The variance you can compute before your board asks about it.
The variance you can compute before your board asks about it.
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August 18, 2026
Your nursing budget is probably light. Here is how to find out by how much.
Six steps, your own roster, about fifteen minutes.
Welcome back to Bridging the Deficit, your go-to resource for financial planning insights — the kind you can actually use, not just theory.
This week: the arithmetic behind the nursing line, step by step.
Most nursing budgets are wrong in the same direction, for the same reason, by an amount you can compute.
If you run FP&A across two or more sites in healthcare, community health, LTC, or behavioral care, here is the arithmetic. Run it on your own roster as you read. If labor is under a third of your P&L, this one won't move your number.
In this issue:
- The six steps, run on your own roster
- Where this goes wrong before step 5
- Where the grid stops holding
- What to do Monday morning
The Six Steps
1: Start where your budget starts.
Take your RN position count and blended base. Say 312 RN FTEs at $89K. That is $27.8M. Your workbook stops here. The next five steps move the number.
2: Build the fringe ladder. All four rungs.
PTO accrual, computed on hours, not on heads. That is the rung most models drop: a 0.8 FTE nurse picking up overtime accrues on hours worked, not on the 0.8 you budgeted, unless your plan caps accrual at forty. Then FICA and Medicare, fixed at 7.65% of a base that moves every time your mix does. Disability and workers' comp price by role class, so one blended rate misprices both. Bonus tiers run 7%, 10%, and 20% by group, each with its own allocation.
Mid-stack, that ladder adds about 39% on top of base. Your $27.8M becomes $38.6M.
Four rungs is not the whole ladder. Health insurance, the retirement match and life cover sit on top as fixed dollars per head, not percentages of wage, so a percentage model never catches them. Your six-step answer is a floor.
"If I have to do that for 2,400 employees, one by one, it would take me the whole year to budget for that." - A finance leader at a 2,400-employee health-insurance operator.
3: Convert to an hourly number you can compare.
$38.6M across 312 FTEs is $123.7K loaded per permanent RN. Divide by 2,080 hours: $59.48. Round to $59.50 and hold it.
4: Price the contingent hour.
A travel or agency RN bills all-in $85 to $100 an hour in 2026. Call it $93. That is a bill rate, not a wage: the traveler's pay, their stipends, the agency's payroll taxes and its margin are already inside it, and nobody itemizes that ladder for you. Your $59.50 is a cost rate with every rung on a line you control.
The gap is $33.50 an hour, or about $69.7K per FTE-year.
5: Find your actual mix.
Your CNO knows this number and your workbook usually doesn't. If scheduling won't give it up cleanly, pull it from the invoices. Contingent labor books to accounts payable against purchased services, not to payroll, which is why a payroll-driven model never sees it. Say three of your four sites ran 45% travel and agency in July against a 20% budget. That is roughly 234 of your 312 RN FTEs, and a 25-point swing is 58.5.
6: Multiply.
58.5 times $69.7K is $4.08M a year. Divide by twelve. $340K: one month
Your board packet says nursing is on plan. Your ledger says otherwise. The variance came from step 5, which your model does not track, applied to step 4, which it prices as though it were step 3.
If you read last week's close piece, this is the same $340K. There we called it a quarter's drift. Run the arithmetic and it is a month.
Where this goes wrong before step 5
Skip one of the four and your answer was already 8 to 12% light before the mix entered it. Leave out PTO accrual and the nursing line lands 8.6% under. The 20% bonus tier is worse but narrower: omit it and the group earning it is 14% under on its own, which is how an 8% gap totals past 12%. The workbook has one rate column and two kinds of nurse. It does not warn you, because it cannot.
Where the grid stops holding
Four sites, three RN role types, three wage tiers and four benefit tiers across two states is 288 rows for nursing alone, and 2,000-plus once allied health goes in.
Position, not person, is the only structure that survives it. Clinical turnover runs high enough that today's individual is not in the model six months out. Admin functions can budget by name. Clinical units cannot, so open your own model and check. If it budgets a clinical unit by named employee, it is already drifting, and the drift shows up in month nine, not month one.
Monday morning: Run steps 1 through 6 against last month's actuals. If your answer differs from budget by more than 5%, the gap is almost always in step 2 or step 5. Bring that number to the next staffing conversation and you are shaping the decision instead of explaining it in the variance meeting afterward.
Take the next step
The Multi-Location Nurse Wage-Mix Worksheet runs all six steps on your own roster, adds the fixed-dollar benefits this email left on the table, and shows you what step 2 and step 5 are hiding.
Run the six steps on your roster →
Excel workbook · 9 tabs · One email field, sent straight to your inbox.
Not in healthcare? The same six steps, without the clinical framing. → centage.com/product/workforce-planning
About Centage
Centage delivers the complete FP&A platform—budgeting, forecasting, reporting, and scenario planning—designed to free finance teams from spreadsheet chaos.
For organizations where strategic finance matters, Centage replaces manual processes with automated workflows, real-time collaboration, and seamless integrations—so finance leaders can stop maintaining spreadsheets and start driving decisions.