Managing fiscal resources is a challenge for all nurse managers.
This is even more true to- day as legislation and regulation of health care reform is implemented. Close attention to costs, balanced by awareness of quality and patient safety, is essential.
Case Study 14-1 illustrates how one nurse manager handled his budget.
What You Know Now • A budget is a quantitative statement, usually written in monetary terms, of plans and expectations over a
specified period of time. • The operating or annual budget is the organization’s statement of expected revenues and expenses for the
coming year. • The revenue budget represents the patient care revenues expected for the budget period based on volume
and mix of patients, rates, and discounts that will prevail during the same period of time. • Nursing units are typically considered cost centers, but may be considered revenue centers, profit centers,
or investment centers. • Nurse managers may be responsible for service lines and staff from multiple disciplines and departments. • Nurse managers have input into capital expenses and are responsible for salary and operating costs related
to new equipment. • A full-time equivalent (FTE) is a full-time position that can be equated to 40 hours of work per week for
52 weeks, or 2,080 hours per year. • The position control is a list of approved, budgeted FTEs that compares the budgeted number of FTEs by
classification (RN, LPN), shift, and status to the actual available employees of the unit. • Variance is the difference between the amount that was budgeted for a specific revenue or cost and the
actual revenue or cost that resulted during the course of activities. • Monitoring the budget throughout the year requires attention to variances and the reasons they occurred.
Tools for Budgeting and Managing Resources 1. Understand the budgeting process in your organization. 2. Determine the number of full-time equivalents necessary to staff the unit. 3. Compute the salary and nonsalary budget, including salary increases and various additional factors. 4. Monitor variances over the budget period and identify negative variances, keeping notes in your
files. 5. Understand that factors out of your control, such as changes in technology or indirect or direct costs
that may be assigned to your budget, affect your budget and its performance. 6. Encourage staff to monitor resource use, including time and supplies.