Problem Analysis and Budget Impact

Problem Analysis and Budget Impact


Each nursing department is allocated a certain amount of resources determined through analysis of budgetary projections for the different units (Sherman, Bishop, Eggenberger, & Karden, 2007). Nurses are expected to operate within the set financial limits outlined in the budgets. Analysis of budgets from various healthcare facilities, however, indicates a significant difference between the projected and the actual budgets. The difference is attributed to the high cost of healthcare. This paper will explore the problem revolving around the rising healthcare cost and establish its impact on the process of budget analysis.

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Financial Problem

The cost of care in America has exhibited an increasing trend over the past few decades, and the government is spending a huge percentage of the country’s GDP on healthcare (Swearingen, 2009)Problem Analysis and Budget Impact. Despite the government’s commitment to providing affordable and quality medical care to its citizens, research indicates that currently, most people cannot afford the cost of care in various facilities (Schuhmann, 2008). The problem is compounded by the fact that most citizens in the country do not have a medical insurance cover that would indemnify them for the cost incurred during treatment. The insurance industry has attributed the high price of policies to the rising outlay of healthcare and indicated that the rates cannot go down devoid of government’s interventions to reduce the cost of care. Lack of proper budget management strategies in the various clinical facilities has been seen as another cause of the high cost of healthcare in the country.

The Potential Budget Impact

The high cost of medical care in the US has posed great challenges to nurses who are directly involved in the budget formulation in various clinical facilities. Nurses are expected to advise unit managers regarding annual budgets since they are in direct contact with patients and can assess their needs in terms of cost (Sherman et al., 2007). Reconciliation of the actual financial plan and the projected budgets has proved hectic to nurse managers due to the huge variations observed (Schuhmann, 2008). The variances indicate that the actual budget exceeds the projected one, and it is only explainable by the high cost of patient care. In insurance companies too, the actual budget exceeds the one planned due to the huge cost incurred in indemnifications. Therefore, the high cost of care has adversely impacted the process of budget analysis since finance managers have to handle the huge variances in the annual financial accounts.

The Role of Nurses

The budget formulation is a continuous process and calls for teamwork amid all nurses at different levels to come up with a comprehensive plan that takes care of all the costs (Swearingen, 2009). Though the development of the annual budget takes place at a specified period, information gathering and analysis by the nurses is continuous since such it is useful in the development of financial plans for the subsequent years.

Staff Nurses

Staff nurses are in charge of collecting and analyzing information useful in budget formulation. Staff nurses are accountable for assessing each patient’s needs and recording such information for use during budget development (Sherman et al., 2007). They are in direct contact with the patients, which makes them understand the financial requirements during their interactions. Their collaboration with the management nurses determines the impacts of introducing new treatment plans in terms of cost and time. This is done through the regular roundtable meetings where stakeholders strategize on the best course of action to be taken to better patient care. The issue of cost and time is deliberated in the meetings, and the information is included in the budget preparation.

The Chief Nurse

The nurse administrator is not in direct contact with the patients but is charged with the responsibility of supervising and ensuring that all the nursing units are guided by the principles of patient-centered care in the course of dispensing their mandate. The chief nurse is the budget controller and relies on the information gathered by both the staff nurses and unit managers to determine the things to be considered during budget formulation (Sherman et al., 2007)Problem Analysis and Budget Impact.

Nurse Manager at the Unit Level

Unit managers are responsible for heading specific nursing departments and report to the nurse administrator (Swearingen, 2009). As opposed to the staff nurses who are in direct contact with the patients, nurse managers depend on information collected by staff nurses to make recommendations to the chief nurse. The managers are responsible for ensuring that the departmental nurses work within the budgets and reconciling the projected budget with the actual one. Variances are explained by unit managers and through such analysis; managers offer recommendations to the administrator on what to be included in the subsequent budgets.

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The mounting cost of care is a serious problem affecting the quality of healthcare in the US since most people cannot afford the high charges in the various facilities in the nation. Nurses from different healthcare facilities have expressed their concern regarding difficulties in budget formulation since in most cases the actual costs exceed the budgeted ones. Since annual budgets are meant to guide nurses in their daily operations, in some cases they have to work under certain financial constraint to prevent the actual cost from exceeding the set ceilings.


Schuhmann, T. M. (2008). Hospital financial performance trends to watch. Healthcare financial management: Journal of the Healthcare Financial Management Association62(7), 59-66.

Sherman, R. O., Bishop, M., Eggenberger, T., & Karden, R. (2007). Development of a leadership competency model. Journal of Nursing Administration37(2), 85-94.

Swearingen, S. (2009). A journey to leadership: Designing a nursing leadership development program. The Journal of Continuing Education in Nursing40(3), 107.

Problem Analysis and Budget Impact

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