BUDGET MANAGEMENT Byron Marshall is a nurse manager for the surgical ser- vices department of a private orthopedic hospital.
Byron has received notice from the vice president of clinical services that next year’s budget is due to her for review at the end of the month. Byron has kept careful records during the previous 12 months for use in preparing the surgical services department budget.
Each month, Byron has received and reviewed monthly reports of revenue and expense for his department. He validated each month’s budget targets, carefully noting areas that didn’t meet budget projections. For example, when April pharmacy charges were 15 percent above budget projections, Byron noted that surgery volume was up 30 percent over the previous year, accounting for the increase in preanesthesia drug charges. Nursing salaries were also over budget for the year, but again, increased surgery volume had resulted in the addition of two full-time surgery technicians to the department. When summer vacations resulted in agency staffing in the OR, Byron saved copies of the approval from the vice president and the human resources department and noted the total cost to his department.
Byron will use the budget information for the past 12 months to project the next fiscal year’s budget for his department. Information from the human resources department provides data for cost of living and merit increases in salary, while materials management has pro- jected a 20 percent across-the-board increase in surgi- cal supplies and pharmaceutical charges. Byron will also
request replacement of two OR tables and three gur- neys as part of the capital budget. These items had been requested by staff during the last department meeting when Byron asked for changes and improvements in the budget. Budget discussion is part of each staff meeting and Byron provides copies of actual budget numbers to the staff each month. He has found that showing rev- enue and expense reports to staff increases compliance with overtime expenses and supply usage.
With monthly preparation, good record keeping, and accurate analysis, Byron is confident that his budget pre- sentation will be on time and on target.
Manager’s Checklist The nurse manager is responsible for:
● Learning and understanding the responsibilities of financial planning for the department
● Reviewing monthly revenue and expense reports for accuracy and completeness
● Understanding and tracking the reasons why particular areas did not meet the budget
● Communicating to staff the importance of fiscal responsibility
● Planning for capital items on an ongoing basis ● Identifying and incorporating increasing or
decreasing expenses into the department budget ● Preparing and presenting a complete departmental
budget to administration
CASE STUDY 14-1
CHAPTER 14 • BUDGETING AND MANAGING FISCAL RESOURCES 197
Magnet Hospital Performance In Magnet-certified hospitals, staff are taught about budgeting and how the unit’s money “works.” Bedside staff make excellent, informed decisions about what resources should be used and understand the give and take of budget management. Bedside staff are empowered to make decisions that impact how they work. For example, the charge nurse on the unit takes phone calls about unit staffing. The float pool might have an additional aide coming in to work who is not assigned yet. The charge nurse takes the phone call from the staffing office to ask if the unit needs another aide and makes the decision.
Another example includes flexing staff for needs on the unit. The charge nurse, along with the coworkers, decide whether someone can be sent home on a slow day or if another staff mem- ber should be called in if the unit is excessively busy.