Page 44 - ACCCN's Critical Care Nursing

Resourcing Critical Care 21

BUDGET PROCESS responsibility for the budget performance can encourage
The budget includes three fundamental steps: budget an esprit de corps and improvements from the whole
preparation and approval, budget analysis and reporting, team that a single manager cannot achieve alone.
and budget control or action.
DEVELOPING A BUSINESS CASE
Budget Preparation and Approval The most common reason for writing a business case is

A budget plan essentially runs in parallel with a unit or to justify the resources and capital expenditure to gain
service management plan, forecasting likely activity and the support and/or approval for a change in service provi-
resulting financial costs. In most circumstances the pre- sion and/or purchase of a significant new piece of
ceding year’s activity and costs are a good benchmark on equipment/technology. This section provides an overview
which to base the next year’s budget. However, hospital of a business case and a format for its presentation. The
expectations in terms of new services, greater patient business case can be an invaluable tool in the strategic
throughput or changes to staff entitlements will need to decision-making process, particularly in an environment
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be factored into the new budget. of constrained resources.
A business case is a management tool that is used in the
The budget period is generally a financial year, but devel-
oping monthly budgets (cash flowing) to coincide with process of meeting the overall strategic plan of an organi-
predictable variations allows for a more realistic represen- sation. Within a setting such as healthcare, the business
tation of how costs are incurred and paid throughout the case is required to outline clearly the clinical need and
financial year period. If the budget plan is well constructed, implications to be understood by leaders. Financial
one always hopes and expects the final budget allocation imperatives, such as return on investment, must also be
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(i.e. the approved budget) to be close to achievable. defined and identified. A business case is a document
in which all the facts relevant to the case are documented
Budget Analysis and Reporting and linked cohesively. Various templates are available
(see Online Resources) to assist with the layout. Key ques-
Most critical care managers analyse their expenditure tions are generally the starting point for the response to
against budget projections on a monthly basis, to identify a business case: why, what, when, where and how, with
variances from planned expenditure. Information should each question’s response adding additional information
not merely be financial: a breakdown of the monthly and to the process (Table 2.2). Business cases can vary in
year-to-date expenditures for personnel (productive and length from many pages to just a couple. Most organisa-
non-productive), and operational (fixed and variable) tions will have standardised headings and formats for the
costs, should be matched against other known measur- presentation of these documents. If the document is
able indicators of activity or productivity (e.g. patient lengthy, the inclusion of an executive summary is recom-
bed-days, patient types/DRGs and staffing hours, includ- mended, to summarise the salient points of the business
ing overtime and other special payments). 3 case (Box 2.1).
One common management maxim is: if it cannot be
measured, then it cannot be controlled. Clinical manag-
ers therefore need to work closely with finance managers
to develop consistent data measurements and reports to TABLE 2.2 Key questions in writing a business case
inform themselves and staff about where they should
focus their efforts to achieve the approved budget target. Question Example
Why? What is the background to the project, and why is it
Budget Control and Action needed: PEST (political, economic, sociological,
technological) and SWOT (strengths, weaknesses,
When signs of poor performance or financial overrun are opportunities and threats) analysis?
evident, managers cannot merely analyse the financial
reports, hoping that things will sort themselves out. Every What? Clearly identify and define the project and the
variance of a sizeable amount requires an explanation. purpose of the business case and outline the
solution. Clearly defined, measurable benefits
Some will be obvious: an outbreak of community influ- should be documented; goals and outcomes.
enza among staff will increase sick leave and casual staff
costs for a period of time. Other overruns can be insidious What if? A risk assessment of the current situation, including
any controls currently in place to address/mitigate
but no less important: overtime payments, although the issue, and a risk assessment following the
sometimes unavoidable, can also reflect poor time man- implementation of the proposed solution.
agement or a culture of some staff wanting to boost their When? What are the timelines for the implementation and
income surreptitiously. 22 achievement of the project/solution?
An effective method of controlling the budget is Where? What is the context within which the project will be
actively to engage staff in the process of managing undertaken, if not already included in the
costs. Managers can explain to staff how the budget has background material?
been developed and how their performance against How? How much money, people and equipment, for
budget is progressing, and identify areas for potential example, will be required to achieve the benefits?
improvement. Seeking ideas from staff on how to improve A clear cost–benefit analysis should be included in
efficiency and productivity and giving them some response to this question.