Knowing Your Managerial Budget

Whether you are looking to move into a management position or are already there, having a strong understanding of how to balance your unit’s budget will help you drive profits for your organization. It is essential for nurse managers to have a strong understanding of how their unit’s budget is affected by operating activities, resources, supplies and of course staffing in order to successfully plan and execute your unit’s day-to-day operations. And while this may not be new information for many nurse leaders, below is a brief overview for those who are newer to managing a unit’s operating budget or are simply interested in a straightforward overview: 
Unit’s Operating Budget:
o   Revenue: the incoming amount brought in through daily operations
o   Expenses: the outgoing amount or costs incurred from day-to-day operations The two key components of unit expenses are:

  • Employment expenses: which primarily consist of costs incurred either directly or indirectly from staffing
    • Contract labor: costs incurred from third party employees
    • Orientation and education: costs incurred from continued or initial training/education to ensure staff is well-informed on current clinical practices or policies and procedures
    • Benefits: as outlined by state/federal law and the organization
  • Non-salary expenses: which primarily consist of supplies and departmental upkeep
    • Medical supplies: costs incurred from the use of any and all supplies used to care for patients
    • Office supplies: costs incurred from the use of administrative supplies such as papers, computers, etc.
    • Leased/rental equipment: costs incurred from renting equipment required for specialized patient care
    • Maintenance and repairs: costs that are incurred from fixing both leased and owned equipment that is needed in order to maintain day-to-day operations or patient care within the unit
    • Travel: costs incurred when staff is reimbursed for travel to conferences or job fairs etc. either for educational or networking purposes
  • Interdepartmental expenses: which consist of costs incurred from transactions between your unit and another
    • Pharmacy: pharmaceutical costs incurred from patient care
    • Central supply: costs incurred from the use of medical supplies that are sourced from the central supply of the organization

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