Part of my responsibilities as a nurse is reporting to my manager. Therefore, for this discourse, I chose to interview him since he also mentors on the best practices within the profession. The topics which were covered during the interview relate to budgeting and management. From the interview, budget management requires an understanding of the different forms of budget and their relevance to an organization. The most common budgets are operating and capital expenditure budgets. The operating budget is used to plan for expected day to day events; it is the main budget that controls personnel and supply costs. On the other hand, a capital expenditure budget outlines the expenses that have been used for capital items purchases. The resource allocation, in relation to budgeting, is also important. From the interview, it is evident that a resource is always allocated in reference to the budget. In addition, resource allocations require strategic planning. The strategic planning is especially important in actualizing profits. The interviewee stated that it has to assist in efficient productions which ought to lead to profit increments.
The interviewee explained that budgeting, in essence, is a detailed financial strategy that is used by an organization to accomplish its activities within a given time. In clinical settings, therefore, it ensures that quality and cost effective services are provided to the patients. The budget is always provided in relation to the goals and requirements of an organization. From the interview, it is evident that it is a continuous process and should allow for a feedback. The budget workflow involves some processes. These include, for instance, the collection of relevant data, planning activities, planning services, the implementation of plan, the monitoring budget and taking corrective measures when necessary. Due to the presence of various forms of budgets, it is important to understand the different types. However, the most important are the operating and the capital budgets.
The interviewee stated that the operating budget used to control the expected day to day events, resources, supplies and personnel; it runs for a one-year duration (Rundio & Sigma 2016). Through that, every nursing unit is reflected as a cost center for which they are provided with an operating budget. The main items in an operating budget are revenues and expenses. Notably, revenues come from the amount received by an organization as a result of patients’ visits. On the other hand, expenses are referred the amount paid to the staff, suppliers and other activities that are part of the operations of the facility.
The capital budget outlines the expenses that have been used in item purchases. Capital items are the items that are useful for a period that exceeds a year. Their expenses must be above the cost specified by the organization. The value of a capital budget is not always constant as part of it is provided for in the operating budget. Normally, the amounts involved are subtracted from the revenue. In most health departments, there is certain amount of money that is kept aside for capital expenditures. As advised by the interviewee, the money is kept annually and only used for emergency cases.
The resource allocation is a plan which an organization uses to decide where to place the scarce resources they have for efficient production. The allocation of these resources in most health systems is aimed at reducing the population health risks. The process requires the formation of a panel, transparency, and clear relevant reasoning. In addition, the process is aimed at the generation of additional revenues in a health system unit. For the achievement of set objectives, resource allocation requires a strategic planning. After budgeting, sufficient resources are required for a mission’s accomplishment. Through management logistics, it is easy to achieve the set goals.
The manager stated that resources should always be placed where there is a better outcome. There are different types of resources that are needed in hospital for efficient services. For instance, there is financial resource which helps in purchasing the equipment needed in a facility (Rundio & Sigma). In addition, there are human resources which are very helpful in decision making processes and service provision. The human resources are very essential and require the support of the administration for better productivity. In most cases, they are motivated with some incentives to encourage them at their work place. Due to that, they work hard because of the treatment they receive; as a result of that, an organization’s profit increases.
In management, it is important to have a strategic plan for your mission. The plan is a commitment for every individual in the organization to work towards the achievement of the set objectives. For an organization to achieve profitability, its strategic plan and financial plan should be integrated. Strategic planning has some items that assist in profit increment. For instance, the management should have a clear and broad understanding of a business’ external opportunities and challenges. More importantly, an organization should adopt to the daily changes within a competitive environment.
According to the interviewee, there should be an empowered planning committee. An active committee that has a full authority on decision making on issues that helps in the production increase the profitability of a business. Another important thing is a shared responsibility by board and staff members. An effective plan requires compatibility within a system. Through working together, a stronger work force is built and as a result of that the profit increases (Rundio & Sigma 2016). Finally, the commitment to change by an organization is quite important. However much an organization may have relevant objectives and work strategies, it should be able to change through new inventions. Apart from that, the present world is dynamic and competitive, therefore every system should be flexible in order to achieve its objectives.
It is important for the management to understand any budget. From that, it would know the requirements needed for the provision of quality care. Due to the existence of nursing units as cost centers on their own, they should be provided a specific budget per their needs.
- Rundio, A., & Sigma Theta Tau International. (2016). The nurse manager’s guide to budgeting & finance. London: Routledge.