Budgeting%20in%20Nursing%20Administration

1
Budgeting in Nursing Administration
Presented By, Mrs. Ahitha, M.Sc (N) Asst. Prof
Obstetrics Gynecology Department
2
DEFINITION

• A forecast of the resources required to deliver
  the services offered by the organization.
• A budget is a financial plan that includes
  estimated expenses as well as income for a period
  of time.
• A nursing budget is a systematic plan that is
  informed best estimate by nurse administrators of
  nursing revenues and expenses. It projects how
  revenues will meet expenses and projects a return
  on equity or profit.
• Budget is a numerical statement expressing the
  plans, policies and goals of an organization for
  a definite period in future.

3
PURPOSE

• To provide a quantitative expression of the
  plans of the hospital or the institution.
• To evaluate financial performance in accordance
  with the plans.
• To control costs.
• To enhance fiscal planning and decision making.

4

• To clearly recognize controllable and
  uncontrollable cost areas.
• To provide a useful format for communicating
  fiscal objectives.
• To allow feedback of utilization of money spent.
• To identify problem areas and facilitate
  effective solutions.
• To provide a means for measuring and recording
  financial success in accordance with the
  objectives of the organization.

5
PURPOSE
6
PRINCIPLES
7
Principles of budgeting

• Sound financial management A budget should
  provide sound financial management by focusing on
  the requirement of the organization.
• Based on objectives and policies A budget should
  focus on objectives and policies of the
  organization. It must flow from objectives and
  give realistic expression to the realization of
  such objectives.

8
Principles of budgeting

• Financial and nonfinancial resources A budget
  should ensure the most effective use of the
  available financial and nonfinancial resources.
• Planned in advance A budget should ensure that
  programme activities are planned in advance.
• Consistent delegation This process requires
  consistent assigning of fixed duties and
  responsibilities to managers at different levels
  for planning/framing and executing the budget.

9
Principles of budgeting

• Coordination efforts Budgeting should aim at
  ensuring coordination among various departments,
  establishing a frame of reference for managerial
  decisions and providing criteria for evaluating
  managerial performance.
• Adequate check and balance Utmost care must be
  taken in fixing targets. A budget should not
  adopt too high or too low estimates.

10
Principles of budgeting

• Appropriate to the nature The budget period must
  be appropriate to the nature of the business or
  service and to the type of budget.
• Under directions and supervision A budget is
  prepared under the leadership of the
  administrator of financial officer.
• Interpretation A budget should be prepared and
  interpreted in consistency with communicating the
  planning process in the organization.

11
Principles of budgeting

• Quality and quantity evaluation While working on
  the budget a review of the performance of the
  previous year is necessary and an evaluation of
  its adequacy both in quality and quantity.
• Flexibility While developing a budget, provision
  should be made for its flexibility.

12
IMPORTANCE OF BUDGET

• An essential management tool
• Budget tells you how much money you need to carry
  out your activities
• Budget enables to monitor income and expenditure.
• The budget is basis for financial accountability
  and transparency.

13
(No Transcript)
14
(No Transcript)
15
(No Transcript)
16
(No Transcript)
17
(No Transcript)
18
(No Transcript)
19
TYPES OF BUDGET
20
TYPES OF BUDGET

• PROGRAMME BUDGET
• PRODUCTION BUDGET
• CASH BUDGET
• FLEXIBLE BUDGET
• Incremental budgeting starts out with a budget
  from a previous period. The business uses this
  previous budget as a basis for calculating the
  new budget. They take the old budget and add to
  or subtract from the totals to come up with a
  budget for the upcoming period. For example, last
  year, a company did 1,000,000 in sales. For this
  year, they expect an increase in sales of 10
  percent. Therefore, their new budget will be
  1,100,000 for the year. 

21
Types of Budgets

• Incremental budget
• Programme budget
• Open-ended budget
• Flexible budget
• Revenue and expense budget
• Zero-based budgets
• Sales budget

• Rollover budget
• Fixed-ceiling budget
• Production budget
• Performance budget
• Capital expenditure budget
• Cash budget
• Sunset budget

22
Incremental budget

• This is based on estimated changes in the
  present operation, allowing for a percentage
  increase for inflation, all of which is added to
  the previous years budget.

23
Programme budget

• This is one where costs are computed for entire
  programme, i.e. , group total costs for each
  services programme,
• e.g. Maternal and Child Health Programme(MCH),
  Family Planning Programme (FPP), Universal
  Immunization Programme (UIP), etc.

24
Open-ended budget

• This is a financial plan in which each operating
  manager presents a single-cost estimate for the
  optimal activity level for each programme in the
  unit, without indicating how the budget should be
  brought down if appropriate funding is not
  available.

25
Flexible budget

• This comprises several financial plans, each for
  a different level of programme activity. It is
  based on the fact that operating conditions
  rarely abide by expectations.
• are budgets that adjust automatically over the
  course of the year depending on the variables
  such as the volumes, labor cost and capital
  expenditures.

26
Revenue and expense budget

• This is expressed in financial terms and takes
  the nature of a proforma income statement for the
  future. It may be prepared in a detailed form or
  abstract statement, reflecting the items of
  profit and loss under classified headings.

27
Zero-based budgets

• This requires the nurse manager is required to
  examine and justify each cost of every programme,
  both old and new, in every annual budget
  preparation

28
Sales budget

• This is the starting point in a budgetary
  programme, since sales, activities give shape to
  all other activities. Sales budgets are compiled
  in terms of quality as well as of value.

29
Rollover budget

• This one forecasts programmes, revenues and
  expenses for a period of more than a year, to
  accommodate programmes that are larger than the
  annual budget plan.

30
Fixed-ceiling budget

• This is a financial plan in which the uppermost
  spending limits are set by the top executive. The
  unit and divisional managers develop budget
  proposals for their respective areas.

31
Production budget

• This is the budget that aims at securing the
  economical manufacturing of products and
  maximizing the utilization of production
  resources.

32
Performance budget

• This is based on functions not divisions, e.g.
  direct nursing care, in-service education,
  quality enhancement, nursing research.

33
Capital expenditure budget

• This is prepared for assuring planned timely
  capital investment in the business to ensure the
  availability of capital at the right time over a
  longer period.

34
Cash budget

• This is prepared by way of projecting the
  possible cash receipts and payments over the
  budget period.

35
OPERATING BUDGET

• It provides an overview of an agencys functions
  by projecting the planned operations usually for
  the upcoming year.
• The nurse manager might includes personnel
  salaries, employee benefits, insurance,
  medical-surgical supplies, office supplies, rent,
  heat, light and house keeping

36
Sunset budget

• This is designed to self destruct within a
  prescribed time period to ensure the expenditure
  is stopped by a predetermined date.

37
(No Transcript)
38
(No Transcript)
39
(No Transcript)