Ms.

Sajida Chagani
&
Ms. Khairunnisa Mansoor
Senior Instructor
AKUSONAM
 Connection time Do you do
budgeting in
daily life?

Were you able to

identify reason for that
?

What is your way of

doing it?

During your budget

plan have you ever
feel like you have
gone out of the If yes, then what do
budgets? you do to over come
the loss.
2
How do I do it ?

3
Unit V: Resources Management

VA: Financial Resource Management (Budgeting)

1. Describe the purpose of budgets.
2. Differentiate and manage different types of budgets.
3. Discuss the significance of budget
4. Discuss goal setting to establish budget
5. Discuss the core elements of preparing, controlling, and
monitoring budget.
6. Describe the appellation of budgeting in their specific
institution
7. Apply specific terminology of budget.
 Connection time

1. Would you go on round a road trip with out

a map?

2. Without knowing that supplies you need

(Money, fuel, driving license, required tires,
and relevant car tools.

3.Where are you going (Destination) ?

5
Connection time

Why is budgeting
process taught to
nurses?

6
 Discuss the significance of budget
Just as a blood pressure cuff and thermometer are tools nurses use in clinical setting

So is Budget
Nurses prepare a patient care plan to determine the overall clinical care that all patients receive

It also determines that care will be provided by which category of staff (RN,tech, HCA)

It also determines which clinical supplies will be available

The elements of budget are intertwining with the care patients receive

In the essence of health care organization nurses must be involved in

budgeting Process 7
Expenses to Consider for a Nursing Unit Budget

Does the patient load change depend on the time of year?

What works for one unit may not work so well for another.

review records from previous years to determine trends

Cost center—smallest functional unit for which cost control and accountability is assigned to nurses8
Terms and Definition for budgeting Process

Budgeting
• Budgeting is a process of planning and controlling future operations by comparing actual results with
planned expectations.

Revenues
• Amount of money institution has earned by providing the services

Expenses
• Are the cost of the services provided

Fiscal year
A specified 12-month period during which operational and financial performance is measured.
Cont…..

Income
• Income is the sum of money to support the expenses

Operating Expense
• Incurred for the items / services which benefited for shorter period of time (less than a year)

Capital Expenditure
• Incurred for the items which benefited for longer period of time (more than a year) like Furniture, Vehicle,
Computer, Land, etc.

Financial management
• A series of activities designed to allocate resources and plan for the efficient operation of the organization.
What are the benefits of budgeting in healthcare?

Prioritize capital
Align operational Effectively manage
investments to align
plans with financial capital spend and
with strategic
planning targets cash flow
initiatives

Better understand the

allotment of funding
Minimize purchasing
to individual projects,
errors
initiatives, and
clinical departments
 What budget-related challenges do hospitals face?

01 02 03 04 05 06

Developmen
Supply chain
t and issues and
Unpredictable Changes to Staff Increasing More?
adoption of interruptions,
economic reimbursemen shortages market
new such as personal
events, such as t and payment and competition
technologies protective
the 2020 models increasing equipment (PPE)
, such as costs
COVID-19 telehealth or prescription
pandemic and home-
drug shortages
based
medicine
?
What factors affect a healthcare budget?

Changes in patient volumes

Rising interest rates

Higher capital acquisition costs

Inflation:
The rate at which the value of a currency is falling and, consequently, the general level of prices for goods and services is
rising.
 Fixed Product line Special purpose Cash Flexible Budget
Budgets budgets budgets budgets

Types of budget Cash flow

budgets
Operating Performance
Budgets budgets

Static Budgets
Capital Budgets Rolling Bud Long-ranged Program
get budgets Budgets
 Operational Budget
Allocation of financial resources according to
budgetary lines for day-to-day operations.
For a nursing unit this
Costs related to operational activities and the costs covers;
include: the cost of supplies,
 Production cost small equipment, Unit
 Overhead cost chargeable items and
 Manufacturing cost other miscellaneous
 Labor cost items.
 Administrative cost, etc.
Unit Chargeable Patient chargeable
Paper Medication
glass cups
Dialysis
Diasef
solution

Morten
Syringes Syringes
liquid Surgical
Regenerat
packs
ive salt

Danger
Saniplast
box ECG
Catheters
electrodes

Tissue Distal
paper C- water Admissi Medicatio
Fold on pack n

Unit Disposabl
Hand e
chargeab
sanitizer saturation NG tube
le
probe

Tongue Surgical IV Surgical

depressor tape canula tape
 Cash Flow Budget
Determines whether the accounts payable and accounts receivable are dealt with
timely.

Benefits:
 It ensures that the inflow of cash is regular and timely.
 This budget is important as it helps the managers determine the cash shortage period.
 And accordingly, take necessary action towards it.

A cash flow budget also enables the business to know whether it would be able to handle
new projects efficiently or not.
 Program Budget
It is a budget prepared for a specific program or project.

And therefore, it is also known as a project budget.

Benefits:
It helps in controlling each project efficiently.

It determines the allocation of funds on a particular project that facilitates

strong decision-making.
 Capital Budget

Includes equipment/plants/machines etc.

Capital Budget covers fixed assets such as land,

buildings, and long-life capital projects financed
over two or more years.

Capital Budgeting is based on the overall

operating plan and is part of the strategic vision for
the organization.
 Capital Budget (New/Replacement)

• Land & building

• Teaching equipment
Can you share an example
• Medical equipment of facility renovation in
• Nonmedical equipment your clinical Setting?

• Facility renovation
Best practices for the healthcare budgeting process

• Create a budget calendar

• Set realistic deadlines
1

• Strive for continual improvement

• Develop a timely monthly variance analysis process
2 • Keep reporting simple

• Give experienced users deeper insights:

• individual departments on total revenue,
• operating income
3 • expenses,
• salaries, and supplies, on both a current month and year-to-date basis

• Automated planning solution, keep it updated to ensure access to the latest features, enhancements,
and dashboards
4
 Connection time
Case scenario

During LM clinical rotation

students observed that in eye and
ENT clinic setup there is need to
inaugurate mini OR for minor
procedures to be performed.

What will be first step of this

process

22
 Approaches to project selection

SAMPLE
HEADLINE
Payback period (PB) Net Present Value
Internal rate of return (IRR) (NPV)
.
Determines how Shows how profitable
The expected return
long it would take a project will be versus
on a project—if the
a company to see alternatives and is
rate is higher than
enough in cash perhaps the most
the cost of capital,
flows to recover effective of the three
it's a good project.
the original methods..
investment.
TO IMPLIMENT THIS IDEA WHAT IS REQUIRED

MAN MATERIAL METHODS MEASUREMENT

RNs, HCA, Tech, Stretcher Process KPI
Doctor Recliner Outcomes
Type of
Space admission
Salary, benefits time Walk-in
Internal transfer
Recovery stay
Post procedure
monitoring
LOS
 Planning

Approval

Implementation

Control/Review
 Approaches to budgeting

1 Cost centers Managers are responsible for predicting, documenting, and managing the costs (staffing,
supplies) of the division

Managers are responsible for generating revenues (previously

2 Revenue centers by increasing patient volume, although health care reform

may make the future of revenue-generating centers obsolete).

3
Managers are responsible for generating revenues and managing costs so that the
Profit centers
department shows a profit (revenues exceed costs).

4 Investment centers Managers are responsible for generating revenues and managing costs and capital
equipment (assets)..
Discuss goal setting to establish budget
Sample Budget reports
Surgical areas

Revenue Expenses Operating Gain/Loss ADC LOS Occupancy

Units

Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget

XYZ 10,443,146 10,664,640 4,268,205 4,257,657 6,174,941 6,406,983 52.06 53.00 5.19 4.63 86.77% 88.33%
 Sample Budget report
Unit A
Jan Feb Mar Apr May Jun Jul Total
Actual 263 198 224 168 182 223 194 1452
Budget 219 200 203 238 195 183 222 1460
Variance 44 -2 21 -70 -13 40 -28 -8
Variance % 20.1 (1.0) 10.3 (29.4) (6.7) 21.9 (12.6) (0.5)
Ambulatory unit
Jan Feb Mar Apr May Jun Jul Total
Actual 476 675 535 651 682 695 728 4442
Budget 773 806 805 719 782 672 704 5261
Variance -297 -131 -270 -68 -100 23 24 -819
Variance % (38.4) (16.3) (33.5) (9.5) (12.8) 3.4 3.4 (15.6)
D ay care unit
Jan Feb Mar Apr May Jun Jul Total
Actual 45 60 55 58 53 39 44 354
Budget 53 48 45 48 42 29 41 306
Variance -8 12 10 10 11 10 3 48
Variance % (15.1) 25.0 22.2 20.8 26.2 34.5 7.3 15.7
 Summarization: Methodology for Budgets

Evaluation: periodically
and modified as needed

Implementation: ongoing monitoring and analysis STEP 5

STEP 4
Plan: budgeting cycle
STEP 3
Diagnosis: the goal or what needs to be
accomplished
STEP 2
Assess: what needs to be covered
in the budget STEP 1
Quick Quiz

The budgeting cycle assists the finance department in the preparation of reports.
True or False?

Correct answer : True

Revenue
……………………….Amount of money institution has earned by providing the services

Answer :
Revenue
Expense
Budget
Income
Does the budget cycle are of shorter tenure than the accounting period?

Yes Or NO

NO

Answer: Budget Cycle

_____________ is a step-by-step process that a company or an individual follow to prepare
a budget.
What was mightiest and muddiest point of
the class?

Comments in the MS Q&A