Essay on Budget Managment Analysis

2287 Words Aug 22nd, 2013 10 Pages
Budget Management Analysis
Christina Hewett
University of Phoenix
Financial Resource Management
Ralph Gigliotti
August 03, 2013

Budget Management Analysis
“Finance should be a fundamental nursing administration content area to meet the growing need for nurse managers with core competencies in financial and budget management” (Finkler, Kovner, & Jones, 2007, p. 476). Health care organizations depend on nurse managers to budget the finances of his or her department appropriately. Budget management analysis includes evaluation of departmental and organizational financial concerns to include forecasting, benchmarking, and cost variance. The purpose of this paper is to determine specific strategies to manage budgets within
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The variance occurs when predicted staff levels are either over or underestimated. Forecasting can anticipate the patient acuity levels and busy seasons; however, it is not an exact science and can be inaccurate. Staffing and scheduling can vary resulting from increased or decreased patient occupied beds. The variance may cause nurses to be called in off-duty resulting in overtime or nurses to be placed on call resulting in having to use vacation or sick hours to maintain full time status. “Cost variance analysis is of great potential importance to the health care industry. Successful use of cost variance analysis requires a sound system of standard setting, or budgeting, and a related system of cost accounting” (Clerverley & Cameron, 2007, p. 354). Nurse managers are also required to prepare a budget for supplies necessary to maintain daily operations in his or her respective departments. Supply inventory is another expense result with budget expectations. Variances occur when either forecasting determines that the previous year used a set number of supplies and the present year is either over or under using those supplies. Variances may also occur when the previous year had a standard cost for supplies, yet suppliers raised the cost per units of the supplies, causing and actual cost to be higher than the expected cost. Both variances may cause alterations to departmental and organizational

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