Nursing & Midwifery Workload and Workforce Planning

1. Nursing & Midwifery Workload and Workforce Planning Nursing and Midwifery Budgets/Financial Management

2. Budget Management Overview • budget allocation based on a similar process throughout Scotland but open to variation • agreed within the overall management process • process is generally the same: • Board to operating division level • operating division level to services • two principal budget setting methodologies applied in practice: • Incremental budgets • Zero-based budgets (ZBB)

3. Incremental Budgets • baseline from the previous year’s budget is brought forward and is adjusted for a variety of factors, including: • anticipated salary inflation, including pay awards and incremental drift, e.g. agreed changes to the establishment, measured in WTEs • non-recurring initiatives, either existing ones ceasing or new ones commencing • full year effect of recurring items introduced part way through the previous year • agreed new service pressures identified through the healthcare planning and prioritisation process • any agreed savings

4. Zero-based Budgets • sometimes set, particularly where higher unit cost and lower, more easily estimated staffing numbers are involved • process starts from scratch, building up the budget on an individual post basis • culminates in a more realistic cost profile, based on up–to-date knowledge and information • not recommended where: • large numbers of staff involved • staff turnover rates throughout the year are high

5. Components of a Budget • depends on the level and extent of devolved responsibility delegated to the budget manager • in practice, the key components of a ward budget will include: • permanent nurse staffing WTE and costs • internal bank WTE and costs • agency WTE and costs

6. Components of a Budget • will hold statistical and financial information for staff on an individual administrative grade basis, including: • clerical support staff WTE and costs • drugs costs, possibly by grouping, e.g. cancer, or by individual drug, where the cost is likely to be significant and measurable • medical supplies, either by grouping, e.g. disposables, or by individual product, e.g. needles

7. Interpreting a Budget • standard approach is to report against each cost heading as follows: • annual budget – a guide to the total estimated cost for the year • year-to-date budget; how much of the total should have been spent so far • year-to-date actual; how much has been spent to date • year-to-date variance; the difference between the budget and the actual. A ’positive variance’ would generally mean that spend is lower than budget, while an ‘adverse variance’ would signify that more has been spent to date than has been allowed for in the budget

8. Reviewing Variances • a key interpretation method is ‘variance analysis’ where budget variances are reviewed to determine whether they are significant, temporary or perhaps the start of a trend of some sort. Some questions to be asked in reviewing variances include: • has the budget been ‘phased’ correctly? The variance may simply reflect a timing difference that will disappear over time • are the actual costs recorded accurate or is some information missing or have costs been allocated to the incorrect cost centre? This needs to be investigated by finance colleagues

9. Reviewing Variances (2) • is a positive variance really a ‘good thing’ or does it reflect the fact that staff recruitment is proving difficult and staff on the ground are under undue pressure of work as a result? • is an adverse variance the start of a trend that requires remedial action to fix or is it due to a one-off, unexpected charge that will not repeat in the year?

10. Forecasting Financial Performance • forecasts will change from month to month due to many factors • staff turnover • unexpected activity • new drugs • an ‘expensive to treat’ patient suddenly and unexpectedly referred • unavoidable employment of agency staff • forecasts should become more reliable as the year progresses • forecast may indicate an overspend, underspend or ‘break even’ situation where actual spend for the year is estimated to closely match budget