• Budget — a plan expressed in money for a defined period (usually one fiscal year). It turns goals into resource decisions and becomes a control tool: actual spending is compared with the plan.
• Budgeting — preparing, approving, implementing, and monitoring the budget. It links planning (what we will do) with controlling (did we do it within resources?).
• Cost center — a unit (e.g., a ward) whose costs are tracked; the nurse manager is usually responsible for the unit's cost center.
• Fixed costs — do not change with client volume (e.g., building depreciation, basic service charges, salaries of permanent staff in the short term).
• Variable costs — change with volume (e.g., syringes, gauze, medications, linen).
• Step-fixed (semi-fixed) costs — fixed within a range of volume, then jump (e.g., adding a nurse when the census passes a threshold).
• Direct costs — directly related to client care (nursing salaries, supplies); indirect costs — overhead (administration, utilities, housekeeping).
• Variance — the difference between budgeted and actual amounts; managers explain significant variances (e.g., higher census, price increases, sick leave coverage).
• Health financing — how money is raised, pooled, and used to pay for health services. In the Philippines, the central mechanisms are the National Health Insurance Program (NHIP) run by PhilHealth and the Universal Health Care Act (RA 11223).

Types of budgets

Budgeting approaches

Budget process

1. Review goals and last year's performance; forecast workload (census, client days, procedures)
2. Prepare personnel, operating, and capital requests with justification
3. Submit, negotiate, and obtain approval
4. Implement and monitor monthly; analyze variances
5. Evaluate and use results for the next cycle

Provider payment mechanisms

Philippine health financing

National Health Insurance Act of 1995 (RA 7875) — created the NHIP and the Philippine Health Insurance Corporation (PhilHealth), a government corporation attached to the DOH.

Universal Health Care Act (RA 11223, approved February 20, 2019)

• Every Filipino citizen is automatically included in the NHIP (Sec. 5).
• Membership has two categories (Sec. 8):
  • Direct contributors — those who pay premiums, e.g., employees (with employers), self-earning individuals and professionals, and migrant workers
  • Indirect contributors — all others, whose premiums are subsidized by the government (e.g., indigents identified by the DSWD, senior citizens, and others covered by the law)
• Population-based services (health promotion, disease surveillance, vector control) are financed by the national and local governments; individual-based services (consultations, medicines, laboratory, hospital care) are financed mainly through PhilHealth as the strategic purchaser.
• Premium for direct contributors: the law's schedule reached 5% of monthly income in 2024 and stays at 5%, with an income floor of ₱10,000 and a ceiling of ₱100,000.
• No co-payment (no balance billing) for services in basic or ward accommodation (Sec. 9) — the policy goal of the law; Zero Balance Billing (below) is how it is currently carried out in DOH-retained hospitals.
• Province-wide and city-wide health systems integrate local health services and pool resources in a Special Health Fund (Secs. 19–20).
• A Health Technology Assessment process guides which medicines, devices, and procedures are funded (Sec. 34).
• Primary care is the foundation: every Filipino is to be registered with a primary care provider that acts as the first contact and navigator.

PhilHealth benefit mechanisms (as of 2025–2026; check current PhilHealth circulars)

• Inpatient care — paid through All Case Rates: a fixed amount per medical condition or procedure. PhilHealth is preparing to shift to Diagnosis-Related Groups (DRG), with pilots and "shadow billing" in 2026, because case rates have not kept up with actual costs.
• Primary care — the former Konsulta package was rebranded in 2025 as PhilHealth YAKAP (Yaman ng Kalusugan Program): free consultations at an accredited YAKAP clinic, selected laboratory tests, and a medicines component (GAMOT) of up to ₱20,000 worth of medicines per year from accredited pharmacies. Members register with a chosen YAKAP clinic.
• Zero Balance Billing — a policy (issued through PhilHealth and DOH circulars under the UHC framework, not a separate law) under which members admitted to basic or ward accommodation in DOH-retained hospitals pay nothing out of pocket for covered services. Other facilities and private rooms follow current PhilHealth rules, which may involve out-of-pocket payment.

• Supply planning: forecast use of syringes, gauze, and gloves from past consumption and expected census; this is part of the operating budget.
• Equipment: the capital threshold applies to the cost of each item, not the total. A ventilator or cardiac monitor above the threshold goes into the capital budget; low-cost items such as glucose meters stay in the operating budget even when several are bought.
• Staffing: calculate needed positions from workload (client days, acuity) — the personnel budget.
• Cost awareness: reduce waste (open supplies only when needed, return unused items, prevent hospital-acquired complications that PhilHealth case rates may not fully cover).
• Accurate documentation and coding: complete charting and correct diagnoses and procedures support PhilHealth claims; missing documentation can lead to denied claims.
• Helping clients: check PhilHealth eligibility on admission, explain ward accommodation and Zero Balance Billing where applicable, refer to social services, and encourage registration with a YAKAP primary care provider after discharge.

Nurse manager

• Prepare and justify the unit budget; monitor monthly reports; explain variances
• Plan staffing within the personnel budget while maintaining safe care
• Participate in capital equipment decisions using cost-benefit thinking (purchase, maintenance, training costs vs. expected benefits)

Staff nurse

• Use resources responsibly; report shortages early
• Document thoroughly for PhilHealth claims and quality monitoring
• Educate clients about PhilHealth membership, benefits, and primary care registration

Community and public health nurse

• Support local health systems integration, primary care registration, and population-based programs financed by government

• Honesty in claims: submitting false diagnoses, procedures, or confinement data to PhilHealth is fraud; nurses must document only what was done.
• No deposit before emergency care — demanding advance payment for basic emergency care is unlawful under the anti-hospital deposit law (BP 702 as amended by RA 8344 and RA 10932).
• Equity (justice): financial decisions should not deny needed care to poor clients; the UHC Act aims to protect all Filipinos from financial hardship.
• Stewardship: wasting public funds or supplies is an ethical and, in government facilities, an administrative issue.
• Data privacy: claims contain sensitive personal information protected by RA 10173.

Case 1. A manager bases next year's supply budget on this year's spending plus 5%.

Approach: incremental budgeting. A zero-based approach would require justifying every item from zero.

Case 2. A unit plans to purchase 10 new glucose meters.

Budget: usually operating — glucose meters are low-cost items, and the capital threshold applies to the cost of each item, not the total of the order. A ventilator or monitor whose unit cost is above the threshold would be capital.

Case 3. A health official explains that a payer gives a fixed amount per registered person per year to a primary care clinic.

Payment method: capitation. Its advantage is emphasis on prevention; its risk is under-service.

Case 4. A client admitted to a ward bed in a DOH-retained hospital asks whether she must pay a balance.

Response: under Zero Balance Billing, PhilHealth members in basic or ward accommodation in DOH-retained hospitals should have no out-of-pocket payment for covered services; refer her to the PhilHealth desk to confirm eligibility.

• Adding up many low-cost items to call them capital — the capital threshold applies per item; a single expensive item (ventilator, monitor) is capital.
• Calling salaries a variable cost in the short term — permanent staff salaries behave as fixed costs; overtime and per-client supplies are variable.
• Confusing case-based payment (fixed per case) with capitation (fixed per person enrolled).
• Believing fee-for-service lowers costs — it tends to increase service volume.
• Thinking PhilHealth membership requires paying premiums first — under the UHC Act, every Filipino is automatically included; indirect contributors are subsidized.
• Treating Zero Balance Billing as covering private rooms — as currently implemented it applies to basic or ward accommodation in DOH-retained hospitals.
• Calling the current primary care package "Konsulta" only — it is now YAKAP.

• Budget = plan in money; links planning and controlling
• Operating (supplies, daily costs, low-cost equipment), personnel (largest), capital (per-item cost above threshold, life over 1 year), cash
• Incremental = last year ± %; zero-based = justify every item each year; program = by program objectives
• Fixed, step-fixed, and variable costs; variance analysis monthly
• Payment: fee-for-service (overuse), case rates/DRG (per case), capitation (per person), global budget (total cap)
• RA 7875 (1995): created PhilHealth and the NHIP
• RA 11223 UHC Act (2019): automatic inclusion of all Filipinos; direct vs indirect contributors; population-based vs individual-based services; primary care provider registration; province/city-wide health systems with a Special Health Fund; HTA
• Premium for direct contributors: 5%, income floor ₱10,000, ceiling ₱100,000 (from 2024 onward)
• Inpatient: All Case Rates now; moving toward DRG
• Primary care (2025 program): YAKAP (formerly Konsulta), with a medicines component (GAMOT)
• Zero Balance Billing: ward accommodation in DOH-retained hospitals