Certified Nurse Manager and Leader (CNML) Practice Test

What is the primary purpose of a budget in a healthcare facility?

1. To manage and track overall expenses

2. To eliminate all unnecessary costs

3. To ensure every service is profitable

4. To predict the number of patients for the upcoming year

The correct answer is: To manage and track overall expenses

The primary purpose of a budget in a healthcare facility is to manage and track overall expenses. A budget serves as a financial plan that outlines expected revenues and expenditures over a specific period. This enables healthcare managers to allocate resources effectively, ensuring that funds are directed appropriately to various departments and programs. By monitoring and controlling expenses through the budget, healthcare facilities can identify variances between projected and actual spending, which is essential for maintaining financial stability and efficiency. While eliminating unnecessary costs, ensuring profitability, and predicting patient numbers are important considerations for the financial health of a facility, they do not encompass the holistic function of a budget. A well-constructed budget can assist in these areas, but its primary role is to provide a framework for managing resources effectively and supporting the ongoing financial viability of the organization.