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NURS FPX 6216 Assessment 2: Preparing and Managing an Operating Budget

Capella 6216 Assessment 2

NURS FPX 6216 Assessment 2: Preparing and Managing an Operating Budget

Student Name

Capella University

School of Nursing and Health Sciences, Capella University

NURS FPX 6216 Assessment 2:

Advanced Finance and Operations Management

Prof. Name:


Preparation and Management of an Operating Budget in Healthcare Organizations

The operating budget is a crucial financial tool that enables healthcare organizations to monitor their daily activities, anticipate revenue expectations, and manage expenses over a specific period, typically a year. This budget is pivotal in aligning with the organization’s goals and objectives, ensuring efficient resource allocation, and enhancing patient care and safety. This paper focuses on preparing and managing an operating budget, particularly in the context of Anthony Medical Center, discussing the budget’s design, key components, uncertainties, strategic considerations, and ongoing management approaches.

Budget Preparation

The operating budget, spanning one year and divided into six months or three quarters, is a cornerstone for financial planning. In the case of Anthony Medical Center, the nursing unit budget is established by building upon the previous year’s budget while incorporating new incremental expenditures. Following established conventions, the operating budget categorizes revenues and expenses in a standardized format (Anderson et al., 2020).

Revenue Breakdown

The revenue section of the operating budget outlines the organization’s anticipated income sources. NURS FPX 6216 Assessment 2: Preparing and Managing an Operating Budget. For Anthony Medical Center, the revenue streams include inpatient revenue, outpatient revenue, and total patient service revenue. Adjustments for contractual agreements and charitable care are accounted for, generating net patient services revenue. Capella 6216 Assessment 2. The overall budget revenue is then summarized (Anderson et al., 2020).

                                            Operating Budget for the Coming Year                             


Amount in $

Inpatient Revenue 


Outpatient Revenue 


Total Patient Service Revenue  


Contractual Adjustments


Charity and Uncompensated Care


Net Patient Services Revenue 


Total Budget Revenue




Salaries and Wages




Rentals and Leases


Purchased Services – Utilities


Depreciation Expense 


Total Budget Expense 


Excess over Revenue 




Expense Allocation

Expenses are meticulously outlined in the operating budget, encompassing salaries and wages, supplies, rentals and leases, purchased services (utilities), and depreciation expenses. The comprehensive budget expense is calculated by summing up these components. The final calculation reveals whether the organization operates with a surplus or a deficit (Anderson et al., 2020).

Uncertainties and Additional Information

Operating budgets are forward-looking predictions subject to uncertainties driven by future scenarios. These uncertainties necessitate incorporating additional information related to emerging technologies to ensure the budget remains adaptable and relevant (Guo et al., 2020).

Strategic Budget Design

The strategic budget design emphasizes the inclusion of significant expenses that align with the organization’s goals. Collaboration among departments like nursing, human resources, information technology, management, and administration is essential. NURS FPX 6216 Assessment 2: Preparing and Managing an Operating Budget. This cooperative approach ensures that each department’s needs and contributions are integrated into the budget. Departments such as quality control, radiology, information technology, and more are considered to allocate resources effectively (Siirala et al., 2020).

Key Components of the Operating Budget

The operating budget comprises various vital components. These include net patient service revenue and operating expenses such as salaries, supplies, rentals, leases, and depreciation. It also takes into account factors like bad debts and includes considerations for charity and uncompensated care (Love & Ika, 2021).

Primary Sources of Budgeting Information

The primary sources of information for budgeting encompass staff evaluations, the incorporation of new technologies, the evaluation of total salaries, and insights from the organization’s income statement. These sources aid in crafting an accurate and comprehensive operating budget (Love & Ika, 2021).

Assumptions and Strategic Planning

Assumptions play a vital role in budgeting. For instance, it is assumed that the utilization of supplies inversely correlates with patient numbers. Strategic planning underpins budgeting by driving decisions to invest in new technologies, enhance patient care, and improve staff competency. The mission of Anthony Medical Center emphasizes patient care, well-being, staff productivity, and competitive success (Bryson et al., 2018).

Ongoing Budget Management

Managing the ongoing budget necessitates selecting an appropriate approach. The paper presents two methods: a critical approach and a supportive approach. The zero-based budgeting system controls costs, while the capital budget approach helps assess project expenditure. NURS FPX 6216 Assessment 2: Preparing and Managing an Operating Budget. The emphasis is also on limiting staff overtime, reducing non-productive time and expenses, and prudent management of ongoing supplies and equipment costs (Ibrahim, Mukdad Mohammad, 2019). Capella 6216 Assessment 2.


In conclusion, the operating budget is a critical financial tool in healthcare organizations, enabling efficient resource allocation and alignment with strategic goals. The paper highlights the importance of collaborative budget design, consideration of key components, incorporation of technological advancements, and ongoing management strategies. By adopting effective budgeting practices, healthcare organizations like Anthony Medical Center can enhance patient care, control costs, and achieve long-term success (Kenno et al., 2018).


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).

Bhatt, J., & Bathija, P. (2018). Ensuring access to quality health care in vulnerable communities. Academic Medicine, 93(9), 1271–1275.

Bryson, J. M., Edwards, L. H., & Van Slyke, D. M. (2018). Getting strategic about strategic planning research. Public Management Review, 20(3), 317–339. Tandfonline.

Dauda, H. (2019). Examining the role of budgeting and budgetary control in achieving objectives of business organisations International Journal of Operational Research in Management, 5.

Capella 6216 Assessment 2

Guo, F., Gregory, J., & Kirchain, R. (2020). Incorporating cost uncertainty and path dependence into treatment selection for pavement networks. Transportation Research Part C: Emerging Technologies, 110, 40–55.

Ibrahim, Mukdad Mohammad. (2019). Designing Zero-based Budgeting for Public Organizations.

Kenno, S. A., Lau, M. C., & Sainty, B. J. (2018). In search of a theory of budgeting: a literature review. Accounting Perspectives, 17(4), 507–553.

Love, P. E. D., & Ika, L. A. (2021). Making sense of hospital project (mis)performance: over budget, late, time and time again—why? and what can be done about it? Engineering.

NURS FPX 6216 Assessment 2: Preparing and Managing an Operating Budget.

Lu, G., Ding, X. D., Peng, D. X., & Hao-Chun Chuang, H. (2018). Addressing endogeneity in operations management research: Recent developments, common problems, and directions for future research. Journal of Operations Management, 64(1), 53–64.

Moro 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), 2318.

Capella 6216 Assessment 2

Owens, J., Singh, G., & Cribb, A. (2019). Austerity and professionalism: being a good healthcare professional in bad conditions. Health Care Analysis, 27(3), 157–170.

Prioli, K. M., Karp, J. K., Lyons, N. M., Chrebtow, V., Herman, J. H., & Pizzi, L. T. (2018). Economic implications of pathogen reduced and bacterially tested platelet components: a us hospital budget impact model. Applied Health Economics and Health Policy, 16(6), 889–899.

NURS FPX 6216 Assessment 2: Preparing and Managing an Operating Budget

Siirala, E., Salanterä, S., Lundgrén‐Laine, H., Peltonen, L., Engblom, J., & Junttila, K. (2020). Identifying nurse managers’ essential information needs in daily unit operation in perioperative settings. Nursing Open, 7(3), 793–803.

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