DQ 2-2

DQ2-2 responses

1.

A manager should be smart, strategic, and responsible when in control of a budget for their department. These characteristics are very of the few things that will allow the unit to run efficiently for a longer term.

Being able to manage a shortfall, it is part of any managerial job. An essential skill to have in bad times like this one, it is the ability for planning in advance against adversities. Developing new strategies such as involving all parts of the unit's committees to plan the monthly budget, informing the staff about the current situation will help to bring everybody together to work for the same reason, including an additional fund in every budget in case of unexpected events are all great options. "Nursing managers are aware of what types of services will be rendered in the next fiscal year." (Rundio, 2016)

As mentioned before, adding an unexpected events fund every monthly budget will allow the unit to be prepared when business lack of prosperity or medical equipment stops working. This fund should be cumulative if it is not used, and at the end of the year, the fund can be utilized for any other purpose in benefit of the department.

Understanding the effect of budget variances in business will help managers realize what factors should be considered. According to James Chen, "Budget variance is a periodic measure used by governments, corporations or individuals to quantify the difference between budgeted and actual figures for a particular accounting category. A favorable budget variance refers to positive variances or gains; an unfavorable budget variance describes negative variance, meaning losses and shortfalls" (Chen, 2019.) These variances can happen by either controlled or uncontrolled factors. Controlled are linked with an unaccurate budget and labor cost while uncontrolled factors are known for the connection with external factors, things that people are not in controlled such as equipment malfunctions, natural disasters, robberies, and more.

Thanks

References

Chen, J. (2019, April 29). Budget Variance. Retrieved from https://www.investopedia.com/terms/b/budget-variance.asp Rundio, A. (2016). Budget development for nurse managers. Reflections on Nursing Leadership, 42(3), 1-8.

2.

If there is a shortfall, which means that basically there is a shortage of funds, most likely is temporary due to various circumstances. This needs to be remedied and investigated, because if there is just a shortage due to a large purchase or low census, variables that would temporarily affect the budget, this happens from time to time. However, as a manager I would investigate the reason and make corrections and sustain the budget in the future. Furthermore, shortfall can be defined as; an outstanding amount which is to be measured against incoming funds, (projected) this would include anything that would be in the form of payments, after everything is budgeted, the amount of incoming payments should be greater than the deficit.

Modification of the budget when necessary begins with accurate financial reporting in the first place. A comparison, an analysis using reports must be compared for actual revenue and expenses to the budgeted revenue and expenses. The manager must must analyze cost and efficiency to determine the need for any modifications. (Rundio)

The manager needs to know exactly where the problem lies, a variance analysis needs to be completed to understand when there is a deficit. Where there are expenses that exceed the budget, and revenue is less than what was budgeted for, a variance analysis must be completed to see what is causing the problem. (Rundio)

As far as variables, there is a good example of this in this week's course reading in the article, "Budget Development For Nurse Managers," Is in the case of the operating room when an unplanned surgical procedure was done in the middle od the fiscal year, this accrued unplanned costs, in the case of the nursing unit, perhaps new equipment has to be ordered, in these situations I would need to communicate these necessities and why the changes in financial department with an explanation of how these expenditures will be good for future revenue. Other things to keep in mind is whether items can wait until the next fiscal year, overall costs, do costs outweigh the benefits? Will the items increase revenue? (Rundio, 2016)

Rundio, A. (n.d.).

Rundio, A. (2016). The nurse manager's guide to budgeting & finance. Indianapolis, IN: Sigma Theta Tau International.

3.

The ability of small hospitals to survive largely depends on external factors such as state and federal healthcare legislation. and internal factors. such as the preparation of a successful financial budget. The focus o£ this report is the preparation of the small hospital financial budget. Developing a financial budget is a process that should use team work to plan and implement if it is to be effective. The budget sets perimeters for management to follow throughout the year. allowing the managers to report variances while providing guidance so variances are maintained at a minimum and adJusted when possible. By using all department managers in the planning process of the budget. the administrator is able to develop effective strategies because all departments are invested in the goals. This eliminates many problems associated with the budget and identifies areas that need improvement. As a result of competition. declining margins. and other economic pressures, administrators are taking several steps to control costs and increase revenues.

(Buerger,1981)The budget process is one of the best tools known to do Just that. The obJectives of a budget are: ·to provide written terms of the hospital goals to provide a basis for the evaluation of financial performance according to the plans To provide a tool to control costs To create cost awareness hospital wide Statistical Budget The first step in preparing an operating budget is to prepare the statistical budget. The obJective is to provide a measure of activity in each department for the upcoming budget period. Diagnostic departments measure how many procedures will be provided for the upcoming year, while nursing estimates the number of patient days anticipated. Knowlege of the past performance of a facility is useful in the forecasting. The last five years is an appropriate amount of history to keep on file. This enables management to plan for future operations. Comparisons of past performance with current operations may indicate favorable and unfavorable trends. For example, it is very helpful to review the past history of full time equivelents (FTEs) for each department in a hospital.

This enables management to set goals to lower overtime, sick time, etc. It enables management to maintain FTEs to within the budget. Departments should be requested to estimate the volume of their activity, but the financial managers should have the final control. This is important because department managers may tend to overstate volume and this could be devastating when the budget is not met. However, the departments should be involved because top management tends to be too conservative. Each department has their own set of variables to examine prior to forecasting. Kay variables to examine are patient days and outpatient visits. Managers should look at the census per month over the past few years to proJect the number of pstient ~ays expected in the future. Equal visits over twelve months cannot be assumed. Seasonal, weekly, and daily patterns should be reviewed. For example, Christmas is usually a slow time of the year, so you would probably budget fewer patient days in December than in maybe June. Other areas of concern may involve a physician planning to retire, which would affect admissions and patient volume.

(Buerger,1981) Preparing a Budget for the Small Hospital