1

SEMINAR

ON

Budgeting for various

units and levels
Application to nursing
service and education
SUBMITTED TO
Mrs.Soney M Varghese
Associate Professor
MOSC CON
Kolenchery

SUBMITTED BY
Finu M Paul
2nd Year MSC Nsg Student
MOSC CON
Kolencherry

Budgeting for various units and levels -Application to nursing

service and education
CENTRAL OBJECTIVE
By the end of the seminar,the group acquires knowledge regarding Budgeting for various
units and levels -Application to nursing service and education ,appreciate the role of nurse in
management of these in the clinical practice.
SPECIFIC OBJECTIVE
By the end of the seminar the group will be able to,
1 Define Budgeting.?
2 Describe types of Budgeting?
3 Explain the steps of planning Budget fro nursing unit?
4 List down the steps in preparation of nrsing budget?
5 Detail steps in Budgeting for College of nursing ?
6 Discuss preparation of budget statement in nursing education?
7 Describe the nursing dministration in Budget ?

INTRODUCTION
The term budget is derived from a French word bougette means purse. Budget is generally a list
of all planned expenses and revenues. It is a plan for saving and spending.. The budget is a
powerful tool because it serves as a guide for nursing care activities and allocation of recourses,
supplies, support services and facilities.
DEFINITION
1. BUDGET
According to Finkler ,1984
A budget is a tool for planning, quantifying the plans and controlling costs.
2. BUDGETING
According to Koontz

Budgeting is the formulation of plans for a given future period in numerical terms.
A. FOR HOSPITAL

BUDGET-HOSPITAL
Different types of approaches are used in preparing the budget for a hospital. The basic reason
for preparing a budget is to enable the hospital to effectively meet its financial requirements. An
effective budget is a summary of the carefully conceived financial plans of all departments.
Therefore, it should be clear to the administration as to what the hospitals financial requirements
are going to be.

FINANCIAL REQUIREMENTS OF HOSPITALS

For any hospital, funds are required for the following:
1. Capital funding
For preservation, upgrading, and replacement of physical facilities and equipment
For new technology
For expansion
2. Operating needs
For working capital and operating expenses salaries, materials and supplies, maintenance,
utilities etc.
3. Reserves
For emergency needs

TYPES OF BUDGET IN HOSPITAL

The budgetary plan results from the accounting plan, and includes:

The capital budget

The cash budget
The operating budget

The capital budget

Capital budget is the estimated fund requirement for capital items needed for growth, for
providing new facilities, and for replacement of worn out equipment, machinery, and furniture.
The decision on capital budgeting is primarily based on:
i. Needs of patients and existing alternatives available
ii. Upgradation of technology
iii. Effects of additional equipment on income and expenditure
iv. Availability of funds

The cash budget

A prediction of future cash receipts and expenditures for a particular time period. It usually
covers a period in the short-term future. The cash flow budget helps the business determine when
income will be sufficient to cover expenses and when the company will need to seek outside
financing.
. Cash budget is the budget that records the forecasted cash inflows from various sources and
also records the forecasted demands for cash. It translates the expense and revenue budget into
statement of cash inflow and outflow. Steady inflow of cash comes from settling the patients
accounts at the time of discharge. However, If hospital is unable to collect cash for service

rendered at the time of discharge, accounts receivable are to be created. The cash budget is
usually broken down by monthly or quarterly periods.
The operating budget
Daily expenses as the cost of electricity,repairs and maintenance and medical/surgical supplies.
MAKE A HOSPITAL BUDGET

Making a hospital budget is only second to medical delivery systems in for a hospital. In fact, if a
budget is not properly written, the hospital may be unable to deliver medical services at all. So
many expenses and sources of revenue must be taken into consideration, so the budget process
takes an expert to get through it successfully.
Instructions
Determine hospital revenue. Revenue can come from patient payments, tax dollars, donations,
insurance credits.
Figure out expenses. Start with the physical facility. How much does it cost to keep up the
building. What is the maintenance cost of each department, engineering, air-conditioning, heat,
water, other utilities. Know what equipment costs, how much must be replaced per patient day,
and if any can be recycled. Include the non-medical cost of each bed in the hospital. Include
advertising.
Know the cost of personnel, all employees and ancillary staff, including consultants,
outsourced contracts, perhaps laundry or nurse staffing services.
Know the medical costs of each bed. How many staff hours are spent on each bed, occupied
or not. Use this figure as an average to get a cost per patient year. Add to that the non medical
costs per bed.

parking garages, lots, landscaping, groundskeeping or window washing.

Include all insurance for the facility and personnel.
Write in an emergency expense fund. Disasters occur and the hospital must be prepared for
them when they arrive.

The steps of planning budget for nursing unit

1.Assistance of her/ his subordinates
Nursing administrator requires the assistance of nursing superintendents and nursing supervisors
to present the needs of the coming year within the specified data and confer with those who
presented such need.
2.Review of the budget Nursing administrator should review the budget appropriation and
actual expenditure of the current year.
3.Preparing requirements He/ she should prepare requirements with the assistance of their
subordinate officials for the coming year from the supplied information by them.
4.Summary of new needs He/ she should prepare a summary of new needs and requirements
both personnel and material with the proper data supports of the requirements.
5.Submitting to institutional administrator Budget should be submitted to the administrator of
the institute/ hospital for review, decision and to incorporate into the master budget required for
the hospital. In any change made by either the administrator or the committee on budget, report
should be furnished to her to be used in the control of expenditure.
A copy of the nursing department appropriation is sent to the director after adaptation of the
budget these statements generally proved the budget for the period and difference between the
budget appropriation and actual expenditure. These reports should be kept reviewed by the

director and her associates and if expenditure exceeds the appropriation, the cause should be
determined.

STEPS IN PREPARATION OF NURSING BUDGET

Review the goals of the hospital

Review the objectives of the existing programmes

Prepare a budget proposal

Revise the existing programme with the revised proposal

Compute the expense for each programme

Adopt the alternative approach for realizing the proposed plan

Compare the proposal to identify the effective one

Prepare a budget request which details a fiscal plan for the preferred programme

Present the need of required staffs Review the budget appropriation and actual expenditure for
the current year conjunction with current hospital statistics

Prepare a new budget is to cover in terms of nursing service required

Determine the percentage of salaries in various department of nursing based on the time
allocated
Estimate the requirement for the coming year

Prepare the summary of new needs to support the request

Submit the report to the head of the department

BUDGET COMMITTEE
The budget committee generally consists of a representative cross section of the major functional
areas or divisions within the institution, with the designated budget director usually serving as
the chairperson. Budget committees frequently include, among others those who hold the
following positions:
Director of Nursing
Director of Human Resources
Director of Material Management
Director of Engineering and Plant Operations

Chief of Medical Staff

Chief Executive Officer, Chief Operating Officer, and/or chief Financial Officer

Director of Nursing: This position is responsible for the major function of the most health care
institution and also accounts for one of the largest, proportion of the institutions and revenues.
Director of Human Resources: This position is responsible for administering the institutions
salary and wage program, including its hiring and firing policies. Since in most health care
institutions salaries and wages constitute well over 50% of the organizations total operating
expenses, the director of human resources is a valuable member of the budget committee.
Director of Material Management: This position represents the other half of the operating
expense equation, the non-salary-and-wage expenses. The director of material management
provides knowledge of inflation trends; new market products; purchase and trade discounts;
fixed asset requirements; and the requirements for receiving, storing, processing, pricing and
distributing the institutions operating supplies.
Director of Engineering and Plant Operations: This position is responsible for the institutions
buildings and equipment, including repair and maintenance. The director of engineering and
plant operations can provide a wealth of information about such things, as well as experience in
new construction, remodeling, utilities efficiency, and other areas of concern.
Chief of Medical Staff: This positions represents the other half of the patient care equation, the
medical staff. It is imperative that the physicians be represented in the budgetary planning and
control process. They are not only the institutions major consumers, but they can be its best
marketers and salespersons . the medical staff, who are on or near the cutting edge of the medical

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technology and therapy, can assist in identifying new procedures, treatments, and other related
services that can benefit the institution and the community it serves.
Chief Executive Officer, Chief Operating Officer, and/or chief Financial Officer:
All three frequently serves as ex officio members of the budget committee. Their attendance at
meeting and active interest in the budget committees activities add credibility to the budget
process and help to keep top management aware of the budget process, its direction, and the
anticipated results.
NURSE ADMINISTRATOS ROLE IN BUDGETTING
1. Budget required for the nursing department should be co-operative activity of the nursing
superintendent and her associates including the supervisors
2. Participation in planning budget
3. It is prepared under the direction and supervision of the administrator or financial officer
designated by him
4. The administrator supplies special forms to guide the budget.
5. Consult and take assistance of her/his subordinates in determining the needs of the unit for
ensuring year on the basis of information received.
6. Request sufficient funds to suggest a sound programme such as to provide for developing
programme provision, expansion of programme, to attract and hold qualified staff to provide for
expansion of physical facilities, supplies, equipment, for improving instruction and also to carry
out adequate functions of the institution.
7. Submit budget request with justification with proposed expenditure. The administrator defines
her/ his budget so that nursing unit will have enough money to conduct programme effectively.
Money must be available to allow experimentation also.

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8.When the budget is allotted, the administrator should support the budget. He/ she should
interpret the subordinates, any changes that may affect instruction services for the adopted
budget. She/ he secures for the adapted budget. Once the budget is adapted, it is the
responsibility of the administrator to see that expenditure should not exceed the appropriation
made
9. Since the nurse administrator also is responsible for budget, she/ he should cover the routine
budget control.
10. The budget request may be broken down to the different units e.g. Salaries, supplies,
equipments and other purchase requirements.

PREPRATION OF BUDGET STATEMENT IN NURSING EDUCATION

The nurse Administrator or head of a budgetary unit is responsible for the preparation of the
annual budget of the school of nursing. In conference with the president and other budgetary unit
heads. The administration gets on over all view of the budget. So that is requirements are
reviewed and activates submitted in time for inclusions. In the proposal for the next financial
year, when the budget allotted the amount should be made known the staff. So that they may
establish priorities among items on which of is proposed to be spent purchases should be made,
accounts maintained in accordance with the financial practices of the institution.
STEPS IN BUDGETING FOR COLLEGE OF NURSING:
1. Request the professors of various departments and librarian 10 present their needs for the
coining year by a specified dale, and confer with these who have presented such need.

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2. Review the budget appropriation and actual expenditure for the current year in conjunction
with statical data.
3. Ascertain whether any changes are contemplated.
4. Prepare the programme which the new budget
5. Determine the percentage of salaries of personnel. eg. Principal. Vice Principal. Professors,
Lecturers, Librarian, Clerk, Peon, etc.
6. Estimate the requirement for the coming year from the information supplied as the expenditure
for supplies, equipments and repairs to date.
7. Prepare a summary of new needs, both personal and material with data to support the request.

THE RESPONSIBILITIES OF PRINCIPAL / NURSING ADMINISTRATION IN

BUDGET INCLUDES THE FOLLOWING 1. Participation in planning budget.
2. Consult and take assistance of his / her subordinates in determining the needs of the unit for
ensuing year on the basis of information received.
3. Request sufficient funds to suggest a sound Programme such as to provide for developing
programme provision, expansion of programme, to attract and hold qualified staff to provide for
expansion of physical facilities, supplies, equipment, (or improving instruction (School and
College) and also to carry out adequate functions of the institution.
4. Submit budget request with justification with proposed expenditure. The administrator defines
her / his budget so that nursing unit will have enough money to conduct programme effectively.
Money must be available to allow experimentation also

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5. When the budget is allotted, the administrator should support the budget. He / she should
interpret the subordinates, any changes that may affect instruction services for the adopted
budget. She / he secures for the adopted budget. Once the budget is adapted, If is the
responsibility of the administrator to see that expenditure should not exceed the appropriate
made
6. Since the Nurse Administrator who is responsible for budget, she / he should cover the routine
budget control
SUMMARY
So far we discussed about,

Definition of Budget

Types of Budget

Steps of planning Budget for nursing unit

Steps in Budgeting for college of nursing

Preparation of Budget statement in nursing education

Nursing administration in Budget

CONCLUSION
Budget is quantitative statement usually in monetary terms, of the expectations of a defined area
of the organization over a specified period of a time in order to manage financial performance.
The organization may use sophisticated and complex forecasting methods, including statistical
techniques to assist in making projections related to the budgetary period. Management normally
uses the past as the common starting point for projecting the future.

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BIBLIOGRAPHY
BOOK REFERENCE
1. Eleanor J Sullivan, Philip J Decker. Effective leadership and management in nursing. 4th
edition published by Addison wesely. Page no.91-104.
2. B T Basavanthappa. Nursing administration. Jaypee publications. 1st edition. Page no.152161.
3. Vatti J Principles and practice of nursing management and administration for BSc & MSc
nursing.ist edition.Newdelhi,Jaypee Brothers Medical Publishers,2013
4. G.R Kulkarni, Financial Management for Hospital Administration, Jaypee Brothers
Publication,New Delhi, Page No-:41-91
NET REFERENCE
5. Google .com
6. Budget planning guidelines. Com 6. Pubmed.com
7. http://www.ehow.com/how_4471831_make-hospital-budget.html#ixzz1E1ObwVQZ
8. http://allbusiness.com/accounting/budegt
9. www.budgetmap.com