each year in early December, she the nurse administrator along with the clinics accounting department and the facility manager, prepare a projected cost estimate for the next fiscal year as part of the planning. This plan includes determining the future budget for the year, laying down reserves, and identifying possible force majeure events that will affect the budget. J. Grey also reported that the facility staff up, down, or canceled if needed. This strategy helps the company manage its planned budget because laying off employees allows the company to retain some of its financial reserves by delegating professional responsibilities to other employees. With this arrangement, the salaries of current employees obviously increase, but this increase is scarce compared to keeping the clinic on budget. From this, as reported by J. Grey, an important conclusion follows: the nurse administrator is responsible not only for budgeting but also for managing the clinical staff. In fact, these are interrelated functions because, in many ways, it depends on how successfully and effectively J. Grey handles her responsibilities. If the staff performs poorly, this leads to the need to revise personnel policies as part of the budgeting plan adjustment. In other words, if the nurse administrator is interested in the best option for managing operating funds in the company, she needs to perform her related job tasks carefully.
Budgeting, Staffing, and Patient Outcomes
Budgeting is influenced by many factors, one of which is current professional performance. When setting a budget, it is essential to understand the goals set within the nursing unit and what allocations will be given by upper management for a budget (Walsh, 2016). The need to be precise is the key to an effective budget. Careful oversight is also needed once the budget is determined. When determining staff, it is formulated by acuity. The nurse manager takes into consideration of nurses that are overtime and new graduates that require a preceptor to plan accordingly. The same attention is placed on patient care techs scheduling and availability, according to Ms. Grey.
The budget accommodates any fast turnovers on the unit, which means a certain number of nurses have to be scheduled per shift. This is determined annually by the joint budgeting committee for the following year, as noted earlier. However, the nursing manager can call staff in or down the staff on patient acuity and patient numbers on the unit. In other words, addressing patient safety helps reduce adverse events, decrease the length of stay, and improve the care process. (Everhart et al., 2013). For example, according to Ms. Grey, if epidemics of seasonal infectious diseases, whether it is the flu virus or allergic reactions, are seen in a region, the number of current nurses on shift increases (D OConnor et al., 2021). This is necessary to ensure consistency of patient care and not create collapses by reducing clinic productivity.
Policy Implications
Budgeting is an important milestone in the development of a companys corporate strategy, and in many ways, it is the viability of a clinic that depends on effective and thorough budget planning. It is already known that the budget is a reflection of professional practice, and it is not appropriate to create budget plans in isolation from the agenda within the institution (Eramo, 2021). A budget is necessary to shape a planned and systematic operation, as well as to ensure the continuity of patient care, which is prospectively important for public health. That said, it is clear that a budget plan cannot assess all sorts of risks, although it tries. For example, any recurring events, be they seasonal epidemics, are built into the management of the budget for a particular year. A specific practice might be to expand nursing staff increase operating expenses for fall illnesses. However, not all of the events can be predicted: COVID-19 clearly showed that clinic budgets might not be prepared for such pressures, posing a threat to planning per se (EscontrÃas et al., 2021; Eramo, 2021). If a businesss economic policies are not designed to cover contingencies, reimbursement is affected (Centers for Medicare & Medicaid, 2017). At the same time, in an effort to quickly adapt to change, nurse administrators can manage staff policies by reducing or increasing staffing levels and modifying work schedules. For example, during a pandemic, the number of active nurses increases to help more patients, which in turn puts more strain on the companys budget. If a large number of patients die, it becomes even more of a blow to the clinic, raising issues such as ineffective treatment, falling reputation, unprofitability of therapy, and possible legal costs (Silver & Chertow, 2017; AHRQ, 2017). Thus, budgets in the clinic are dynamic, and while planning for them is a necessary part of guaranteeing success, it is not exhaustive.
Conclusion
Creating an operating budget and planning for a future reporting period are essential and critical practices for any company, including a clinic. This paper, based on an interview with nurse administrator Ms. Grey, has shown that budget management is inextricably linked to personnel management. In the event of overspending, the administrator may reduce staffing in order to maintain reserve savings. At the same time, clinics plan their budgets in advance as part of their operating strategy. Such planning may include an assessment of force majeure, but no one is immune to unforeseen situations. It is critical for the nurse administrator to be able to balance workforce retention and budget management to keep the business profitable.
References
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D OConnor, R., Barten, D. G., & Latten, G. H. (2021). Preparations of Dutch emergency departments for the COVID-19 pandemic: A questionnaire-based study [PDF document]. Web.
Eramo, L. (2021). 40% of hospitals reconsidering traditional budgeting amid pandemic: HFMA poll. HFMA. Web.
EscontrÃas, O. A., Istrate, E. C., Flores, S., & Stewart, D. C. (2021). Operational and financial impact of the COVID19 pandemic on US dental school clinics. Journal of Dental Education, 1-7. Web.
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Silver, S. A., & Chertow, G. M. (2017). The economic consequences of acute kidney injury. Nephron, 137(4), 297-301. Web.
Walsh, K. (2016). Managing a budget in healthcare professional education. Ann Med Health Sci Res, 6(2), 71-73. Web.
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