BUDGETARY LEADERSHIP AND MANAGEMENT

BY: MR. LORD DARYLL ANGELES

BUDGETARY LEADERSHIP AND MANAGEMENT Budgetary leaders inspire proactive fiscal planning, determine resource needs, guide visioning of justification for resources, negotiate for needed resources, analyze expenses, anticipate, recognize, and creatively deal with budgetary problems, create a financially savvy work environment, involve group members in fiscal planning, and help groups find innovative ways to be more cost effective.

BUDGETS A budget is a plan for the allocation of resources and a control for ensuring that results comply with the plan. Results are expressed in quantitative terms. Although budgets are usually associated with financial statements, such as revenues and expenses, they also may be nonfinancial statements covering output, materials, and equipment. Budgets help coordinate the efforts of the agency by determining what resources will be used by whom, when, and for what purpose. They are frequently prepared for each organizational unit and for each function within the unit.

PREREQUISITES IN BUDGETING 1. A sound organizational structure with clear lines of authority and responsibility. 2. Someone must be responsible for collecting and reporting statistical data. 3. Charts of accounts that are designed to be consistent with the organizational plan. 4. Managerial Support 5. Formal budgeting policies and procedures should be available in budget manual.

ACCOUNTING AND TYPES OF BUDGET

BY: GERTRUDE MONICA MENZI

ACCOUNTING Accounting is a system that accumulates book-keeping entries into summaries of the financial situation of an enterprise. The fundamental equation of accounting is: Assets = Liabilities + Fund balance Assets are the valuable resources owned by the agency. Liabilities are what the agency owes. Fund balance is the agencys assets.

TYPES OF BUDGET

Operating, or Revenue-and-expense, Budgets It provides an overview of an agencys functions by projecting the planned operations, usually for the upcoming year. It might include personnel salaries, employee benefits, insurance, medical-surgical supplies, office supplies, rent, heat, light, housekeeping, laundry service, drugs and pharmaceuticals, repairs and maintenance, depreciation, in-service education ,travel to professional meetings, educational leaves, books, periodicals, subscriptions, dues and miscellaneous fees, legal fees, and recreation, such as Christmas parties and retirement teas.

Personnel Budgets It estimates the cost of direct labor necessary to meet the agencys objectives. They determine the recruitment, hiring, assignment, layoff, and discharge of personnel. The nurse manager decides on what type of nursing care necessary to meet the nursing needs of the estimated patient population.

Capital Expenditure Budgets

This are related to long range planning. It includes physical changes such as replacement or expansion of the plant, major equipment, and inventories. These items are usually major investments and reduce the flexibility in budgeting because it takes a long time to recover the costs.

Cash Budgets

This are planned to make adequate funds available as needed and to use any extra funds profitability. They ensure that the agency has enough, but not too much, cash on hand during the budgetary period. This is necessary because income does not always coincide with expenditures.

Flexible Budgets Some costs are fixed and do not change with the volume of business. Other costs vary proportionately with changes in volume. Some variable expenses are unpredictable and can be determined only after change has begun: thus the need for flexible budgets to show the effects of changes in volume of business on expense items.

BUDGETING PROCESS 1. Establishment of operational goals and policies for the entire agency.

2. Operational goals must be translated into quantifiable management objectives for the organizational units.
3. Departmental budgets are revised, and the master budget is prepared.

4. Financial feasibility of the master budget is tested.

5. Final document is approved and distributed to all involved parties.

Advantages Budgets plan for detailed program activities. They help fix accountability by assignment of responsibility and authority. They state goals for all units, offer a standard of performance, and stress the continuous nature of planning and control process. Budgets encourage managers to make careful analysis of operations and to base decisions on careful consideration. Weaknesses in the organization can be revealed and corrective measures taken. Staffing, equipment, and supply needs can be projected and waste minimized. Financial matters can be handled in an orderly fashion, and agency activities can be coordinated and balanced.

Disadvantages Budgets convert all aspects of organizational performance into monetary values for a single comparable unit of measurement. Only those aspects that are easy to measure may be considered, and equally important factors, such as organizational development and research efforts, may be ignored. The budget may become an end in itself instead of the means to an end. There is danger of overbudgetting; budget becomes crumbersome, meaningless, and expensive. Skill and experience are required for successful budgetary control. Budget planning is time consuming and expensive.

COSTING OUT NURSING SERVICES

COSTING OUT NURSING SERVICES The traditional models equation: NT x (ANHS + BAI +ICA) = TNC per DRG Where: NT = amount of nursing time per intensity level for a DRG ANHS = average nursing hourly salary BAI = benefits across the institution ICA = indirect cost amount TNC = total nursing cost

The McCloskey models equation: NT/NI x (ANHS + BAI + EC +ICA) = TNC Where: NT = amount of nursing time NI = nursing intervention (instead of intensity level for a DRG) ANHS = average nursing hourly salary BAI = Benefits across the institution EC = equipment cost (not in traditional model) ICA = indirect cost amount TNC = total nursing cost (instead of cost per DRG)

In general, the key problems related to costing out nursing are a lack of comparability of data used, multiple definitions of cost and neglect of variables that affect nursing care. Levels of care, expected outcomes, and cost of care can be related to pricing of nursing care. Nurses must be concerned about maintaining cost-effective, high quality health care.