health expenditure

1. Microteaching on
Factors affecting health
expenditure and Role of nurse in
fiscal planning of nursing
expenditure
Presented by:
Nisha Yadav
M.Sc. Nursing 2nd year
NINE, PGIMER
Chandigarh
Presented to:
Dr. Meenakshi Agnihotri
Associate Professor
NINE, PGIMER
Chandigarh

2. Outline
• Health expenditure
• Determinants of health expenditure
• Hospital expenditure
• Factors affecting hospital expenditure
• Fiscal planning
• Objectives of fiscal planning
• Importance of fiscal planning
• Role of nurse in fiscal planning of nursing
expenditure

3. Health expenditure
Health expenditure is defined as spending on health
goods and services that includes:
• hospitals (both public and private)
• primary health care (unreferred medical services,
dental services, other health practitioners,
community health, public health and medications)
• referred medical services
• other services (patient transport services, aids and
appliances, and administration)
• research
• capital expenditure

4. Health expenditure cont…
• Health expenditure includes all expenditures for
the provision of health services, family planning
activities, nutrition activities and emergency aid
designated for health, but it excludes the provision
of drinking water and sanitation.
• Total health expenditures represent the amount
spent on healthcare and related activities (such as
administration of insurance, health research and
public health) including expenditures from both
public and private funds.

5. Determinants of health
expenditure
• Income
• Population, age structure and epidemiological
needs
• Technological progression and variation in medical
practice
• Service provision
• Health financing
• External funds

6. Hospital expenditure
• Hospital expenditure covers all services provided by
hospitals to patients.
• These include room and board, ancillary charges,
services of resident physicians, inpatient pharmacy,
hospital- based nursing home and home health
care, and any other services billed by hospitals.

7. Factors affecting hospital
expenditure
• Unpredictable economic events
• Development and adoption of new technologies
• Labor shortages and increasing costs
• Increasing market competition
• Supply chain issues and interruptions
• Rising interest rates
• Inflation

8. Unpredictable economic events
• Unpredictable economic events, such as the 2020
COVID-19 pandemic
• For any hospital, a positive operating margin is
essential for long-term survival.
• Few hospitals can maintain themselves for an
extended period when total expenses are greater
than total revenues.
• For hospitals, positive financial margins allow
them to invest in new facilities, treatments, and
technologies to better care for patients, and to
build reserves to meet unexpected expenses or
revenue shortfalls.

9. • Before COVID-19
• Compared with other industries, healthcare
margins typically have been very thin.
• Even before COVID-19, a number of U.S. hospitals
struggled with negative margins—in other words,
they were losing money on operations.
• In fact the median hospital margin was a very
modest 3.5%.

10. • The Effect of COVID-19 on Hospital Margins
• When the COVID-19 pandemic emerged, hospitals
had to stop all but the most urgent non-COVID
care.
• The result was a dramatic slowdown in volume of
patients and in revenue, while expenses remained
high.
• To date, no one knows when and to what degree
these patients will return.
• The result has been an unprecedented impact and
an uncertain future about the ability of hospitals to
serve their communities and remain financially
viable.

11. Development and adoption of new
technologies
• The development of information and
communication technology is one of the most
important factors affecting the health sector.
• Development and adoption of new
technologies, such as telehealth and home-
based medicine
• In implementation of these technologies extra
personnel would be required by the hospitals
as well as extra logistics will be required.
• So, this extends the expenditure of the hospital
in development, adoption and implementation
of these new technologies.

12. Labor shortages
• Labor shortages are poised to raise costs and
whittle down the financial performances of both
nonprofit and for-profit hospitals well into 2022,
whereas health insurers are generally better
positioned to shrug off the inflating costs of
medical care.
• Many provider organizations are increasing their
minimum wages for nonclinical staff to compete
with other agencies, for instance, while at the same
time rolling out retention and sign-on bonuses to
maintain their nursing workforce.

13. • Shortages also increase the leverage of unions
negotiating new contracts and boost the hourly
wages of contract nurses
• These trends and mitigation efforts will eat at
hospitals’ bottom lines over the long term as
salaries and benefits typically make up about half
of a hospital’s expenses

14. Increasing market competition
• A market is competitive when competitors are
sufficiently competitive to incentivize and
incumbent to improve (better quality, low price,
new services, more innovations, etc.) to maintain
its competitive advantage.

15. • The traditional view of hospital competition has
viewed that hospitals compete primarily along
'quality' dimensions, in the form of fancy
equipment to attract admitting physicians and
pleasant surroundings to entice patients.
• Both price and quality competition are greater in
markets that are less concentrated, although the
net effect of the two on prices is insignificant.

16. Fiscal Planning
• It is defined as a continuous process which involves
decisions or choices about alternate ways of using
available resources with the aim of achieving
particular goals.
• Planning helps to identify those deficiencies in the
economy and the social structure which demand
largest attention from the standpoint of economic
growth.

17. Objectives of fiscal planning
• To determine capital requirements
• To determine capital structure
• To frame financial policies
• To utilize financial resources adequately

18. Importance of fiscal planning
• Ensures provision of adequate funds to meet day to day
requirements of the organization as well as its future
expansion.
• Ensures timely availability of funds
• Provides policies, procedures and plans
• Helps in ensuring a reasonable balance between
outflow and inflow of funds so that stability is
maintained.
• Ensures that the suppliers of funds are easily investing
in organization which exercise financial planning.

19. • Helps in making growth and expansion
programmes.
• Reduces uncertainties with regards to changing
trends which can be faced easily through enough
funds
• Helps in ensuring stability and profitability in
concern
• Guides for proper and better utilization of available
resources

20. Steps in fiscal planning
• Determination of financial objectives
• Estimate the capital requirements
• Formulation of financial policies

21. Fiscal planning for Nursing Service
Department
• Generally nurses are very reluctant to spend time,
understand and operate a budget for the department
but the present administration and management
necessitates more involvement and participation of the
nurse administrator for the effective utilization of
hospital budget.
• Involvement in forecasting planning, implementing and
evaluating the performance of the Nursing Service
Department, maintain standard of nursing care with
proper utilization of the allotted budget will go a long
way to provide better care to clients and thereby
strengthen the hospital in its service to the people.

22. • The hospital administrator must be aware of the
contribution of the Nursing Service Department to
the health care services of the hospital, particularly
activities related to nursing care.
• The nurse administrator should be involved in the
preparation of the hospital budget from the very
beginning of planning.

23. Factors to be Considered while Planning
for Nursing Service Department
• The total number of beds in the hospital.
• The average bed occupancy of patients.
• Type of service and special units e.g. Medical, Surgical,
Obstetrical, Pediatric, Neuro, Skin, Operation Theatre
and so on including out patient departments.
• Physical layout of the wards - this is a very important
factor. This includes layout of wards, cubic, cabins,
private wards. Since the nurses are expected to be on
their toes most of the time, facilities which reduce
physical strain and saves time need to be purchased.

24. • Personal policies
• Standard of nursing care, method of patient assignment
and types of nursing procedures being performed in
the various units.
• Number of auxiliary nursing personnel, ward clerks,
messengers, non-nursing functions expected to be
performed by nurses etc.
• Quality of supervision required for nurses in these
units.
• Sound organizational structure with clear lines of
authority and responsibility.

25. Preparation of Budget for Nursing
Service
• Budget Committee: A budget committee consisting of
3-4 members depending upon the size of the hospital
may be formed. Assistant and Dy. Nursing
Superintendent, one Ward Sister and the Nursing
Superintendent or Chief Nursing Officer can be the
members. You can also be co-opt members from the
Hospital and Finance Section.
• Information on Unit Expenditure from each nursing
service units (wards) from floor supervisor, equipment
of supplies and from Principal of School of Nursing is
collected and gone through.

26. • Compilation stark in the month of September. The first
draft is sent to the Medical Director/Finance
Controller/Budget Officer in December and the same is
received by them for any addition, deletion or
examined for justification.
• Final draft is sent for approval by the Budget
Committee of the hospital.
• After approval, it is sent to the Nursing Director by end
of January, and by end of March, the budget is made
available to the nursing section.
• Financial year starts from 1st April every year. The
money sanctioned for equipment, supplies, linen are
purchased and verified.

27. Role of nurse in fiscal planning
• For running any health care organization money
and efficient financial managerial system is needed
to carry out patient/client centered activities.
• It involves tremendous expenditure in maintaining
building and infrastructure, procuring drugs,
equipment and supplies, day to day running of the
hospital department, investigation procedures,
laundry, central supply services and so on.

28. • Nurses need to play their role in the financial
management of these institutions.
• Nurses have a very important role and a crucial part
to play in improving the cost effectiveness of
patient care.
• We are aware that a substantial portion of the
hospital budget goes towards "Nursing Costs".
• Nurse Administrators as budget holders have a
responsibility for helping the hospital service/
health service to achieve its "value for money"
objective.

29. • The nurse managers are involved in spending from their
hospitals, health authorities limited revenue budget.
• Keeping this in view, it is important that they ensure
payment for staff is always correct, that stocks and
supplies are used economically and they are subject to
frequent monitoring and checks to reduce the costs.
• Nurse Administrators need to understand the
"Standard Financial Instructions" issued by the health
authorities or hospital management, so that they also
serve as a source of information on means of
economizing on unjustified expenditure

30. • It is necessary that nurses possess basic knowledge about
budget and budgetary process, so that they can actively
participate in reducing costs, prevent 'wastage of material
and expenditure and duplication in management of the
patient care services.
• They can, thus, justify their budgetary allocation in the
interest of patient care services and improved work
environment.
• To raise funds in a most economical and suitable manner is a
crucial role of nurse in improving the cost effectiveness of
patient or client care.

31. ANY DOUBTS???

32. Conclusion
• Hospital expenditure covers all services provided by
hospitals to patients. The factors which affects hospital
expenditure are any economic events, supply issues,
labor shortages, inflation, etc.
• The demand for quality health care has increased, along
with the cost of providing high technology treatment.
The general pattern of inflation that is witnessed today
means that the more traditional forms of nursing care
should also be increased.
• So, it is necessary that nurses should have basic
knowledge about budget and budgetary process, so that
they can actively participate in reducing costs, prevent
'wastage of material and expenditure and duplication in
management of the patient care services.

33. References
1. https://www.who.int/health_financing/documents/cov-
report_e_11-deter-he/en/
2. https://www.aihw.gov.au/reports/australias-health/health-
expenditure
3. https://www.aha.org/guidesreports/2020-07-20-effect-covid-19-
hospital-financial-health
4. https://www.aha.org/news/headline/2021-10-26-moodys-labor-
shortages-continue-erode-hospitals-financial-performance
5. https://www.researchgate.net/publication/345667727_EFFECT_OF_
NURSES_%27USE_OF_TECHNOLOGY_ON_HOSPITAL_COSTS
6. Vati J. Principles and practice of Nursing Management and
Administration. 2nd ed. 2020; 560-62.
7. https://www.slideshare.net/vijipn/fiscal-planning-in-nursing-
management

34. Thank you…