NURSING BUDGET
INTRODUCTION:
Budgeting is the heart of administrative management. It serves as a powerful tool of co-ordination
and negatively an effective device of eliminating duplication and the wastage. These are served by devices
such as justification of estimates, supervision of the use of appropriate funds, timing of the rate of
expenditure and the like.
DEFINITION:
A budget may be a simple plan of one’s personal finances, or it may be a complex document used
by large organization.
According to TN Chhabra ―a budget is an estimation of future needs arranged according to orderly basis
covering some or all activities of an enterprise for a definite period of time.
According to Dimock ―Budget is balance estimated expenditure and receipts for a given period of time.
In the hands of the administrator the budget is the record of the past performance, a method of current
control and projection of future pans.
FEATURE OF BUDGET:
• Budget should be simple in design and oriented to those who use it
• It should be flexible. It should be adjust various needs and conditions of the institution
• It should be synthesis of past, present and future
• It should be product of joint venture and co-operation of executives/ department heads at different
levels of management.
• Budget is composed of two segment; that are income and expenditure. Income limits expenditure;
hence income should be estimated prior to the estimation expenditure.
• A budget reflects the goals and aspirations of the faculty.
• Budget making involves the whole situation.
• Budget is forward planning. Planned activities are vital for efficient and successful functioning
• A budget gives direction- it is more than the list of the desired and approved expenditure. It is also
the instrument of administration and management.
• It should have support of top management throughout the period of its planning and
supplementation.
• Budget has a time period usually annual. It is important to secure the maximum participation of
organization in preparation on of budget.
PURPOSES OF BUDGET:
• To provide definite targets for income and expenditure of the department
• To co-ordinate the activities of the different functional heads in the working of these departmental
budget
• To enable a cash flow statement prepared month by month
• To aid management in formulating future policy decision to promote the growth and welfare of the
organizations
• To provide useful tool for the control of costs
• To provide a tool for communication and co ordination within the organization.
• To improve financial planning and decision making.
• To identify controllable and uncontrollable cost area.
IMPORTANCE OF BUDGET:
Budget is a numerical description of expected income and planned expenditure for an organization
for a specified period of time. It is a concrete, picture of the total operation of an enterprise/ organization/
institution in monetary term, i.e., finance.
The following point serves the importance of budget:
• Budget is needed for planning for future course of action and to have a control over all activities in
the organization.
• Budget facilities co coordinating operation of various departments and sections for realizing
organizational objectives.
• Budget serves as a guide for action in the organization.
• Budget helps one to weigh the values and to make decision when necessary on whether one is of a
greater value in the programme than the other.
PRINCIPLES OF BUDGET:
Budget is an operational plan for a definite period, usually a year, expressed in financial terms and based on
expected income and expenditure.
1. Budget should provide sound financial management by focusing on requirement of the organization
2. Budget should focus on objectives and policies of the organization. It must flow from objectives and
give realistic expression to the way of realizing such objectives.
3. Budget should ensure the most effective use of scarce financial and non financial resources.
4. Budget requires that programme activities planned in advance
5. Budgetary process requires consistent delegation for which fixed duties and responsibilities are
required to be allocated to managers at different level for framing and executing budget.
6. Budgeting should include coordinating efforts of various departments establishing frame of
reference for managerial decisions, and providing a criterion for evaluating managerial performance.
7. Setting budget target requires an adequate checks and balance against the adoption of too high or
too low estimate. Utmost care is a must for fixing targets.
8. Budget period must be appropriate to the nature of business or service and to the type of budget.
9. Budget is prepared under the direction and supervision of the administrator or finance officer.
10. Budget is to be prepared and interpreted consistently throughout the organization in the
communication of planning process.
11. Budget necessitates a review of the performance of the previous year and an evaluation of its
adequacy both in quantity and quality.
12. While developing a budget, the provision should be made for its flexibility.
TYPES OF BUDGET:
There are three types of expenditures that the unit manager is directly involved in, those are personnel,
operating, and capital budgets.
1. Personnel budget:
• The largest portion of the budget expenditures is personnel budget; because healthcare is labor
intensive (not machines intensive).
• The personnel budget includes actual worked time (Productive time), and time the organization
pays the employee for not-working time (Non-productive time).
• Non-productive time includes the cost of benefits, new employee orientation, employee turnover,
sick and holiday time, and education time.
2. Operating budget:
• It includes such daily expenses as the cost of electricity, repairs and maintenance, and
medical/surgical supplies (as syringes, catheters…etc).
3. Capital budget:
• Capital budgets plan for the purchase of buildings or major equipment (of long-life equal or
greater than 5 to 7 years) which is not used in daily operations, and is more expensive than
operating supplies.
• Examples of capital budget include: renovation of a major wing in the hospital, purchasing
equipment as call-light system, hospital beds…etc.
STEPS IN BUDGETING:
COLLECTION OF PAST DATA ASSESS SUCCESS AND FAILURES OF PAST
SETTING OBJECTIVES FOR FORECAST YEAR
OBJECTIVES ARRANGED IN TERMS OF INDICATED UNITS
PREPARATION OF REPORTS ON EXPENSES
PREPARATION OF BUDGET REPORT
REVIEW OF BUDGET REPORT
EVALUATION FOR MODIFICATION OR CHANGRS FINAL PRESENATION BEFORE BOARD
OF TRUSTEES FOR DECISION
STEPS IN EFFECTIVE BUDGETING PROCESS:
• Determine the requirements: inputs from all levels of hierarchy must be obtained
• Develop plan: Budget for 12months is set: Zero-Based budget
• Analyze and control the operation: continuous monitoring is essential
• Review the plan: Periodic revision and modification
STEPS IN BUDGETING FOR COLLEGE OF NURSING:
1. Request for the needs of various departments
2. Review the budget appropriation and actual expenditure for the current year
3. Contemplated changes
4. Salary fixation
5. Requirement estimation
6. Summary of new needs
THE STEPS OF PLANNING BUDGET FOR NURSING UNIT:
1. Assistance of his/her subordinates
2. Review of budget
3. Ascertain changes
4. Preparing requirements
5. Summary of new needs
6. Submitting to institutional administrator
ROLES AND RESPONSIBILITIES OF THE NURSE
ADMINISTRATOR/PRINCIPAL IN BUDGETING:
• Participation in planning budget
• Consult and take assistance of his/her subordinates
• Request sufficient finds
• Submit budget request
• Support the budget when it is allotted
• Cover the routine budget control
FACTORS INFLUENCING BUDGET PLANNING:
Any alteration in one or more from the following factors requires reviewing, modifying or even changing
the budget. These factors are:
• Internal and external economic environment, as well as financial means.
• Changing demands of the clients and/or providers.
• Availability of human resources.
• Capacity of the organization (as opening a new, or closing a working unit).
• Service costs/market price.
• Organizational goals and strategic directions.
• Plans and objectives of one or more department.
CONCLUSION:
A budget is a detailed financial plan, used to carry out organizational goals. The budget includes proposed
earnings and expenditures as well as details about how resources (money, time, and people) will be acquired
and used. The purpose of the budget is to project future plans and costs.
BIBLIOGRAPHY
BOOK REFERENCES:-
• JOGENDRA VATI “A Text Book Of Nursing Management And Administration” first edition 2013,
published by Jaypee Brothers Medical Publishers (p) Ltd. page no. 390-394
• BT BASVANTHAPPA “A Text Book Of Nursing Administration” Second edition 2009, published
by Jaypee Brothers Medical Publishers (p) Ltd. page no. 830-833
• NEELAM KUMARI “A Text Book Of Management Of Nursing Services And Education” third
edition 2011, published by S Vikas and company Medical Publishers India page no. 410-413
NET REFERENCES:-
• http://www.nursingppt.in/nursing-administration/budgeting-for-nursing-service-nursing-
adminstration-ppt/
• https://www.slideshare.net/sandykaur1829/budgeting-ppt-40670897
