Role of a Nurse Leader in Budgeting - Special Academic Support

Do you need this or any other assignment done for you from scratch?

We assure you a quality paper that is 100% free from plagiarism and AI.

You can choose either format of your choice ( Apa, Mla, Havard, Chicago, or any other)

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Introduction

Healthcare organizations operate within a predetermined budget prepared by the financial department and the nurse manager. Primarily, the expenditure estimates are based on the experiences from the past years and expected activities for the current year. Mostly, a bigger percentage of the budget goes to staff payroll and recurrent medical supplies. The nurse leader and informatics department should monitor and identify any inefficiencies and recommend strategies to achieve more with the limited monitory resource. The nurse leader should be able to provide a reasonably fair operating budget, explain short-term variations, handle minimum staffing requirements, and use different budget approaches. Although financial managers are responsible for finances in healthcare organizations, nurse leaders must be budget savvy to aid in forecasting departmental needs.

The Rationale for Nurse Leaders to Provide Reasonable and Fair Operation Budget

Nurse leaders understand the units of service, which are the basic financial building blocks for the healthcare budget. Operational expenses for surgeries, birth procedures, and other encounters per financial year are often known by the nurse leader (Leger & Dunham-Taylor, 2018). Providing a reasonable budget that shows the utilization of money to fit each category ensures faster approval and builds trust in the capabilities of the nurse leader. Moreover, it ensures that the variance from the set budget is minimal to enhance the planning and forecasting of healthcare activities.

The other rationale for giving a reasonable and fair operation budget is to promote value for the patients. According to Brydges et al. (2019), nursing accounts for 50% of the hospital budget which is substantial in the operating margin of the institution. The implication is that if the nurse leader fails to deliver a fair operation budget, it will offset all the other programs. Resultantly, the organization will not be able to give a proper account of its financial reports and may lose sources of funding from the community and the government. Thus, providing a reasonable and fair operation budget builds the integrity and accountability of the hospital to external stakeholders.

Explaining Short-term Variations

Nurse leaders should be prepared to explain short-term variations to the budget so that it is a factor during the planning and helps in future estimates. For instance, a higher expenditure can occur as a result of a disease outbreak in the region, causing an influx of patients in the hospital. Expectedly, the spending for that period will be high and, when used for forecasting, provide a wrong analysis of the hospitals operations. Therefore, the nurse should be prepared to gather information and present evidence for the offsetting of the budget at the time and how it can be excluded from future planning.

In addition, the nurse leader should provide an overview of the usual expenses when there are no eventualities. The nurse leader should know the cost per patient day to better control the variations and remain fiscally astute (Leger & Dunham-Taylor, 2018). Particularly having the exact figures of recurrent expenditures helps the nurse to show areas that have been affected by short-term variations (Bai et al. 2017). For example, if in the case of an outbreak, there are many inpatient admissions and more personal protective gear is used, the budgetary committee will understand how to factor in the challenges in future forecasting. Thus, each explanation that the nurse gives should be in writing, backed with evidence of identifying factors offsetting the budget and the increased or reduced cost for a specified period.

Critical Issues for Nurse Leaders in the Development of Budget

The nurse leader should have a wide array of knowledge and skills for budget development. However, some issues are more important such as staffing and replacement plan. Depending on the hospitals finances, they may have a hire-up to the core or minimum staffing requirement. Given that most of the bulk of hospitals expenditure goes to the payment of staff, it is crucial to factor in any plans for the replacement and dismissal of employees (Waxman & Massarweh, 2018). The leader should forecast future staffing requirements while factoring in the minimum patient: nurse ratio recommended by the Ministry of Health.

Moreover, hours per patient day (HPPD) and cost per patient day (CPPD) are important metrics in meeting the fiscal targets of the units. They show the estimate of the most productive nursing hours against the number of patients, which help when deciding to commit resources (Waxman & Massarweh, 2018). The implication is that the department can only invest in projects with higher returns on investments. The issue is critical in reviewing performance cost drivers and understanding the root causes of failure in some areas.

Handling Minimum Staffing Requirements

A minimum staffing requirement is an example of a fixed cost that is always needed regardless of the number of activities that are going on in the institution. For example, the salary, rent, and other allowances for the nurse leaders remain constant even if there are no patients admitted for the entire period (Leger & Dunham-Taylor, 2018). The best way to handle this requirement is by putting them as fixed and recurrent expenditures to lessen the task. The rationale is that the minimum staffing requirement is unlikely to fluctuate regularly. The allocation of staff is done based on the mean number of patients seeking hospital services in a day. Moreover, the cost of this budgetary allocation is rarely affected by the volume of services provided at the hospital, hence considered part of operations. When there is a plan for a significant addition of employees, the nurse leader can include the same as a future investment in the capital budget.

Alternatives to Department Budget Approach

Line-item budgeting approach is an alternative to the department design. It works by managing information based on the cost categories or the types of expenses that the hospital has. For example, there are operational, fixed, and emergency costs. The nurse leader can develop a budget based on the pattern that has been used in the past to handle different expenses. The line item approach helps retain control but limits the flexibility of the nurse leader in trying out other services. Alternatively, there is performance or program-based budgeting, which focuses on linking the allocated funds to measurable outcomes. It is a form of zero-based budgeting which demands a justification for every cost (Morlidge, 2017). The services without benefits are plugged out to ensure the efficiency of the nursing department. The nurse leader can use a rolling forecast if the hospital requires more flexibility as it allows for a more frequent update of expected expenditures in the future.

Conclusion

In conclusion, nurse leaders should understand the budgeting process since they handle most of the daily activities and understand the hospitals needs and priorities. Notably, they should know the operating and capital budget to help plan for recurrent needs and other expenses. In some cases, there may be short-term variations due to emergencies; hence, the need to be dynamic and flexible. Nurse leaders should understand critical matters that take the most finance and are vital for offering patient-centered care. Knowing more than one budgeting structure helps to alternate and find the most suitable method. Thus, nurse leaders should always be accountable for how they plan to spend the money allocated for their department.

References

Bai, Y., Gu, C., Chen, Q., Xiao, J., Liu, D., & Tang, S. (2017). The challenges that head nurses confront on financial management today: A qualitative study. International Journal of Nursing Sciences, 4(2), 122-127.

Brydges, G., Krepper, R., Nibert, A., Young, A., & Luquire, R. (2019). Assessing executive nurse leaders financial literacy level. JONA: The Journal of Nursing Administration, 49(12), 596-603.

Leger, M. & Dunham-Taylor, J. (2018). Health care financial management for nurse managers: Merging the heart with the dollar (4th ed.). Jones & Bartlett Learning.

Morlidge, S. (2017). Traditional budgeting: What are the alternatives? FP&A Trends.

Waxman, K., & Massarweh, L. J. (2018). Talking the talk: Financial skills for nurse leaders. Nurse Leader, 16(2), 101-106.

Click Here To Order Now!