Discuss importance of Budgeting in Healthcare

Discuss importance of Budgeting in Healthcare

Budgeting in Healthcare Essay

The role of nurse managers is to oversee and ensure the quality of care delivered by nurses under their staff. As well the nurse manager is also responsible for all of the nursing staff and for budgeting for expenses for the department or organisation which they oversee. However, one area in which nurse managers often have limited practical experience is that of budgeting.Budgeting in Healthcare Essay

In order to be successful manager nurses need to have substantial skills in human resources, strategic management, and financial resources. With respect to financial resources, managers need to have a thorough understanding of financial terminology and develop strong relationships with individuals responsible for finance in the organisation. As well managers must be able to develop a basic budget, and monitor that budget to ensure that their department/organisation is not going into deficit (Danna, 2014). One part of basic budgeting is that of capitol budgeting.Budgeting in Healthcare Essay

Capitol budgeting is a type of budgeting which is conducted to determine if a long term investment, such as a new piece of equipment, is worth it at that particular moment in time. Historically, because of the nature of nursing, the business model used was quite different than that of other industries. For that reason, capitol budgeting was often not considered to be a high priority. However, as health care systems become more integrated, the benefits of capitol budgeting are starting to be realized. In a previous study it was found that fully integrated organizations were able to generate a better and more consistent return on their capital investment than organisations which are not fully integrated (Zismer, Sterns, & Claus, 2011).

In the United States, one of the major costs of the health care system is that of administration costs. Over 25% of the budget for health care is spent on administration. In contrast England spent 15.45% on administration. Each year the costs of healthcare continue to rise and policymakers are continually looking for ways to cut costs. It is for this reason that nurse managers must be able to do budgeting (Himmelstein et al., 2014). If a nurse manager is able to oversee the nurses/patients, and also balance the finances this could lead to cost savings and other administrative personnel would not be necessary.Budgeting in Healthcare Essay


Currently I work at a Veterans Hospital in Primary Care. Often times we collect and send samples to the laboratory for analysis. Once expensive piece of equipment which may need replacing, or which the laboratory may not have, is that of a mass spectrometer. Traditional techniques of microbial identification can be time consuming and often times require sick patient to wait extensive periods of time for test results. In contrast to traditional methods matrix-assisted laser desportion ionization time of flight mass spectrometry (MALDI-TOF MS) can be used as a faster and more accurate alternative (Singhal, Kumar, Kanaujia, & Virdi, 2015).

One main method to demonstrate the need of this equipment is to show the difference in accuracy between current methods and MALDI-TOF MS. Because misidentification can mean increased costs to the hospital, the amount of savings due to increased identification can also be calculated and reported. Further financial information would also be the decreased technician time required to process the sample. As an emotional appeal, one thing that could be highlighted is that the longer a patient waits for identification the more pain and stress they are under. Speeding up this process can reduce patient suffering and increase quality of care. By highlighting both the financial and emotional benefits of this equipment, this will make decision makers more likely to purchase this piece of equipment. This will in turn lead to improvement in the quality of care of current and future patients.Budgeting in Healthcare Essay

Danna, D. (2014). Essential business skills for nurse managers. Health Leaders Media.
Himmelstein, D. U., Jun, M., Busse, R., Chevreul, K., Geissler, A., Jeurissen, P., . . . Woolhandler, S. (2014). A comparison of hospital administrative costs in eight nations: US costs exceed all others by far. Health Affairs, 33(9), 1586-1594.
Singhal, N., Kumar, M., Kanaujia, P. K., & Virdi, J. S. (2015). MALDI-TOF mass spectrometry: an emerging technology for microbial identification and diagnosis. Frontiers in microbiology, 6, 791.
Zismer, D. K., Sterns, J. B., & Claus, B. (2011). Capital efficiency and integrated health system designs: does business model design predict capital efficiency performance in community health systems? Healthcare Financial Management, 65(7), 88-93. Budgeting in Healthcare Essay

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