interview mentor

6

Advanced Finance and Operations Management: Mentor Interview

Budgeting

In an interview, Mr. Clifford, a nursing manager provided insights on budgeting from a nursing leader’s perspective. According to him, one of the major roles of budgeting is controlling costs without compromising the quality-of-service delivery or employee motivation. Labor costs take up the largest portion of operating costs. Managing these costs provides a major challenge to nurse leaders. Aligning the operational budgets with the overall organizational goals is also a major challenge when drafting operational budgets. Nurse leaders must also share their financial expectations with the staff members. Sharing these expectations ensures that all members are aware of their financial goals and are continuously working towards achieving them.

An important strategy for managing productivity within budget constraints is ensuring that all staff members are consulted and informed about nursing decisions in their organizations. Communication during decision making ensures that the staff members are aware of the rationale for the various decisions made during the budget drafting process and more likely to be committed to operating with the constraints established by the budget.

To ensure that equipment and supplies are appropriately always used and are available, nursing managers need to set policies and procedures that must be upheld in organizations. They regularly assess compliance standards and take appropriate measures towards staff members who do not comply with them. These measures may include training or punishments. Nurse managers collaborate with physicians to find the current standards to include in the policies and procedures.

Nurse managers must align their capital budgets with the long-term organizational goals. While this type of budgeting occurs at the higher management levels, they require constant input from staff members. They deal with patients on daily business and, therefore, understand the organization’s long-term needs. Capital budgeting is complex and can be a challenge for most nurse managers. They require to assess a wide range of factors, including prevailing economic conditions, healthcare reforms, patient’s needs, and such financial factors as returns on investment.

Managing operational budgets is different from capital budgets in that operational budgets do cover daily operations while capital budgets cover equipment and infrastructural developments undertaken over the long term. Some of the aspects that are covered in the operational budget include medical supplies, office suppliers, and labor costs. Capital budgets cover such items construction and updating new buildings, buying, and improving existing equipment, and buying such intangible assets as copyrights. Managing the operational budgets is significantly simple and requires minimal research and evaluation than capital budgets.

Nurse managers must apply several financial practices to effectively manage budgets. These practices include identifying the supporting infrastructure to be used when budgeting, identifying key performance indicators, defining the budgeting processes, and establishing and defining the correct budgeting level. These practices ensure that budgets are effective and are aligned to organizational goals.

Analysis

Managing an operating budget involves managing six core its components. The first aspect is sales. This aspect covers the forecasts for services that will be provided to customers and revenue earned from them. Managers use these forecasts to manage spending. The second aspect is production. This component of the operating covers the number of units of services that are to be produced within the stipulated period. This component goes hand in hand with the sales and component. The third component involves supplies that used when providing services to patients. A manager must ensure that there are enough supplies for the budgeted period. The labor components are consisting of a significant portion of the operating budget. Managers must ensure that all employees are paid competitive wages to keep them motivated. The overhead component includes such costs as rent, insurance, energy, and water incurred by an organization. Administrative expenses make up the last component of the operating budget that managers need to control (Keeler, 2020). They include expenses incurred in the administrative areas of the organization. Managing capital budgets involves determining the investments that need to be undertaken, cash flows arising from them, the investment’s residual value, and is net present value (Mukherjee et al, 2016). Once these aspects are determined, the investment is carried and regularly assessed to ensure it achieves its set objectives. For instance, if a healthcare organization builds a new building, the manager must assess its use regularly to ensure it achieves its set goals.

When allocating resources for labor, equipment and services, the manager must determine the organizational needs for each. For instance, a manager can determine the number of labor and delivery nurses required based on the demand for delivery services. These needs are then assessed based on the organization’s capacity, costs, policies and regulations, and available funds (Brown & Leger, 2021). The manager then allocates resources based on these factors.

When planning, one must follow several basic steps. First, one must determine the available resources. Then, they must determine their goals and how to achieve. The third step involves determining expenses based on those goals. Lastly, a manager needs to evaluate the plans progress to ensure its success.

Mr. Clifford’s approach to nursing is hands-on and rigorous. He is concerned about the minutest details in a budget. He is committed to ensuring that his budgets are effective and are adhered to. He is also a good communicator who involves his staff in the budget making process to ensure that they are also committed to implementing it. Through this approach, he helps his organization achieve financial stability.

References

Mukherjee, T., Al Rahahleh, N., & Lane, W. (2016). The capital budgeting process of healthcare organizations: A review of surveys. Journal of Healthcare Management, 61(1), 58-76. https://journals.lww.com/jhmonline/Fulltext/2016/01000/The_Capital_Budgeting_Process_of_Healthcare.11.aspx

Brown, P., & Leger, J. M. (2021). Healthcare Finance: A View from 30,000 Feet. Financial Management for Nurse Managers: Merging the Heart with the Dollar, 71. https://books.google.com/books?hl=en&lr=&id=1uNDEAAAQBAJ&oi=fnd&pg=PA71&dq=operational+budgeting+in+healthcare&ots=pMDpDEjU6L&sig=4xMmTsG0X7Xt0mye-3vO1HJBfxk

Keeler, T. J. (2020). Effective Budgeting: Putting It Together. In Comprehensive Healthcare Simulation: Program & Center Development (pp. 39-43). Springer, Cham. https://link.springer.com/chapter/10.1007/978-3-030-46812-5_7