1. Running head: A PERSONNEL BUDGET FOR HOME CARE 1
A Personnel Budget for Home Care
Debra A. Vitelle
DeSales University

2. A PERSONNEL BUDGET FOR HOME CARE 2
Abstract
Up until recently nurses have had very little involvement in the budget process.
“Nursing was generally classified as a non-income producing service and nurses input into the
budgeting process was undervalued” (Marquis, & Huston, 2012). However, health care
organizations have now begun to realize the importance of nurse’s involvement in financial
planning. The reality is that salaries make up the greatest portion of expenditures in a health
care institutions budget (Fishbein, & Vehaun, 2009). There are three major types of budgets
that nursing/managers may be involved in which include operating, personnel and capital
budgets. Although managers usually don’t have full responsibility for budgeting it is important
to understand the basics. All health care providers need to realize that they are responsible for
cost containment which refers to “effective and efficient delivery of services while generating
needed revenues for continued organizational productivity” (Marquis, & Huston, 2012). This
paper will propose a personnel budget for a home care agency including the potential variances
and strategies that can be implemented to help with those variances.

3. A PERSONNEL BUDGET FOR HOME CARE 3
A Personnel Budget for Home Care
Discussion
Up until recently nurses/managers had minimal opportunities or experience in the
budget process. However, because the greatest expenditure in a health care budget is salaries
managers are becoming more involved in looking at budgeting and cost containment. This
paper will create a calendar year personnel budget for a home care agency. The rationale for
this budget is this is the type of budget the hospital uses and the home health agency is a
department of the hospital.
In preparing to create the budget the first step was assessment, which included
determining what personnel needed to be included in the budget (Marquis, & Huston, 2012).
The second step in the budget process was the diagnosis or the goal of what the proposed
budget is trying to accomplish, in this case the goal of the budget is cost containment while
providing efficient, effective services to generate the needed revenue with the current number
of available resources (Marquis, & Huston, 2012). The third step is the plan which was done
through budget forecasting. This was done by reviewing the previous twelve rolling months of
expenses compared to the current budgeted expenses for the purpose of projecting next year’s
budget. (Rolling months mean that if the budget process begins in July for example we would
look at the previous twelve months from that time). The fourth and fifth steps in the budget
process are implementation and evaluation this is completed by the Director of the
department, as she is notified of the projected budget and deviations from that budget on a
monthly basis; she is then required to notify administration as to what could be affecting the
budget deviations.

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The budget proposed for home health is based on the number of employees including a
staffing mix of fulltime and part time registered nurses, therapists including physical therapy,
occupational therapy, speech therapy, social workers, a dietician, and clerical personnel.
Additionally, the budget includes shift differential, on call hours, overtime, holiday overtime
and new hires.
Currently the home health department has the following productive staff:
Twenty FTE (fulltime) Nurses = 80hours per pay period
1. Director salary: $115,000.00
2. Two Clinical Supervisors salaries: $200,000.00
3. Two Team Leaders salaries: $175,000.00
4. Clinical Informatics Nurse salary: $90,000.00
5. Telehealth Nurse salary: 72,800.00
6. Thirteen Direct Care RN’s salaries based on $ 42.00/hour = $ 1,135,680.00
Part time and Perdiem Nurses:
1. Five Part time RN’s (.6= 48 hours per pay period) @ $42.00/hr=$ 262,080.00
2. Three per diem RN’s (.4=32 hours per pay period) @ $32.00/hr=$ 79,872.00
Therapy Staff:
1. Therapy Supervisor salary: $114,000.00
2. Seven fulltime physical therapists ( 80 hours per pay period ) @ $50.00/hour=
$728,000.00
3. Five part time physical therapists (.6 = 48 hours per pay period) @ $ 50.00/hr =
$ 312,000.00

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4. One full time occupational therapist (1.0 = 80 hours per pay period) @ $ 45.00/hr =
$93,600.00
5. One part time occupational therapist (.6= 48 hours per pay period) @ $45.00/hr=
$56,100.00
6. Two part time speech therapists (.4= 32hours per pay period) @ $ 60.00/hr= $99,840.00
7. One part time social worker (.8= 64 hours per pay period) @ $ 29.00/hr=$ 48,256.00
8. One per diem social worker (.4= 32 hours per pay period) @ $ 29.00/hr = $ 24,128.00
Shift differential for RN’s = $ 1,000.00/month = $12,000.00/year (.2 FTE’s) based on figures
from previous year.
RN on Call: $ 604.00/month = $ 7,248.00/year (.1 FTE) based on figures from previous year.
RN overtime: (.8 FTE = 64hours/month) @ $ 63.00/hr =$ 4,032.00/month = $ 48,384.00/year
RN holiday overtime: (7 holidays /year based on 5 nurses /holiday) @ $ 63.00/hr x 8hours =
$504.00 x 5 nurses =$ 2,520.00 x 7 holidays = $ 17,640.00/yr.
New Hire RN: based on previous year of 32,481.00 visits with a 2% growth would increase visits
by 650 allowing for the hiring of one part time RN (.6 = 48 hours per pay period) @ $40.00/hr =
$ 49,920.00
Four Clerical Personnel: (non productive personnel)
1. Receptionist (1 FTE 80 hours per pay period) @ $12.50/hr= $ 26,000.00/yr
2. Three team assistants ( 80 hours per pay period) @ $ 13.75/hr= $ 28,600.00
Total Personnel Budget for 2014 = $ 3,796,148.00
The home care budget is a hospital system budget and is not changed until the following
year regardless of the variances. One of the strengths of this budget is that it is part of a larger

6. A PERSONNEL BUDGET FOR HOME CARE 6
system which then other departments/programs help to offset costs or expenses when revenue
is down in the department. A major weakness of the budget is that the hospital system still
looks at the budget for home care based on visits made and not as a per episode of payment
which is how home care is paid by the Centers for Medicare.
Variances in the budget can be related to an increase or decrease in the patient census.
The census is looked at every morning to determine the need for use of per diem staff, or if
they should be called off. Additionally, other variances can be an increase in overtime
secondary to patient acuity and increased census or travel time. A Bi-monthly review of
overtime is looked at when the pay periods end with a written explanation sent to
administration. Other variances can be tied to a change in reimbursement rates from managed
care companies as well as the pay for performance regulations set forth by the Centers for
Medicare that may reduce revenue when patient outcomes are below the state/national levels.
Additionally, changes in the payer mix will affect the budget for e.g. more managed care or
Medicaid patients can also decrease revenue. With the cut in revenue being felt by many
agencies there is also the potential for encroachment from regional competitors (Nugent,
2011).
Some strategies to help combat the above variances are continued staff education since
pay for performance is tied to the oasis data set, accuracy by the staff is imperative. Increased
utilization of marketing to help increase the agencies referral base and balance the case mix.
Developing and implementing additional programs such as telehealth utilization for
management of other chronic diseases rather than only focusing on those patients with

7. A PERSONNEL BUDGET FOR HOME CARE 7
congestive heart failure. This can help off - set the reimbursement cuts and improve efficiency
by the agency (AHC media, LLC, 2009).
Conclusion
In conclusion nursing leaders must be aware of budgeting in order to help health care
organizations remain viable in this critical time of health care reform. Many variables can affect
a budget but understanding the basics of the budgetary process agencies can remain successful
by holding all practitioners accountable for cost effective quality care. When agencies remain
transparent and share or elicit ideas from staff during the budgetary process they may find that
the staff “has deep insights into avoidable costs, areas of excessive resource consumption and
clinical process improvement initiatives that will help maintain margins in and increasingly
lower reimbursement environment” (Nugent, 2011).

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References
AHC media, LLC., (2009). Home health agencies prepare for cuts and changes with health care
reform: Agency representatives make sure legislators have all the facts. Hospital Home
Health, 26(10), 109-11.
Fishbein, J., & Vehaun, D. (2009). Managing the personnel budgeting process. Government
Finance Review, 67-71.
Marquis, B.L., & Huston, C.J. (2012) Leadership and management tools for the new nurse a case
study approach. Philadelphia, PA: Lippincott Williams & Wilkins.
Nugent, M.E. (2011) Budget planning under payment reform. Healthcare Financial
Management, 65(7), 38-42.