1.
Penner, 2013, Chapter 5:
Reporting Budgets, Part 1 of 2
• Budget reports and
reporting
• Operating expense
budget:
– Personnel expenses
– Non-personnel
expenses

2.
Why focus on the operating expense
budget for an acute care nursing unit?
• Operating expenses are assumed to be
under the control and supervision of the
nurse manager.
• Your understanding of acute care nursing
unit budgets will transfer to the review of
other health care budgets.

3.
Components of Budgets
• Budget time period:
– Budgets often reported monthly
– Fiscal year (FY) or budget year, quarterly budget
reports
– Weekly or daily if more detail on performance is needed
– More than one FY in the past or future for budget
planning
– Budgets reporting several time periods show trends in
performance
• Line items: budget table rows
– See “Reasons for Rows” presentation
• Columns
– See “Consider the Columns” presentation

4.
Budgets and Budget Reports
• There is an overall operating budget that
includes volume (statistics), expense and
revenue budget
• These sections may be reported separately
– Utilization reports (volume, statistics)
• Why is a line for volume usually included in expense and
revenue reports?
– Expense reports
• Why are personnel (staffing) reports used?
– Revenue reports
• Why are revenue reports often missing from nursing unit
budgets?

5.
Fixed vs. Flexible Budgets
Fixed:
• Budgeted amounts
are set regardless of
changes in volume
over FY
• Examples--rent,
equipment, full-time
or permanent staff
Flexible:
• Adjustments made
over the year based
on volume variance
• More complicated to
prepare but more
useful and accurate
• Examples: on-call or
other variable staff,
medical supplies

6.
Table 1. Nursing Unit Expense Budget
Variance
20 staffed beds, June 2013 ($
thousands).
Budget
June
2013
Item
360
Patient Days
Actual
June
2013
347
Variance
-13
$ 200
$ 220
-$20
$
50
$ 53
-$3
$ 250
$ 273
-$23
Supplies
$
25
$ 26
Overhead
$
10
Total Non-personnel
$
Total Expenses
Productive
Non-productive
Total Personnel
Current
YTD 2013
Prior YTD
2012
3,240
3,164
$ 1,248
$ 1,257
$
$
312
309
$ 1,560
$ 1,566
-$1
$
153
$
144
$ 10
$0
$
60
$
60
35
$ 36
-$1
$
213
$
204
$ 285
$ 309
-$24
$ 1,773
$ 1,770

7.
Personnel Expense Budget Report
• High costs so require close monitoring
• Nurse manager often able to control these
costs
• Personnel expenses:
– Straight time and overtime hours
– Differentials and premiums for shifts,
weekends and holidays
– Benefits, paid leave
– Travelling and per diem nurse hours

8.
Thinking About Personnel Expenses
• Staffing standards:
– Nurse-patient ratio
– Staff mix (RNs, LVNs, CNAs)
• Full-time equivalents (FTEs)
– Direct care measured in hours not positions
• Absenteeism
– Costly
– Reduces productivity

9.
Operating Expense Budget:
Non-personnel
• Fixed non-personnel expenses:
– Office supplies
– Training, staff education supplies
– Depreciation
– Overhead or administrative expenses
• Flexible non-personnel expenses:
– Medical supplies

10.
Key Points
• Nursing unit budgets can include the statistics,
expense and revenue budgets as the operating
budget.
• Nursing unit budgets often only report statistics
(volume) and expenses.
• Staffing costs are often the most closely
monitored as they are typically the highest costs
and require supervision and control.
• Expenses might be fixed or flexible, depending
on their link to direct patient care (volume).