NURS FPX 6216 Assessment 2 Preparing and Managing an Operating Budget

Name

Capella university

NURS-FPX 6216 Advanced Finance and Operations Management

Prof. Name

Date

Preparing and Managing an Operating Budget

Preparing and managing an operating budget involves estimating an organization’s income and expenses over a specified fiscal period, typically a year. This process necessitates a thorough review of historical financial data, corporate objectives, market trends, and regulatory requirements. An operating budget includes revenue sources such as sales, services, grants, and investments, as well as various expenses, including employee salaries, supplies, utilities, rent, and maintenance costs. Effective budget management requires continuous monitoring, identifying variances between projected and actual performance, and making necessary adjustments to optimize resource utilization (Anderson et al., 2020).

Mercy Medical Center (MMC), a healthcare facility situated in a metropolitan area, is committed to providing high-quality healthcare services to a diverse population. The hospital is equipped with advanced medical technology, specialized care units, and a skilled workforce to ensure patient-centered care. One of its units, a 35-bed facility staffed by 20 Full-Time Equivalent (FTE) employees, primarily caters to elderly patients. Due to staff shortages and turnover, this unit frequently requires additional overtime and extra shifts to maintain operational efficiency (Capella University, n.d.). As a nurse, my responsibility includes designing and managing the operational budget for this hospital unit.

Operating Budget and Financial Planning

An operational budget serves as a financial blueprint that forecasts an organization’s income and expenditures for a fiscal year. It is crucial for managing financial resources efficiently while ensuring that daily operations run smoothly. The budget comprises revenue streams such as inpatient and outpatient services, grants, and investments, along with expenses like staffing, supplies, leasing, and maintenance costs. Organizations use the budget to track financial performance, compare actual results with projections, and make strategic adjustments to optimize financial stability (Visconti & Morea, 2020).

MMC’s operational budget includes scheduled quarterly evaluations to ensure financial alignment with institutional goals. By incorporating historical financial data and anticipating future healthcare demands, the budget supports strategic financial planning. The following tables illustrate MMC’s projected annual revenues and expenditures.

Table 1: Annual Revenue Breakdown

Revenue Sources	Amount ($)
Inpatient Revenue	860,000
Outpatient Revenue	630,000
Total Patient Service Revenue	1,490,000
Contractual Deductions	(120,000)
Charitable and Unpaid Care	(30,000)
Net Revenue from Patient Services	1,340,000
Total Budget Revenue	2,400,000

Table 2: Annual Expense Breakdown

Expense Categories	Amount ($)
Employee Compensation	104,000
Supplies	59,000
Leasing Costs	12,000
Outsourced Services – Utilities	11,000
Asset Depreciation	17,000
Total Budget Expenditure	203,000

The net budget is calculated by subtracting the total expenses ($203,000) from the total revenue ($2,400,000), resulting in a net balance of $2,197,000. This budget framework ensures efficient financial planning and resource allocation while maintaining MMC’s commitment to high-quality healthcare services.

Budget Development and Management Strategies

MMC’s operating budget provides a structured financial roadmap but requires clarity on specific revenue sources and expenditures. More transparency is needed in revenue details from patient services and ancillary services such as cafeteria operations. Additionally, further justification for expenses, including IT investments and operational enhancements, is necessary to enhance financial planning (Harrington et al., 2023).

Creating the budget involved multiple steps, including stakeholder input, analysis of historical financial data, and market assessments. Stakeholders played a crucial role in defining financial constraints, organizational priorities, and funding allocations. Cost estimation considered key expenses like labor, medical equipment, facility maintenance, and operational overheads (Špacírová et al., 2020). The budget also incorporated cost control strategies to optimize resource utilization while maintaining service quality.

To ensure financial sustainability, MMC focused on prudent expense management and revenue optimization. The budget accounts for strategic investments in staff training, infrastructure, and technology to enhance healthcare service delivery. By adopting a proactive financial approach, MMC aims to mitigate budget deficits and sustain long-term operational efficiency (Fortuna, 2021).

References

Anderson, D. M., Cronk, R., Best, L., Radin, M., Schram, H., Tracy, J. W., & Bartram, J. (2020). Budgeting for environmental health services in healthcare facilities: A ten-step model for planning and costing. International Journal of Environmental Research and Public Health, 17(6). https://doi.org/10.3390/ijerph17062075

Badowski, M. E., Wright, E. A., Bainbridge, J., Michienzi, S. M., Nichols, S. D., Turner, K. M., Wicke, C., Awad, J., Thompkins, A., & Martin, R. D. (2020). Implementation and evaluation of comprehensive medication management in telehealth practices. Journal of the American College of Clinical Pharmacy, 3(2), 520–531. https://doi.org/10.1002/jac5.1210

Capella University. (n.d.). Capella University – University Catalogs – NURS-FPX6216. Capella.smartcatalogiq.com.https://capella.smartcatalogiq.com/en/2023-2024/university-catalog/course-descriptions/nurs-fpx-nursing-flexpath/6000/nurs-fpx6216/

NURS FPX 6216 Assessment 2 Preparing and Managing an Operating Budget

Fortuna, C. P. A. (2021). Budgeting practices: Its impact on the profitability of small and medium enterprises in Isabela. Universal Journal of Accounting and Finance, 9(3), 336–346. https://doi.org/10.13189/ujaf.2021.090307

Harrington, C., Mollot, R., & Williams, D. (2023). United States’ nursing home finances: Spending, profitability, and capital structure. International Journal of Social Determinants of Health and Health Services, 54(2). https://doi.org/10.1177/27551938231221509

Kenno, S., Lau, M., Sainty, B., & Boles, B. (2020). Budgeting, strategic planning and institutional diversity in higher education. Studies in Higher Education, 46(9), 1–15. https://doi.org/10.1080/03075079.2019.1711045

Nikolaos, T. (2022). Budget management for the non-profit organization. International Journal of Global Economic Light, 8(6), 9–13. https://www.eprajournals.net/index.php/JGEL/article/view/1256

Okoroafor, S. C., Ahmat, A., Osubor, M., Nyoni, J., Bassey, J., & Alemu, W. (2022). Assessing the staffing needs for primary health care centers in Cross River State, Nigeria: A workload indicators of staffing needs study. Human Resources for Health, 19(S1). https://doi.org/10.1186/s12960-021-00648-2

NURS FPX 6216 Assessment 2 Preparing and Managing an Operating Budget

Palozzi, G., & Ranalli, F. (2023). Telemedicine implementation between innovation and sustainability: An operating model for designing patient-centered healthcare. In Human-Centered Service Design for Healthcare Transformation (pp. 375–399). https://doi.org/10.1007/978-3-031-20168-4_21

Pessina, E., Barbera, C., Langella, C., Rossi, F., Sancino, A., Sicilia, M., & Steccolini, I. (2020). Reconsidering public budgeting after the COVID-19 outbreak: Key lessons and future challenges. Journal of Public Budgeting, Accounting & Financial Management, 32(5), 957–965. https://doi.org/10.1108/jpbafm-07-2020-0115

Ricciardi, W., & Tarricone, R. (2021). The evolution of the Italian national health service. The Lancet, 398(10317). https://doi.org/10.1016/S0140-6736(21)01733-5

Špacírová, Z., Epstein, D., García-Mochón, L., Rovira, J., Olry de Labry Lima, A., & Espín, J. (2020). A general framework for classifying costing methods for economic evaluation of health care. The European Journal of Health Economics, 21, 529–542. https://doi.org/10.1007/s10198-019-01157-9

NURS FPX 6216 Assessment 2 Preparing and Managing an Operating Budget

Visconti, R., & Morea, D. (2020). Healthcare digitalization and pay-for-performance incentives in smart hospital project financing. International Journal of Environmental Research and Public Health, 17(7). https://doi.org/10.3390/ijerph17072318