Chapter 1: Budgeting for the Nurse Manager

Introduction

My first nurse manager job was in an urban emergency department. In this hospital, the director of nursing generated and monitored the budget. The nurse manager did not participate in the budgeting process or receive budget reports or audits. In fact, nurse managers in this organization had no clue whether they were over budget or under budget—or if the budget was balanced.

One day, the assistant director of nursing advised me that I was over budget and that I should do a better job of controlling overtime—even though I was not privy to budgeting information and didn't have access to budget reports. In other words, I had accountability and responsibility but no real authority because the director of nursing had complete control of the budget. The moral of this story: If you are a nurse manager, and you are expected to manage a budget, you need to be part of the budgeting process. This includes receiving meaningful reports so you can manage your budget.

The Budgeting Process for Nurse Managers and Its Relationship to Patient Care

Of course, many nurses are happy to avoid the nitty-gritty accounting details inherent in the development and management of a budget. This head-in-the-sand attitude with regard to financial affairs is perhaps understandable. After all, we went into nursing to care for patients. But what many of us often fail to remember is that caring for patients requires prioritizing needs and allocating finite resources. This requires budgeting.

Budgeting and finance are topics that are not addressed adequately in the typical nursing curriculum. This is understandable because nurses need to learn many things about clinical care, and so the curriculum focuses on that. Nurses get more exposure to finance and budgeting at the master's degree level, and those who pursue a nursing-management degree learn the most about these topics.

A lot of nurses think that it is up to the nurse manager on the unit to worry about and manage the budget. However, the reality is that every item that we use has a cost associated with it that affects the budget—and thus the dollars—of the organization. You'd have to be living in a vacuum to miss how the general economy affects your own life; the same is true in healthcare. There is not a bottomless pit of money and reimbursement. As my mom always said, “Money does not grow on trees.”

Every nurse and other hospital employee must be accountable for the use of resources. Nurses who understand the budgeting process will be able to contribute positively to organizational performance and ensure organizational sustainability.

Besides, although understanding financial and budgeting concepts can be challenging, it can also be ...