Operation Budgeting in Nursing

Subject: Nursing
Pages: 5
Words: 1377
Reading time:
5 min
Study level: College


In the healthcare system, there is increasing competition for fund use amongst services offered. Therefore, nursing leaders must formulate proper budgeting criteria to enable effective and efficient operations. Developing a systematic budget will allow the administrator to have deep insight into the income and necessary expenditures hence can strategize appropriate measures to facilitate the management of future uncertainties that may arise. It is the responsibility of the head of the department to ensure all the planning and coordination processes are performed accordingly for the organization to provide reliable and quality health care services. It is important for the nurse leader to make a reasonable budget for the institution to promote smooth operation.

Importance of Reasonable and Fair Operating Budget

Facilitate Smooth Operations

Reasonable budgeting would allow the management to adjust their expenditure in case the previous projections increased. Thus, it is impossible to predict future changes that might occur in the hospital (Saville et al., 2019). To be able to operate adequately, a nurse leader must ensure the budgeting estimates are capable of stretching to cover for additional costs assuming there is an increase in future spending.

Acquisition of Necessary Items

Nursing entails various activities that aim at providing quality and safety services to the patients; therefore, it requires different materials to enhance the practice. A fair operating budget would enable the head of nursing to acquire and purchase necessary and relevant resources that are significant for service delivery. The process will promote prioritizing; hence, this results in proper and effective usage of the available finances.

To Provide Effective Care

Nursing involves daily operations that require coordination and management of staff members to offer needed services. Good budgeting would ensure that the administration is capable of meeting the daily requirement to meet short-term goals. Using the budget, a nurse leader can easily anticipate the number of resources, personnel, and other supplies required to provide effective care for the patients over a given period of time.

Reasons for Explaining Short-Term Variation

It is the responsibility of a nurse leader to plan for the operating budget, which is then forwarded to the hospital’s financial department. They have a proper understanding of the activities happening in the nursing domain hence are capable of identifying and explaining possible differences. Therefore, it is necessary for the nurse manager to be adequately prepared to address the differences so that if any adjustment is needed, it can be easily obtained. Predicting the future outcome is not simple; hence administrators should be aware of changes based on the projections made during budgeting. Providing reasons for the deviations would make the institution understand how nursing works and make adjustments to improve service delivery.

How Nurse Leaders Prepare to Explain Short-Term Variations

Designing Budget

An effective budget plan will give a nurse leader insight into the revenues and the related expenses. Using the figures, it will be easier for the manager to understand how the estimates changed within a time frame. The plan would entail all the necessities required to facilitate the operations; thus, in case of variation, it becomes easier for the administrator to detect and explain the reason behind the dissimilarities.

Setting Goals

To offer effective and efficient health care services, a nurse leader should develop short-term goals that drive the performance of staff members. Assuming the set objectives are not met within the specified time frame, it will be an indication for the manager that some aspects of the operation are not performing according to the variations. Therefore, by identifying the reasons for not reaching the target, an administrator will be fully prepared to explain the differences.

Important Issues for Nurse Leaders

Overseeing Revenues

In the health care unit, nurse leaders are concerned majorly about the sources and payment of patient-related revenues. The manager must ensure all the necessary income is received so that the facility can be able to afford finances to facilitate effective service provision (Ramos et al., 2021). The administrators elaborate and assess the areas where the facility obtains its funding. Focusing on the returns enables the administrator to manage and control both the expected and unexpected expenses for the efficient performance of the organization. Gathering the funds would ensure the hospital can advance its development in terms of facilities hence improving quality and safe patient care.

Tracking of Payers

Nursing leaders also ensure they have clear records of the income payers and their overall involvement. The approach enables the manager to have comprehensive insight into the different types of the person paying for healthcare services. Generally, hospital revenue comes from direct payment by the patients seeking the facilities, from insurance companies paying for insured individuals, or from organizations that cover their employees. Therefore, tracking all the income makes it easier for the manager to project the expenditure during the budgeting process in relation to the expected funding.

Staff Budget

Staff budget is an essential aspect of the nursing operations as it elaborates the relevant expenditures associated with workers. Generally, it is the most spending part of the healthcare unit that is sensitive and requires keen observation to ensure the wage demand and other relevant benefits are met to boost the productivity of nurses. Developing it requires a nurse leader to consider all the possible factors that might cause ineffective performance or limit the number of professionals needed to offer their services. Furthermore, it should cover issues of training new members for effective performance in the sector.

Handling Minimum Staffing Requirement Costs

Creating Adequate Nurses Schedules

In order for a nurse leader to handle challenges associated with staffing costs, a proper schedule should be developed to reduce the chances of overtime work that would increase the expenses. Prior planning and assigning every nurse to work during a specified period would make it possible for the administrator to deal with expenditures associated with the work-related timing. The approach can effectively manage the wages and other remuneration for the staff members for efficient operation.

Determine Nurse-Patient Ratio

The nurse manager can establish the ratio of staff members to patients. This approach enables the leader to evaluate the nursing workload, inducing effective measures to address the challenge either by adding more employees or balancing the available workers to support the clients (Nelson III, 2017). Calculating the ratio would allow the administrator to determine how professionals would deliver standard care at a reduced cost.

Alternatives of Department Budget Approach

Activity-Based Budgeting

This budgeting technique focuses on the outcomes the healthcare unit intends to achieve. Assuming the aim is to improve patient safety and satisfaction, the nursing facility will review reasons that have previously made it not to deliver effective services and allocate adequate financial resources to boost them. For instance, if the number of staff members is inadequate, it will be upon the nurse leader to adjust the budget to acquire more staff to increase manpower and experience in the facility.

Zero-Based Budgeting

The zero-based budget approach involves step by step justification of the plan. The method allows nurse managers to effectively evaluate the related cost of items, enabling standardizing purchases (Hijal-Moghrabi, 2019). The technique is useful in economizing and eliminating unnecessary expenditure hence saving the healthcare unit excess money. It provides proper insight into budgeting, thus facilitating complete control overspending. Therefore, it can be essential in making the hospital save and meet its goals easily.

Value Proposition Budgeting

This approach takes into consideration the value the item will add to the system. If the hospital wants to budget for some equipment, the manager will evaluate the impact they will bring to the staff, patients, and other stakeholders. This criterion enables an administrator to eliminate properties that are insignificant to promoting effective service delivery. Furthermore, it allows the management to acquire an element that offers a strong outcome, facilitating operational activities.

In summary, due to the financial constraints, a nurse leader should structure a reasonable budget that would ensure nursing activities are managed effectively and efficiently. The manager should properly analyze the necessities required and design a plan that will enable coverage of both the known and unknown expenditures. They should be well prepared to be accountable for any possible short-term deviation. An administrator can ensure the organization meets its objectives by developing a fair operating budget that balances revenue and the estimated expenses.


Hijal-Moghrabi, I. (2019). Why is it So Hard to Rationalise the Budgetary Process? A behavioral analysis of performance-based budgeting. Public Organisation Review, 19(3), 387-406. Web.

Nelson III, K. E. (2017). Nurse Manager Perceptions of work overload and strategies to address it. Nurse Leader, 15(6), 406-408. Web.

Ramos, M., Forcellini, F. A., & Ferreira, M. G. G. (2021). Patient-centered healthcare service development: A literature review. Strategic Design Research Journal, 14(2), 423-437. Web.

Saville, C. E., Griffiths, P., Ball, J. E., & Monks, T. (2019). How many nurses do we need? A review and discussion of operational research techniques applied to nurse staffing. International Journal of Nursing Studies, 97, 7-13. Web.