Nursing Unit Budgets: Consider the Columns
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This document analyzes the budget variance for a nursing unit with 20 staffed beds. It includes a table showing the budgeted and actual expenses for June 2013 and year-to-date, including personnel costs, supplies, overhead, and total expenses. The table allows comparison of actual performance to budget targets and the previous year's performance. Key points are to compare current data to budgets and past periods, and to consider whether variances are favorable or not and what may have caused any differences.
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Nursing Unit Budgets: Consider the Columns
- 1. Consider the Columns: Analyzing Budget Variance Susan J. Penner, RN, MN, MPA, DrPH, CNL 2013
- 2. Why think about the columns? • Key question for interpreting budget reports is “Compared to what? • Budget columns often help in comparing – Actual performance to budget targets – Current performance to past performance
- 3. Table 1. Nursing Unit Expense Budget Variance 20 staffed beds, June 2013 ($ Budget thousands). Actual Current Prior YTD Item June June Variance YTD 2013 2012 2013 2013 Days in time period 30 30 -181 182 Productive $ 200 $ 220 -$20 $ 1,248 $ 1,257 Non-productive $ 50 $ 53 -$3 $ 312 $ 309 Total Personnel $ 250 $ 273 -$23 $ 1,560 $ 1,566 Supplies $ 25 $ 26 -$1 $ 153 $ 144 Overhead $ 10 $ 10 $0 $ 60 $ 60 Total Non-personnel $ 35 $ 36 -$1 $ 213 $ 204 Total Expenses $ 285 $ 309 -$24 $ 1,773 $ 1,770
- 4. Table 1. Nursing Unit Expense Budget Variance 20 staffed beds, June 2013 ($ thousands). Budget Actual Current Prior YTD Item June June Variance YTD 2013 2012 2013 2013 Days in time period 30 30 -181 182 Productive $ 200 $ 220 -$20 $ 1,248 $ 1,257 Non-productive $ 50 $ 53 -$3 $ 312 $ 309 Total Personnel $ 250 $ 273 -$23 $ 1,560 $ 1,566 Supplies $ 25 $ 26 -$1 $ 153 $ 144 Overhead $ 10 $ 10 $0 $ 60 $ 60 Total Non-personnel $ 35 $ 36 -$1 $ 213 $ 204 Total Expenses $ 285 $ 309 -$24 $ 1,773 $ 1,770
- 5. Table 1. Nursing Unit Expense Budget Variance 20 staffed beds, June 2013 ($ thousands). Budget Item June 2013 Days in time period 30 Productive $ 200 Non-productive $ 50 Total Personnel $ 250 Supplies $ 25 Overhead $ 10 Total Non-personnel $ 35 Total Expenses $ 285 Actual Current Prior YTD June Variance YTD 2013 2012 2013 30 -181 182 $ 220 -$20 $ 1,248 $ 1,257 $ 53 -$3 $ 312 $ 309 $ 273 -$23 $ 1,560 $ 1,566 $ 26 -$1 $ 153 $ 144 $ 10 $0 $ 60 $ 60 $ 36 -$1 $ 213 $ 204 $ 309 -$24 $ 1,773 $ 1,770
- 6. Table 1. Nursing Unit Expense Budget Variance 20 staffed beds, June 2013 ($ thousands). Budget Item June 2013 Days in time period 30 Productive $ 200 Non-productive $ 50 Total Personnel $ 250 Supplies $ 25 Overhead $ 10 Total Non-personnel $ 35 Total Expenses $ 285 Actual Current Prior YTD June Variance YTD 2013 2012 2013 30 -181 182 $ 220 -$20 $ 1,248 $ 1,257 $ 53 -$3 $ 312 $ 309 $ 273 -$23 $ 1,560 $ 1,566 $ 26 -$1 $ 153 $ 144 $ 10 $0 $ 60 $ 60 $ 36 -$1 $ 213 $ 204 $ 309 -$24 $ 1,773 $ 1,770
- 7. Table 1. Nursing Unit Expense Budget Variance 20 staffed beds, June 2013 ($ thousands). Budget Item June 2013 Days in time period 30 Productive $ 200 Non-productive $ 50 Total Personnel $ 250 Supplies $ 25 Overhead $ 10 Total Non-personnel $ 35 Total Expenses $ 285 Actual Current Prior YTD June Variance YTD 2013 2012 2013 30 -181 182 $ 220 -$20 $ 1,248 $ 1,257 $ 53 -$3 $ 312 $ 309 $ 273 -$23 $ 1,560 $ 1,566 $ 26 -$1 $ 153 $ 144 $ 10 $0 $ 60 $ 60 $ 36 -$1 $ 213 $ 204 $ 309 -$24 $ 1,773 $ 1,770
- 8. Table 1. Nursing Unit Expense Budget Variance 20 staffed beds, June 2013 ($ thousands). Budget Actual Current Prior YTD Item June June Variance YTD 2013 2012 2013 2013 Days in time period 30 30 -181 182 Productive $ 200 $ 220 -$20 $ 1,248 $ 1,257 Non-productive $ 50 $ 53 -$3 $ 312 $ 309 Total Personnel $ 250 $ 273 -$23 $ 1,560 $ 1,566 Supplies $ 25 $ 26 -$1 $ 153 $ 144 Overhead $ 10 $ 10 $0 $ 60 $ 60 Total Non-personnel $ 35 $ 36 -$1 $ 213 $ 204 Total Expenses $ 285 $ 309 -$24 $ 1,773 $ 1,770
- 9. Table 1. Nursing Unit Expense Budget Variance 20 staffed beds, June 2013 ($ thousands). Budget Item June 2013 Days in time period 30 Productive $ 200 Non-productive $ 50 Total Personnel $ 250 Supplies $ 25 Overhead $ 10 Total Non-personnel $ 35 Total Expenses $ 285 Actual Current Prior YTD June Variance YTD 2013 2012 2013 30 -181 182 $ 220 -$20 $ 1,248 $ 1,257 $ 53 -$3 $ 312 $ 309 $ 273 -$23 $ 1,560 $ 1,566 $ 26 -$1 $ 153 $ 144 $ 10 $0 $ 60 $ 60 $ 36 -$1 $ 213 $ 204 $ 309 -$24 $ 1,773 $ 1,770
- 10. Key Points to Remember • Compare – To budget targets – To past performance • Consider – Is the variance favorable or unfavorable? – What causes the budget variance? – Can the variance be controlled?
Editor's Notes
- <number> Hi, I’m Dr. Susan Penner. Does the term “budget analysis” make you want to run and hide? It’s really not that bad. This module walks you through some tips and tricks to help you make sense of a nursing unit budget.
- <number> A good way to get started analyzing a budget is to think about the columns. We’ll use a sample nursing unit budget to explain.
- <number> This is a simplified nursing unit budget report. The dollar values are in thousands, so the productive personnel expense budgeted for June 2013 is $200,000 Look this over for a minute. What are your thoughts about performance on this nursing unit?
- <number> Let’s examine one column at a time. The line items help the reviewer understand what information is included in the budget report. The first column in most budget reports lists the line items. In this budget, items include the days in the time period, as well as productive, non-productive and total personnel expenses. Supplies, overhead, total non-personnel expenses and total nursing unit expenses are also listed. Sometimes line items are presented as codes, and you’ll need to find out what the codes mean, so be prepared to ask questions.
- <number> Budget reports usually include a column for budget figures. The budget figures are the targeted or forecasted figures that represent what is expected over the time period. In this example, total personnel expenses are budgeted at $250,000 for June 2013, with total expenses budgeted at $285,000 for June 2013.
- <number> Actual budget figures report what actually occurred over the time period. In this example, total personnel expenses actually reached $220,000 in June 2013. Total expenses on the nursing unit actually reached $309,000 in June 2013. Be aware that it usually takes some time to compile and report budget figures. For example, a nurse manager might not receive a budget report for June 2013 until July 2013 or even later, as it takes time for the actual budget figures to be recorded.
- <number> The variance column indicates the difference between budgeted and actual figures for each line item. For budget expenses, if a variance column is not provided, you can calculate the variance by subtracting the actual value from the budget value. In this example, most of the actual values for June 2013 are over budget, so the variance is negative, indicating an unfavorable variance. The overhead expense is fixed, as it does not change from month to month, so the budget value matches the actual value. Think again about what this budget report is telling you. For example, can you see that productive or direct nursing costs are considerably over budget? A CNL should think about why the unit was over budget for productive nursing costs. Were there more patients than usual? Did patients require more nursing care than usual? Was the unit over-staffed? Were nurses absent, so less productive per diem nurses were scheduled? Is there any way to control and manage these costs?
- <number> It is also helpful to see how a work setting performs over the year to date. The current Year To Date values represent actual performance from January 1 through June 30, 2013. An experienced manager can use the current YTD figures to estimate how much of the nursing unit budget has been spent so far in the fiscal year.
- <number> In order to evaluate the current Year To Date performance, it’s helpful to compare to the prior Year To Date. Up to the end of June, this nursing unit operated at about $3,000 less in 2012. Now take another look at this budget, and see if you better understand the budget report when you consider the columns. Does reviewing a budget seem a bit easier now that you’re considering the columns? I hope so!
- Remember, if you can figure out a hospital nursing unit budget, you can figure out a clinic budget or other health care budgets. In addition, budgets are often prepared a little bit differently in different work settings. Step up and ask the nurse manager questions about the budget report. As a CNL, you can help the manager better control costs in nursing microsystems. Thanks!