Nursing Administration & Management

1. BUDGETING
Purvi patel
Nusing tutor
MBNC

2. INTRODUCTION
 Budget is defined as a statement of anticipated
results during a stipulated period expressed in
financial and nonfinancial terms.
 Three essential steps in the control process include
standards, comparing results with standards and
taking the required corrective action.
 Budget cover a stipulated time period- usually a year.
 The budgeting process starts when the top
management sets the strategies' and goals for the
organization.

3. DEFINITIONS:
 Budget is financial plan of the government
for a definite period.
 Budget can be defined as numerical
statement expressing the plans, policies
and goals of an organization for a definite
period in future.
 Budget is concrete precise picture of the
total operation of an enterprise in monetary
terms.

4. PURPOSE OF A BUDGET:
 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 supply a mechanism for translating fiscal
objectives into a projected monthly
spending pattern.
To enhance fiscal planning and
decision making.

5.  To clearly recognize controllable and
uncontrollable cost area.
 To provide a useful format for
communicating fiscal objectives.
 To allow feedback of utilization of moneys
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.

6. TYPES OF BUDGET
Programme
budget
Production
budget
Cash budget
Flexible
budget
Rollover
budget
Open ended
budget
Fixed
ceilinging
budget
Performance
budget
Sales budget
Sunset
budget
Zero based
budget
Incremental
budget
Capital
expenditure
budget
Revenbue
and expense
budget

7.  Programme budget: this is one where costs are
computed for entire programme. ex. Maternal and
child health programme.
 Incremental budget: this is based on estimated
changes in the present operation, allowing for a
percentage increase for inflation.
 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.
 Flexible budget: this comprises several financial
plans, each for a different level of programme
activity.
 Revenue or expense budget: this is expressed in
financial terms and takes the nature of a proforma
income statement for the future.

8.  Zero based budget: this require the nurse
manager is required to examine and justify each
cost of every programme.
 Sales budget: this is the starting point in a
budgetary programme, since sales activities give
shape to all other activities.
 Rollover budget: this one forecasts programme,
revenues and expense for a period more than a
year, to accommodate programme that are larger
than the annual budget cycle.
 Fixed ceiling budget: this is a financial plan in
which the uppermost spending limits are set by the
top executive.
 Production budget: this is the budget that aims at
securing the economical manufacturing of products
and maximizing the utilization of production
resources.

9.  Performance budget: this is a based on functions
not divisions. E.g. direct nursing care, nursing
research
 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.
 Cash budget: this is prepared by way of projecting
the possible case receipts and payments over the
budget period.
 Sunset budget: this is designed to “self destruct”
within a prescribed time period to ensure the
expenditure is stopped by predetermined date.

10. PRINCIPLES OF BUDGETING:
Sound financial management
Based on objectives & policies
Planned on advance
Coordinating effort
Under directions & supervision
Quality & quantity evaluation

11. CONTINUE…..
Flexibility
Interpretation
Appropriate to the nature
Adequate check & balance
Consistent delegation
Financial & nonfinancial resources

12. STEPS IN BUDGETING
Assessment of the goals of
the institutes & hospital.
Assessment of the
objectives of the present &
proposed programmers
Assessment of all old & new
programmers for manpower,
capital & operating expense

13. CONTINUE…
Identify alternative
methods for realizing the
objectives.
Compare alternatives to
determine the most cost
effective.
Develop a budget request
that details a fiscal plan for
the preferred programme.

14. FUNCTIONS OF BUDGET:
 Budget explains and documents unit needs to
higher administrative levels.
 Budget recognizes the importance of and develops
short and long range fiscal plans.
 It estimates the internal and external environment
of the organization.
 It articulates unit level fiscal planning towards
organizational goals and objective.
 It ensures that documents that the client needs are
rendered clearly and completely.

15.  It coordinates and monitors the different
aspects of budget control.
 It provides opportunities for subordinates to
participate in relevant fiscal planning.
 It precisely assesses personnel needs, using
predetermined standards or an established
patient classification system.
 It underlines the use of appropriate
technique.

16. ADVANTAGES OF BUDGETING PROCESS:
 A budget helps plan for detailed programme activities.
 It helps fix accountability.
 It states goals for all units, offers a standard of
performance and stresses the continuous nature of
planning.
 It encourages managers to make a careful analysis of
operations and base decisions after careful
consideration.
 Weakness in the organization can be revealed.
 Staffing, equipment and supply needs can be projected
and waste minimized.

17.  Financial matters can be handled I an orderly
fashion.
 Agency activities can be coordinated & balanced.
 Budget help managers in integrating personnel
efforts within the organization towards a common
goals.
 Budget controlling devices to correct any excessive
expenditure.
 Budgets help in just measurement of performance.
 Budgeting helps the management learn from past
experience.
 Budget improves communication.
 Budget helps new staff and lower level managers.

18. DISADVANTAGES OF BUDGETING :
 A budget may become an end in itself instend of the
means to achieve an end.
 Budgetary goals may curb agency and gain
autocratic control of the organization.
 Over budgeting is a big danger and become
meaningless.
 Skill & experience are essential for successful
budgetary control.
 Budgetary planning is expensive and time
consuming.