Fiscal planning in nursing management

Fiscal PlanningBYP.N.VIJI, M.Sc(N)

LECTURER

StepsPlan Non-PlanZero BudgetingMid- term appraisalCapital & revenue

Limited role in determining resource allocation.Allowed only limited inputNursing as Non Income producing service

Overview of fiscal planning in nursing management

Nursing budgets generally account for the greatest share of the total expenses in healthcare institutions, participation in fiscal planning has become a fundamental and powerful tool for nursing

In 21st century….

Features of fiscal planning…

Most direct control or influence financial elements

Receive regular data reports

Reflects the philosophy, goals, and objectives of

the organization

Accountable for the financial results of the operating unit

Responsibility accounting

Active participation in unit budgeting

Characteristics ProactiveFlexibleClearly stated in measurable terms Short- and long-term planningInvolve as many people as feasible in the budgetary process Requires vision, creativity Thorough knowledge of the political, social, and economic forces that shape health care

Evaluation

Implementation

Develop a plan

Assess what needs to be covered

STEPS IN FISCAL PLANNING

Integrating Leadership Roles And Management Functions In Fiscal

Planning Understand fiscal terminologyAware of budgetary responsibilitiesMaintaining cost effective unitsensitivity to the organization’s

economic, social, and legislative climate is a high-level management function

Skillful in the monitoring aspects of budget control

Leadership skills……FlexibilityCreativityVision regarding future needsAnticipate budget constraintsAct proactivelyIdentifying alternativesCost containment does not jeopardize

patient safety

Components of expenditure

Plan Non- plan

Received funds

Plan funds Non plan funds Extra budgetaryresources

Zero based budgeting A method of budgeting in which all

expenses must be justified for each new period. Zero-based budgeting starts from a "zero base" and every function within an organization is analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one.

Advantages of zero based

budgeting

Find costEffective

ways

Detects Inflated budgets Useful

for service departments

Efficient allocation

of resources

Increases Staff

motivation

EliminateWastefuloperation

Identifyopportunities

Identify mission

Increases Communication

&coordination

Disadvantages ofZero basedbudgeting

Difficult to define decision units

Forced to justify every detail

Necessary to train managers

Compressing may remove critically important details

Honesty of the managers must be reliable & uniform

Implementation of Zero based budgeting

The zero-based budgeting system puts the burden of proof on the manager, and demands that each manager justify the

entire budget in detail and prove why he or she should spend the organization's money in the

manner proposed. A "decision package“ must be developed by each manager for every project or activity, which includes an analysis of cost, purpose, alternative courses of action,

measures of performance, consequences of not performing the activity, and the benefits.

Each budget start with an assumed value

of 0.

Each budgeted item is started at last years level, and next period’s level is planned as an increment to that level

Zero based budgeting Incremental budgetingVs

A combination of zero-based

budgets with rolling budgets or

some other form of budgeting

Dysfunctional behavior in subordinatesSignificant levels of job related tensionsAdverse effects on peer and subordinate – superior relationship

Behavioral impacts of Zero

Based budgeting

Mid term appraisal MTA — which is an exercise carried out

during the middle of a Plan period to assess the direction in which the Plan is moving and to take corrective action wherever required — is slated to be much more than a review of how much money is going into various schemes and projects .

Capital budget Capital payments consist of capital

expenditure on acquisition of assets like land, buildings, machinery, equipment, as also investments in shares, etc., and loans and advances granted by Central Government to State and Union Territory Governments, Government companies, Corporations and other parties. Capital Budget also incorporates transactions in the Public Account.

Revenue budget The revenue budget consists of

revenue receipts of the government (revenues from tax and other sources) and the expenditure met from these revenues.

Hierarchy Of Budgets

Capital assets

vehiclesMachinery & production equipment

Store equipment & furnishing

Lab equipment

Office furniture & office equipment

Buildings

Large IT systems

Operating budget

Employee salaries

Utilities cost

Travel & training expenses

Telephone & internet services

Marketing communication

Outside consultant fees

India union budget• Revenue Budget: The revenue budget

primarily comprises Government revenue receipts like tax and expenditure met from the revenue. The tax revenues principally constitute yields of taxes and other duties imposed by the Government of India.

• Capital Budget: The capital budget primarily comprises capital receipts and payments.

Revenue Deficit Revenue deficit occurs when the actual

amount of expenditure and actual amount of received revenue do not tally with the anticipated expenditure and revenue figures

Recommendations and Advice by Experts

• precautionary measures to reduce revenue deficit level not less than 50% from the current level

• Recommends lowering the ratio of revenue deficit to fiscal deficit below 50 percent.