Hand out- financial planning

Prof. Ushanandini Rajesh

Vice Principal
Westfort College of Nursing, Thrissur
 Types of budgets
Major: Open Ended
• Line – item Flexible
• Fixed ceiling Sunset
• Performance Sales
• Program Production
• Flexible Revenue&
• Roll over expenditure
• Zero - base Capital expenditure
• Incremental Cash
 Budgeting tools
1. Trend analysis
2. Cost benefit ratio
3. Marginal analysis
4. Work sampling
5. System analysis
 Budget monitoring tools
1. Capital inventory
2. Supply inventory
3. Position control
4. Monthly account reports
5. Cost accounting
6. Variance analysis
 Non productive FTE
( full time equivalent)
Is based on 2080 hours per year
FTE average is used for personnel budget. Eg:
________________________________________
Average vacation FTE 12. days
Average Holiday FTE 7.0 days
Average sick days 3.5 days
Average training &
Education FTE 3.0 days
Average other leave FTE 1.5 days
Total 27.5 days( 220hours)
Total actual work time is 2080-220 hours= 1860 hours
 Nursing personnel budget
Based on patient acuity system
Acuity Nursing hours per patient
needed during 24 hour period
0.5 0-2 hours
1.0 2-4 hours
2.5 4-10 hours
5.0 10-24 hour
(University of South Alabama Medical
Centre)
 Staffing formula
Average daily census X nursing hoursX1.4X 1.14
7.5
Eg. 3rd floor : Average daily census= 31.8
Nursing hours=4 (per 24 hours)
1.4 is a constant representing 7 days in a week
with a full time worker working 5 days in a
week:7+5=1.4
1.14 is a constant representing an allowance of
0.14 FTE for vacation, illness etc. for each 1.0
FTE
7.5 represents one work day
 Staffing formula Contd
3rd floor 27 FTEs calculated by
14 RNs, 9 LPNs, 4 NAs
So applying it in the formula
31.8x4x1.4x1.14 =27 FTEs
 Nursing personnel budget
Calculation For MCH Unit
unit ADC Acuity Nsg/hrs RN LPN NA other
Total
3rd 31.6 0.9 4 14 9 4 5 32
ped 22 1.3 4.5 16 5 0 4 25
picu 4.4 3.4 12 11 0 0 2 13
nbn 19.7 1.0 4 9 6 1 3 19
Del - - - 20 3 1 4 28
play - - - - - - 1 1
total 70 23 6 21 128
ADC= Average Daily Census
 Steps in preparation of an
operating budget
i. Collect past data
ii. Examine previous year objectives –
achieved or exceeded
iii. Set objectives for forecast year
iv. State objectives in terms of
production/service/activities
v. Consider salary and wage adjustments
vi. Prepare report of expense eg. Tax,
supplies
 Steps in preparation of an
operating budget contd
vii. Prepare budget report
Budget summary
Budget statement& supporting schedules
Budget information- activities
viii. Review of budget by administrator
ix. Evaluation of budget
x. Modifications by finance committee
xi. Final approval by the board
 Estimate of budget
Item No Income/ Actual Current
Expendi Last Year Budget Next Year
ture Year Budget

Actual Propos Approv

ed ed
1.

2.

3.