NURS FPX 6216 Assessment 2 Preparing and Managing an Operating Budget

Name

Capella university

 NURS-FPX 6216 Advanced Finance and Operations Management

Prof. Name

Date

Preparing and Managing an Operating Budget

Effective oversight of medical operations and fiscal planning is a key responsibility for nurse managers. In this context, my nursing colleague Sarah, the financial coordinator at Riverside Regional Medical Center, oversees a department with 25 full-time equivalent experts. She is tasked with developing and stewarding the unit’s economic plan. Increasing overtime hours and the need for supplemental shift coverage have recently driven up staffing expenditures. Additionally, high employee turnover has necessitated ongoing recruitment efforts. Compounding these challenges is the demographic makeup of the patient population, primarily elderly individuals with multiple chronic illnesses, which demands intensive care and extensive resource allocation, further straining the unit’s financial sustainability.

Nurse fiscal coordinators should have a keen financial vision and the capabilities to guide budgeting processes well. Informed nursing leaders with extensive knowledge in healthcare finance can tactically allocate funds, adjust to domestic and foreign changes in the healthcare sector, and create budgets that maximize expenses without compromising the quality of care (American Nurses Association, 2023). Nurses must blend clinical skills with operational acumen to promote organizational progress, leadership skills, and respond to changing patient needs. In the same way, financial proficiency equips nurse managers to lead system improvements and play significant roles in healthcare policy change.

Preparing an Operating Budget

A hospital’s operating budget is an inclusive financial blueprint that projects income and expenditures over a defined timeframe, typically spanning one economic year (Lalani et al., 2023). This financial framework enables nurse managers to distribute funds strategically and safeguards the unit’s delivery of optimal patient care. Fixed expenses remain stable regardless of activity levels, while variable costs fluctuate based on patient volume or service requirements. Additionally, identifying diverse revenue streams is essential to maintaining the unit’s economic sustainability.

The operating budget at Riverside Regional Medical Center comprises essential expenditures categorized as fixed, variable, and discretionary, all of which support delivering high-quality healthcare services. Fixed expenditures predominantly cover compensation and benefit packages for 25 full-time equivalent (FTE) staff members, reflecting the ongoing need for a stable and proficient workforce. Additional fixed outlays such as utility services (electricity, water, internet) and clinical infrastructure and equipment maintenance are crucial for sustaining daily operations and ensuring functionality of essential medical technologies.

These costs exhibit minimal fluctuation over time. Conversely, variable expenses are influenced by patient census and workload demands. A recent wave of employee attrition has escalated overtime compensation. At the same time, the aging patient demographic, many managing long-term health issues, drives up consumption of clinical supplies, pharmaceuticals, and dietary provisions. The budget also allocates resources for continuous staff education and competency development to uphold regulatory standards and promote quality care.

Major Sections of the Budget

Key budget components encompass income and expenditure. The income section outlines all financial inflows to the unit, including earnings from patient services, public sector allocations, and alternative funding avenues. The expenditure section details all financial outflows necessary for unit operations. These costs are typically divided into staffing, administrative functions, and operational outlays (Lalani et al., 2023). 

Source of Information

These classes are elaborated upon later in the article. Crafting a precise budget depends on diverse data inputs, such as prior fiscal records, procurement data and insights from public funding bodies and insurers. Analyzing previous financial reports revealed patterns in expenses and income generation. This retrospective analysis offered valuable insights into workforce allocation and reward structures. Extra shift incentives, patient flow metrics, and the monetary demands of medical inventory, medicines and equipment maintenance (Amos et al., 2021).

To initiate the operating budget development, we begin by projecting anticipated income and expenditures founded on the outlined situation. The initial table presents projected income sources, including service fees, government allocations, and supplementary contributions such as insurance reimbursements and charitable donations. The total projected annual revenue stands at $13,816,000. Budget assumptions incorporate a typical tenancy frequency of 80% at Riverside Regional Medical Center, a workforce of 25 full-time equivalent (FTE) employees, each earning an normal yearly pay of $90,000, along with extra expenditures related to extra hours pay, shift differentials, medical materials, and general working needs. The second table outlines expected costs, covering compensation for the 25 FTEs, overtime and additional shift payments, supply procurement, utility expenses, pharmaceutical needs, equipment servicing, staff development, and administrative functions. These expenditures are estimated at $374,667 per month, amounting to an annual total of $3,260,000.

Table 1: Revenue 

Revenue Source	Monthly Amount	Annual Amount
Patient Care Revenue	$1,007,000	$13,186,000
Government Funding (Medicaid and Medicare or other Insurances)	$60,000	$500,000
Other Income (Charities)	$20,000	$130,000
Total Revenue	$1,087,000	$13,816,000

Table 2: Expenses 

Expense Category	Monthly Amount	Annual Amount
Salaries (25 FTEs)	$117,667	$1,400,000
Overtime and Extra Shifts	$30,000	$300,000
Supplies	$50,000	$600,000
Utilities and Maintenance	$50,000	$240,000
Medication	$40,000	$360,000
Equipment Maintenance	$40,000	$180,000
Training and Education	$25,000	$60,000
Administrative Costs	$22,000	$120,000
Total Expenses	$374,667	$3,260,000

NURS FPX 6216 Assessment 2 Preparing and Managing an Operating Budget

The Riverside Regional Medical Center’s financial outline includes planned costs beyond essential operations to enhance staff satisfaction and clinical efficiency. These extra costs feature incentive programs such as performance bonuses and structured evaluations. It helps reduce turnover and improve morale. Investments in updated non-labor tools, including computers, communication systems and wearable health technologies. It boosts patient monitoring and optimizes workflow. The budget allocates funds for research and development to foster innovation and integrate evidence-based practices, particularly in elderly care.

Revenue generation is sustained through a diversified model, with core income from inpatient services, diagnostic and treatment services. Reimbursements from Medicare and Medicaid provide crucial support due to the aging patient population. Extra funding sources such as grants, charitable donations and research sponsorships reinforce the unit’s capacity for infrastructure upgrades and the execution of progressive technologies.

The financial plan is organized into quarterly assessments. It enables dynamic budget oversight that adapts to the evolving needs of Riverside Regional Medical Center and broader economic shifts. A SWOT analysis conducted by Miura et al. (2021) focuses on several internal strengths, such as affordable workforce costs and consistent income streams. External opportunities like potential avenues for extra funding. The operating budget identifies key challenges. It includes employee fatigue and market volatility. This operating budget serves as a fiscal blueprint designed to uphold operational effectiveness and sustain superior standards of patient care. The hospital can safeguard long-term operational resilience and financial viability by deliberately managing fixed and variable costs. It exploits income sources and monitoring financial outcomes.

Knowledge Gaps and Uncertainty

Various knowledge deficits and unpredictabilities can compromise the budget’s reliability. Fluctuations in projected patient volume and acuity levels can impact staffing requirements and the cost of medical supplies. Additionally, staff retention and turnover variability can lead to inconsistent overtime costs. Revenue forecasting remains uncertain due to the unpredictable nature of grant allocations and research funding. Furthermore, unforeseen crises or sudden regulatory shifts can drive up operational expenditures. Enhancing budget accuracy would require access to more comprehensive data. It includes past financial performance, patient census patterns, and reimbursement trends. Lastly, identifying cost-reduction opportunities, such as streamlining workflows or sourcing more economical supplies, could strengthen long-term fiscal stability.

Budget Designing and Creation

A budget is formulated by considering both internal dynamics and external influences. The process starts with an in-depth evaluation of prior financial records, population health data, and institutional priorities to establish a solid foundation. This involves analyzing historical patterns in income and expenditures (Amos et al., 2021). This involves identifying key cost contributors and forecasting potential shifts in patient volume. Effective financial planning hinges on the strategic distribution of resources based on anticipated demands, ensuring a careful balance between fixed obligations and flexible spending while maintaining a high standard of patient care.

An essential component of budget development is the application of cost-benefit analysis, which enables Riverside Regional Medical Center to evaluate financial investments against anticipated outcomes. This approach safeguards that spending supports healthcare delivery’s effectiveness and long-term viability (Bhati et al., 2023). Additionally, linear programming techniques optimize resource allocation by minimizing expenses and maximizing operational gains. These analytical tools support strategic decision-making regarding compensation structures, procurement of medical supplies, capital equipment investments, and other vital cost areas.

Various complexities and uncertainties must be addressed during the budgeting process. A significant concern is the unpredictable nature of healthcare demands, particularly within the aging population, where multiple chronic conditions substantially drive up hospitalization costs (Aydin & Cetinkale, 2022). Cost projections for pharmaceuticals and clinical supplies are made cautiously to mitigate financial strain from unanticipated patient complications. Given the persistent challenge of workforce attrition, budgetary allocations must also support robust hiring, onboarding, and employee retention initiatives to safeguard continuity of care.

Conflicting Data and Perspectives 

Unanticipated economic shifts, alterations in reimbursement rates, and the potential impact of new healthcare regulations are examples of factors that should not be incorporated into the budget. Grants and donations serve as a source of income, but their availability is unpredictable and cannot be relied upon year after year. Unexpected expenses arising from advancements in medical technology and treatment methods emerge. By acknowledging these uncertainties, the budget can be adjusted as necessary to preserve fiscal health while continuing to uphold exceptional standards of patient care.

Strategic Plan and Evaluation Criteria

Strategic planning is essential for crafting a budget that fosters financial stability and prepares for future developments in the healthcare sector. This approach facilitates optimal resource distribution, addresses potential challenges, and outlines a sustainable long-term strategy. A well-structured plan culminates in a comprehensive proposal that aligns with the core mission and goals of Riverside Regional Medical Center. The primary objective of this hospital unit is to deliver exceptional patient care, achievable only through a dedicated workforce, cutting-edge medical technologies, and effective resource management. A key factor in ensuring the strategic plan’s success is to focus on enhancing staff retention, embracing technological innovations, and optimizing resource allocation to boost hospital performance.

 An employee retention strategy is a vital aspect of healthcare organizations. It enhances staff satisfaction, minimizes turnover, and elevates patient care. High turnover rates can result in higher recruitment and training expenses and disrupt continuity in patient care. Organizations can generate a ethnicity where staff respected and supported by introducing career development opportunities. This improves the work environment and offers performance-based rewards (Shiri et al., 2023). This approach aids in retaining staff by integrating training programs, bonuses, and performance evaluations into the operational budget, positioning workforce retention as a priority. It improves patient outcomes and organizational resilience. In parallel, incorporating advanced technologies is a fundamental element of a healthcare organization’s strategic plan. 

Adopting cutting-edge medical technology enables hospitals to refine decision-making processes and treatment protocols. It creates a safer and more efficient environment for patient care. Investing in data-driven healthcare solutions and state-of-the-art equipment strengthens the hospital’s competitiveness, attracts more patients, and safeguards access to government funding. This technological integration is crucial for improving patient care and hospital operations, reinforcing its reputation and boosting revenue (Haleem et al., 2022).

Allocating resources specifically for elderly care is paramount for hospitals serving aging populations. Older adults often require specialized equipment and services like mobility aids, pressure-relieving mattresses, and chronic disease care programs. Budgeting for these essentials safeguards that the hospital can provide quality care. It reduces readmission rates and improves patient outcomes. Services like rehabilitation, home healthcare, and stress management programs tailored to the elderly enhance care quality while optimizing resource usage and operational efficiency. Adequate resource allocation for elderly care allows the hospital to meet the distinct needs of this demographic, ensuring comprehensive and exceptional care (Bhati et al., 2023).

Strategic Plan Evaluation

Assessing the success of the strategic plan involves continuous evaluation to safeguard alignment between the hospital’s economic purposes and its core mission. Given that the budgeting process follows an annual cycle with quarterly performance reviews. Consistent monitoring is essential to confirm that financial resources are being utilized effectively. Key metrics such as financial precision, expenditure management, patient experience, and staff retention will serve as crucial benchmarks for making timely improvements. The primary aim is to maximize spending efficiency while maintaining a financial buffer to address unexpected challenges. Over time, Riverside Regional Medical Center can refine its budgeting framework and strategic direction to support long-term growth. It delivers exceptional patient care and maintains operational excellence.

Approach to Ongoing Budget Management

Healthcare budgeting is a continuous and strategic endeavor to safeguard financial stability and excellence in patient care (Lalani et al., 2023). Effective budget oversight involves regular tracking of key performance indicators (KPIs) and the generation of complete financial reports. It provides actionable insights for making timely adjustments throughout the fiscal cycle. At Riverside Regional Medical Center, specific metrics such as abating employee attrition, improving patient health outcomes, and integrating evidence-based technologies and innovations will be monitored within the operational budget.

These indicators help assess the alignment of financial costs with the hospital’s commitment to quality care. A core principle of sound budget management lies in balancing cost-efficiency and superior healthcare delivery (Amos et al., 2021). Given the budget constraints for medical tools and resources, it is essential to align expenditures with patient care priorities. Strategic financial planning should emphasize allocating funds based on urgency, patient well-being, and long-term clinical value. Cost-containment strategies such as group purchasing, negotiating favorable supplier contracts, and sharing resources across departments reduce wasteful spending and enhance financial performance (Amos et al., 2021).

Assumptions 

Employee retention is a critical component of this budgetary strategy, grounded in the belief that job satisfaction significantly influences workforce stability. Offering competitive compensation, career advancement opportunities, and comprehensive employee benefits plays a vital role in retaining staff. It minimizes expenses related to recruitment and onboarding (Vries et al., 2023). At Riverside Regional Medical Center, the budget incorporates employee incentive schemes, skill enhancement programs, and avenues for professional growth to cultivate a motivated and committed workforce. It contributes to elevated standards of patient care.

Another underlying premise is that continuous staff education boosts clinical expertise, operational productivity, and patient outcomes. Well-prepared staff tend to perform with greater assurance, reduce the likelihood of clinical errors, and positively impact care delivery. Consistent monitoring and realignment of budgetary allocations safeguard financial stewardship, aligning with the hospital’s operational needs while upholding its dedication to high-quality care. The institution can achieve long-term sustainability and operational excellence through strategic fiscal management and evidence-informed planning.

Conclusion

Formulating and supervising the budget safeguards financial constancy and quality patient care within healthcare organizations. Aligning scale planning with institutional goals, fulfilling workforce and technological needs, and prioritizing elderly care. Riverside Regional Medical Center can enhance efficiency and long-term sustainability. Continuous evaluation and data-driven adjustments are crucial for navigating challenges and maintaining resilience in a dynamic healthcare setting. The involvement of interdisciplinary teams in budget planning fosters collaboration and transparency. Strategic investment in staff training and development further supports patient-centered care. A well-managed budget strengthens the administration’s capability to familiarize to altering care demands.

References

American Nurses Association. (2023, September 12). Financial management skills for nurse managers. ANA Nursing Resources Hub. https://www.nursingworld.org/content-hub/resources/nursing-leadership/nursing-financial-management/

Amos, D., Yong, C. P., & Musa, Z. N. (2021). The mediating effects of finance on the performance of hospital facilities management services. Journal of Building Engineering, 34(1), 101899. https://doi.org/10.1016/j.jobe.2020.101899

NURS FPX 6216 Assessment 2 Preparing and Managing an Operating Budget

Aydin, N., & Cetinkale, Z. (2022). Analyses on ICU and non-ICU capacity of government hospitals during the COVID-19 outbreak via multi-objective linear programming: An evidence from Istanbul. Computers in Biology and Medicine, 146, 105562. https://doi.org/10.1016/j.compbiomed.2022.105562

Bhati, D., Deogade, M. S., & Kanyal, D. (2023). Improving patient outcomes through effective hospital administration: A comprehensive review. Cureus, 15(10), 1–12. https://doi.org/10.7759/cureus.47731

Haleem, A., Javaid, M., Singh, R. P., & Suman, R. (2022). Medical 4.0 technologies for healthcare: Features, capabilities, and applications. Internet of Things and Cyber-Physical Systems, 2(1), 12–30. ScienceDirect. https://doi.org/10.1016/j.iotcps.2022.04.001

Lalani, K., Helton, J., Vega, F. R., Turanzas, M., Langabeer, T., & Langabeer, J. R. (2023). The impact of COVID-19 on the financial performance of largest teaching hospitals. Healthcare, 11(14), 1996. https://doi.org/10.3390/healthcare11141996

Miura, S., Nose, D., Kanamori, K., Imaizumi, S., Shimura, H., & Saku, K. (2021). Sustainable hospital management by a cross SWOT analysis in a medium-sized hospital. Sustainability, 13(23), 13042. https://doi.org/10.3390/su132313042

Shiri, R., El-Metwally, A., Sallinen, M., Pöyry, M., Härmä, M., & Toppinen-Tanner, S. (2023). The role of continuing professional training or development in maintaining current employment: A systematic review. Healthcare, 11(21), 2900. https://doi.org/10.3390/healthcare11212900 

NURS FPX 6216 Assessment 2 Preparing and Managing an Operating Budget

Vries, N. de, Lavreysen, O., Boone, A., Bouman, J., Szemik, S., Barański, K., Godderis, L., & Winter, P. de . (2023). Retaining healthcare workers: A systematic review of strategies for sustaining power in the workplace. Healthcare, 11(13), 1–29. https://doi.org/10.3390/healthcare11131887