Budgeting and planning are fundamental disciplines for any organization. They ensure cost effective utilization of resources in order to maximize profit and productivity. Organizations' strategies are incomplete without budgets which give forecasts of the financial undertakings that an organization should subscribe to.
Budgeting therefore must adapt a defined approach and must take into consideration the resources available. Budgets are supposed to establish best practices by managing expenses ensuring accountability, setting accurate and high performance budget and the use of comparative benchmarks. Best practice for budgets will also employ tools such as balanced scorecard and the establishing of monitoring of the variances and setting forth corrective plans of action (Clark, 2005).Therefore a recommended approach to budgeting for the nursing team would include setting the revenue part of the budget. This is then balanced by re-adjusting the cost side of the budget. The nursing team's financial controller can then have access to the following year's budget based on historical data and performance.
The purpose of this approach is to try and hold down the cost. Generally the team's financial controller may also occasionally hold budget variance meetings with other stakeholders. Whenever the costs are exceeding the revenue for the team, they may request corrective action from the finance department. Incentives can also be offered to the team to ensure that they stay within the budget. The overall process of budgeting will include budget setting and management. The former concerns itself with establishing a budget prior to the start of a financial year while the latter is concerned with monitoring and controlling the process (Clark, 2005).The nursing team financial controller will do well to note the budget setting process must be based on the overall strategic plan of the nursing team. Other departments related to the nursing team must also be consulted during this process. The overall health care institution budget should focus on strategy, mission and financial plan of the entire institution. The nursing team should be adequately involved especially with concern to volumes and revenue. The financial directors who include the nursing team financial controller are accountable to these volumes. The whole nursing team should also be involved in the budget setting process. This is aimed at ensuring a sense of joint ownership of the budget whose implementation will also become a collective effort involving the whole team. Once the budget has been set the next step involves the management of the budget. This calls for the financial directors including the nursing team's financial controller establishing and ensuring a culture of accountability. Departmental budgets are normally flex budgets. They are jus part of the hospital's master budget incorporating volume adjustments based upon cost per unit of service and productivity (Clark, 2005). These volumes should be monitored on a monthly basis and the projections availed to departmental heads for peer review.
In conclusion the recommended budget planning approach must be viewed as a process consisting of setting and managing or implementation. Adapting the best practices in each of these steps will ensure that the health care institution has better year end financial results. With this better year end financial results the hospital can proceed and invest in patient care, research, training and teaching. The ability for each department to draw out a budget that fits into the master budget is good practice that ensures that each department remains accountable financially.
- Clark, J. J. (2005).Improving hospital budgeting and accountability: A best practice approach. Retrieved on 20th May 2010 from http://www.allbusiness.com/accounting/budget/481878-1.html