Discuss the fulltime equivalent level as a key component of

Discuss the full-time equivalent level as a key component of the operating budget for any healthcare organization. Why is it so important?

Solution

For healthcare organizations, operating budget helps in resource management by defining the total expenditure basis. It helps in selcting the optimal mix of resources.

Full time equivalent or FTE is a metric or a calculation that takes into account the length of time an employee works each week. An employee is deemed to be full time if the scheduled hours of work is the same as the assigned hours. If it is not the same, the employee is considered to be a part-time employee. In other words, FTE are the moving average of the number of people on the payroll for a particular period.

The importance of FTE as a key component of the operating budget is that it helps in allocating resources towards salaries. It helps in efficiently creating provisions for personnel costs in the operating budget. FTE helps in calculating the productive time and helps in allocation of resources towards contract labor, towards orientation and education and towards benefits for all the employees.