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NURS FPX 6216 Assessment 2 Preparing and Managing an Operating Budget

Preparation and Management of an Operating Budget

Financial management applies to every establishment irrespective of ownership or size. The objectives of a company or group might not be accomplished if the firm fails in the management of its accounts. As a result, managing finances is vital for the fiscal safety of an institution, in this case, a healthcare establishment. The person accountable for the management of finances is the nurse leader whereby, preparing and managing operating budgets is a skill required for the nurse in charge. An operating budget signifies the estimations, the revenue of the hospital plus the expenses that are sustained through a specific period (Dichev, I. 2017).

NURS FPX 6216 Assessment 2 Preparing and Managing an Operating Budget

 In this case, the provision contains 35 beds encompassing 20 permanent salaried workers, insurance, administrative expenses, emergency operations, repairs, responder safety, and healthcare systems maintenance among additional outlays. The income and revenues of this operating budget comprise overall patient takings, government donations, payments, out-of-pocket payments, and other direct payments. Consequently, the hospital’s groundwork for the operating budget is founded on the proceeds and expenses of the infirmary (Dichev, I. 2017). The preparations and management of an operating budget encompass an intricate system with several staff. 

By definition, “a budget is a proposal or diagram used by managers to ensure that quality and cost-effective services are provided to patients” (Danna, 2016). Just like earlier mentioned, the person accountable is a nurse manager who oversees operations such as; clinical and quality fallout measures, supplies par stock unit, patient and workers satisfaction, staffing and training, human resource management, and departmental operations. The hospital in question has been losing workers and the existing ones have been working overtime to cover all the required shifts not to forget that the institution deals with elderly patients who are precisely aged 60 and above. As a result, the operating budget plan will take in inner and outward aspects, communal and work value matters to discourse employment issues in the unit. In general, the core objective will be developing a strategy to recognize noteworthy budget segments that will impact staff self-confidence and retention while holding costs and expenses without deterring patient and personnel safety.

Regrettably, the present healthcare trends encourage nurse administrators to accomplish more using fewer resources. However, a budget is intended to accomplish the following missions: 1) calculate the necessary resources to offer first-class care; 2) organize a strategy to yield the financial aims of a unit; 3) deliver a planned proposal of the department’s financial objectives and action idea to accomplish them (Rundino, 2020). The operating budget is dedicated to the regular running of departments and unit details of services offered, costs sustained, income produced, and forecasting resources and undertakings.

Preparation of an Operating budget

Just as stated earlier, the operating budget is inclusive of the year’s revenue and expenditures. The budget also acts as a tool for fixing targets as well as making adjustments in case the market conditions vary. In addition, the budget assists in making decisions such as making employee additions for the management to conclude on essentials needed before the hospital opens another year and estimate the expected profits. The initial step is to prepare a basis for the budget rendering to the available or expected funds, thus, the objectives of the budget procedure have been recognized. Factors that influence hospital operations at this level consist of socioeconomic aspects, inside aspects such as management, plus the inclinations in the division (Dichev, I. 2017). The next step is creating a cost buffer whose foremost intention is scrutinizing the costs. Assessment of the costs is usually grave in controlling the aspects that impact the costing course through the primary phase of budgeting. In this stage, the hospital’s compensation plans have already been revised. Any budget revisions done are founded on the latest hospital developments, which also include employees’ salaries and compensations, the present hospital capacity as well as the hiring of new staff. 

The third stage involves preparing the revenue and expenditure funds. Revenues specify the hospital’s proceeds whereas expenditures include the overheads the hospital incurs through its maneuvers. Practically, establishments must not use more than the firm can make. The hospital’s incomes are very important in funding the expenses (Maduekwe & Kamala, 2016). The fourth and last stage is incorporating the department’s budgets. Each and every division in a hospital possesses its budgets, which are coordinated to provide the hospital’s all-inclusive budget. Coordination of the budgets is essential in arriving at the concluding budget for an establishment. Hence, the institution works by certifying that the working budget is arranged in reference to the coordinated budget, which incorporates the departmental financial plans.

Another item is bonuses that are also merged in the budgets together with provisions for capital expenses, a step needed so that the group can realize its aims. Variations to the financial plan are then done rendering to the example and evaluations are similarly done, which can be assessed to integrate several variations needed to establish a budget (Yao, Li, and Yun, 2022). Last but not least the team needs to come up with budgetary controls, which are needed to compare the estimated budget and the actual budget. The budgetary controls are also made to certify that the accurate resources are calculated and the working of the budget can be appraised in the long run (Maduekwe & Kamala, 2016). The hospital’s budgeting procedure has adhered to strict steps, which are crucial in displaying the source of the revenue and the way the money will be disbursed in the infirmary. Below is the 35-bed capacity hospital budget needed for the financial management and performance of the hospital setting for one month. 


Operating budget


Monthly Budget Amount

Monthly Actual Amount




    Patient income




  Government Contributions 








    Out of pocket









Direct payments









$11, 000




  Salaries and Wages




  Administrative       Outlays












Healthcare systems






Responder safety













NURS FPX 6216 Assessment 2 Preparing and Managing an Operating Budget

Rendering to the above operating budget, it is evident that it is a detailed statement representing the essential operational expenses that will be incurred plus the income to be generated through a specified phase of time. Working overheads like staff salary expenses, office maintenance and machinery, medicinal supplies, drugs, and managerial costs are all integrated to create an operating budget (Hill, K. S., Higdon, K., Porter, B. W., Rutland, M. D., & Vela, D. K. 2015). The actual amount is then likened to the original estimated budget allocations. After the evaluations are done, reasons are calculated and recorded for underspending or overspending; these are noted down as variances in the budget account. Assessments and corrections are then implemented to mitigate whichever negative differences and the budget is then reviewed based on this information. The details that are not fused in the budget table are flexible expenses: they are changes made through a financial year based on volume differences variations in medical provisions, personnel expenditures – variances and payments reimbursed for night shift and holiday workers, reimbursements, and travel charges for nursing agents.

Strategic Planning for Outcomes Evaluation

The clinic’s budget is tactically intended to back its mission as well as grow the ideals of patient management and staff. Through improved efficiency of nurse involvements, decrease waiting time for patient treatment and bed preps, lessened medication and certification mistakes, utilization of electronic medical records, and cost-contained provisions, the infirmary sustains that these involvements will advance the general patient practice. Staffing should similarly be protected; the monthly budget offers adequate fiscal sustenance to wage the obliged staff to manage patients (Dichev, I. 2017). From the above budget, the strategic plan is set aiming to guarantee that there is competency in the hospital’s operations. Nurse directors are confronted with the fiscal realism of patient-staffing proportions, budgets, and fiscal recording while handling an acute care unit. When a budget is acknowledged, the nurse director formulates a calculated strategy to be executed. Working budgets entail financial planning though owning a tactical plan offers a chance to design outlays before reaching budget targets (Spacey, 2017). Planned budgets are a significant managing tool to solve problems and implement competitive rewards to achieve the establishment’s fiscal objectives. The nurse in charge sets the unit’s goals for them to line up with the establishment’s mission and advance quality results in patient management (Spacey, 2017). Assessment metrics comprise aspects like patient fulfillment, attaining raised revenues or cost-lessening targets, being effective and a frontrunner in budget managing among coworkers and equals, growing the quality of services offered, and evolving competencies to be extra competitive.

Nurse heads play a vital part in running their department carefully but cost-effectively.

Conferring to researchers, contemporary best performs for cost-effective reliable care may be attained through the development of a financial efficacy plan. The plan can offer approaches to grow enrollment efficiency plus also include flexible staffing, developing processes to reduce staffing through the low count, holding staff clusters, and classifying values to assess opening and closing sections for poll fluctuations (Hill, Higdon, Porter, Rutland & Vela, 2015). Tactical planning offers opportunities to forestall the requirements to attain lasting goals. As for the nurse in charge, the process is based on provisions presented from preceding years, which entail everyday all-purpose undertakings of the hospital and, providing patient care. The financial arrangements on revenue and expenses will be likened to real expenditures and income (Rundio, 2016).

Ongoing budget Management

Benchmarking is based on development through the use of the finest approaches, and it is 

a procedure, which encompasses recognizing awareness and experience as well as distribution of best performances. Research clarifies that an all-inclusive strategy for healthcare priority settings that draw on fundamental economic disciplines and morals can be implemented irrespective of the financial weather (Rundio, 2016). To smoothen the budget process, the nurse administrator should take part in the process of close supervision of expenses and revenues, cost of products sold, and expenses to perceive how closely real performances align with the set budget or the original financial plan created. One issue though with the present monetary predicament for nurse heads is that the situation is not indefinite. Utmost health schemes introduce reductions whenever resources seem scarce and then work with lesser costs through times of excess. 

Nevertheless, what is important through resource management notwithstanding the financial weather is a resolution that evades obsolete performance. Consequently, there are many hands-on answers, which can be implemented to solve crises particularly when the financial weather is not favorable (Rundio, 2016). On the other hand, during times of excess, contingency subsidies (money set to use during tragedies or unforeseen fiscal crises) ought to be cumulated to assist in the mitigation of impacts on the unit’s budget through financial downturns. Additionally, a similar level of accountability ought to be upheld during times of economic shortage and excess situations so that losses and gains are evaluated regularly. The objective is to define where funds can be saved in every given financial plan even if additional cash is coming in. Conclusively, each part of the establishment should be expected to propose extra cost-effective possibilities to arrive at the system’s financial objectives (Mitton, Dionne, & Donaldson, 2014).


Thorough fiscal management is vital to the financial safety of healthcare establishments. Lining up the fiscal objectives of a nursing division is the duty of nurse leads and the operating budget acts as the roadmap to improve the usage of resources. Budgeting does not in a day, it is a continuing course for the nurse managers; nevertheless, the work is not finished once the budget is completed. Instead, operations are constantly supervised, in relation to the budget and fiscal objectives of the establishment. To guarantee that fiscal objectives are met, changes are affected, and where needed, via tactical preparations, budget plans are restructured for imminent budget preparations. The hospital’s operating budget is centered on revenue and expenditure. The proceeds include government grants, direct income, premiums, and indirect donations. The expenditures are essential in presenting what is projected to be performed and subsidies for the hospital’s expenditures.

The calculated aim of the infirmary is to comprehend effective and operative maneuvers. The hospitals can attain these purposes by safeguarding that they engage the finest human resource in addition to following the necessities for the values offered. Hospitals are mandated to appropriately compensate the workers and they need to also implement the utmost novel technologies to endorse the automated health record necessities that are resolute to stay in the establishment. The controls for the ventures take in improved competence, decreased time for patients in the queues, and manageable accounts at the hospital. Realizing these ventures entails appropriate financial provisions and engaging the qualified staff to tackle every present issue. Consequently, preparation and management of the budgets remain crucial in conducting diverse issues, which include improving the hospital’s quality of care to the patients.

NURS FPX 6216 Assessment 2 Preparing and Managing an Operating Budget


Danna, D. (2016, January 21). Learning and mastering the operating budget. Strategies for Nurse Managers.

Dichev, I. (2017). On the conceptual foundations of financial reporting. Accounting and Business Research, 47(6), 617–632.

Hill, K. S., Higdon, K., Porter, B. W., Rutland, M. D., & Vela, D. K. (2015). Preserving staffing resources as a system: Nurses leading operations and efficiency initiatives. Nursing Economics, 33(1), 26–35.

Maduekwe, C. C., & Kamala, P. (2016). The use of budgets by small and medium enterprises in Cape Metropolis, South Africa. Problems and perspectives in management, (14, Iss. 1 (continued)), 183-191. 

Rundino, A. (2020, November 16). Budget development for nurse managers. www.sigmanursing.org. Retrieved September 15, 2021, from https://nursingcentered.sigmanursing.org/features/top-stories/budget-development-forthe-nurse-manager 

Spacey, J. (2017). 5 Examples of a Strategic Budget. Simplicable. Retrieved from: https://simplicable.com/new/statregic-budget

Yao, Y., Li, J., & Yun, L. (2022). Application of Flexible Budget Based on Company Profit Model: Taking VK’s Financial Data as an Example. Asian Business Research, 7(2), 88.

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