DNRS 6211 Week 3 Budget Worksheet Example

Operating Budget Worksheet: An 18-Bed Inpatient Rehabilitation Unit, With the Assumption and Source Behind Every Line

Student Name

College of Nursing, Walden University

DNRS 6211: Finance and Economics in Healthcare Delivery

Instructor Name

Month Day, Year

Operating Budget Worksheet: An 18-Bed Inpatient Rehabilitation Unit, With the Assumption and Source Behind Every Line

This worksheet sets out the annual operating budget for a composite 18-bed inpatient rehabilitation unit in a community hospital for the coming fiscal year. It covers the costs the unit manager controls. Every line carries the assumption that produced it and the record that assumption came from, so that anyone reviewing the budget can test it rather than accept it (Penner, 2017).

The Volume Driver

One number drives every variable line: 5,584 patient days. It rests on an average daily census of 15.3, which is 85% occupancy of 18 beds, multiplied by 365 days. The census assumption comes from the unit's census report for the past 24 months, which averaged 15.1, adjusted upward by the admissions forecast from the hospital's planning office, which expects a small rise in stroke referrals after the new neurology group opens. Staffing is set at 6.8 worked nursing hours per patient day, the target in the unit's approved staffing plan, which gives 37,971 worked hours. Every personnel line below points back to these two figures, and if the census assumption moves, the budget moves with it.

The Worksheet

Table 1 separates personnel from non-personnel. Personnel is broken into worked hours, paid nonproductive hours, differentials, orientation, and benefits rather than shown as one salary total, because each of those lines responds to a different decision (Dunham-Taylor & Pinczuk, 2015). Worked hours respond to census and staffing; nonproductive hours respond to leave policy; differentials respond to the schedule; orientation responds to turnover.

Table 1

Annual Operating Budget, 18-Bed Inpatient Rehabilitation Unit

Personnel makes up 95% of the total, which is typical of a nursing unit and means that the staffing assumption, 6.8 hours per patient day, and the census assumption together account for most of the budget's risk.

Exclusions

Three categories are deliberately left out. Allocated overhead, such as the unit's share of administration, facilities, and information systems, is assigned by the finance office and is not controllable by the unit manager, so it appears only in the hospital's full-cost report (Reiter & Song, 2021). Anything meeting the hospital's capital definition, an item costing $5,000 or more with a useful life over 1 year, goes through the capital budget instead. Therapy staff, including physical, occupational, and speech therapists, are budgeted by the rehabilitation therapy department, even though they work on the unit every day.

Assumptions Most Likely to Break

Two assumptions deserve watching. The first is census. Each change of 1 patient in average daily census moves worked hours by about 2,480 a year and the personnel budget by roughly $110,000, including benefits. The second is the productive ratio of 88%. If leave use rises, as it did in the year of the respiratory virus surge, nonproductive hours grow and premium pay usually follows to cover the gaps. Both are reviewed monthly against actual results, which is the subject of the variance analysis that follows this budget.

References

Dunham-Taylor, J., & Pinczuk, J. Z. (2015). Financial management for nurse managers: Merging the heart with the dollar (3rd ed.). Jones & Bartlett Learning.

Penner, S. J. (2017). Economics and financial management for nurses and nurse leaders (3rd ed.). Springer Publishing Company.

Reiter, K. L., & Song, P. H. (2021). Gapenski's healthcare finance: An introduction to accounting and financial management (7th ed.). Health Administration Press.