Evaluate variance analyses as they apply to nursing budgets within healthcare organizations.
Guidelines With Scoring Rubric
Purpose
The purposes of this assignment are to (a) identify and articulate key concepts of budget-development strategies for your cardiac unit at Saint Louis Medical Center (SLMC), which includes evaluating variance analyses as they apply to nursing budgets within healthcare organizations (CO 2); (b) formulate a revenue-and-expense budget for a nursing unit within a healthcare organization (CO 1); and (c) communicate the information in a clear, succinct, and scholarly manner.
Course Outcomes
Through this assignment, the student will demonstrate the ability to do the following:
(CO 1) Formulate a revenue and expense budget for a nursing unit within a healthcare organization. (PO 2 and PO 8)
(CO 2) Evaluate variance analyses as they apply to nursing budgets within healthcare organizations. (PO 4)
Due Date: Sunday 11:59 p.m. MT at the end of Week 5
(Note: This assignment will be submitted to Turnitin (TII) automatically through the Chamberlain Dropbox.
Total Points Possible: 200
REQUIREMENTS:
1. This paper will be graded on quality of information, use of citations, use of standard English grammar, sentence structure, and organization, based on the required components.
2. Create this assignment using Microsoft Word, which is the required format for all Chamberlain documents. You can tell that the document is saved as an MS Word document because it will end in .docx.
3. Submit the paper to the appropriate CCN Dropbox by 11:59 p.m. MT on Sunday of the week due. Any questions about this paper may be discussed in the weekly Q & A Discussion topic.
4. The length of the paper is to be no greater than three pages, excluding title page and reference page. Extra pages will not be read by the instructor and will not count toward your grade.
5. APA format (6th edition) is required in this assignment, including a title page and a reference page. Use APA level 1 headings for the organizational structure of this assignment. Remember that the introduction does not carry a heading that labels it as a level heading in APA format. The first part of your paper is assumed to be the introduction. See the APA manual for details. See the resource in Doc Sharing called Guidelines for Writing Professional Papers. Use the suggested format and headings to organize your assignment:
a. Include an introduction (do not label it as a heading in APA format)
b. Identify steps to develop a budget
c. Analysis of sample budget development
d. Strategies to improve budget development
e. Supporting evidence
f. Conclusion
PREPARING THE PAPER
As the nurse executive of a healthcare organization, you were provided a sample budget for the cardiac unit at SLMC. You must analyze the proposed budget and make recommendations to improve the development of the budget. Evidence will be used to support your strategies.
Note: Use the resources in Doc Sharing related to SLMC to assist in completion of this assignment; Week 5 Budget Development Background Information and SLMC information as needed.
1. Clearly introduce your budget-development assignment in the introduction paragraph, including a sentence that states the purpose of your paper.
2. Clearly articulate the steps you would take, as the nurse executive, to develop a budget for your cardiac unit at SLMC.
3. Clearly analyze the proposed sample budget developed for the cardiac unit at SLMC.
4. Clearly articulate your strategies to improve the budget development for the cardiac unit at SLMC.
5. Include of a minimum of three sources of scholarly, empirical evidence that support your budget strategies.
6. Provide conclusion statements for your overall assignment content.
7. The paper will be a length of three pages maximum, excluding title and reference page(s).
Note: If you go over the paper length, the information will not be graded by the instructor.
8. Title and reference page(s) must be in APA format (6th edition).
9. Use 12-point Times New Roman font and one-inch margins on all sides of the paper.
Benefits of Budgeting
As we begin this week’s lesson, it is important to discuss how pro formas and spreadsheets can be beneficial to the nurse leader in relation to the financial management of a healthcare organization. Last week’s content provided an overview of forecasting and how this can also be beneficial in the financial management of a healthcare organization.
Budgeting Process
The budget is a formalized plan prepared by management that reflects the anticipated expectations for a certain area. Typically, this process can take several months to complete, and a budget calendar is usually provided by the finance department to ensure that needed information is submitted by the leader within the needed timeframe to allow senior leadership to approve and release the final budget within the set timeframe. A timeline builds in time the leader may need to provide additional information to justify a certain budget-item request to senior leadership. A sample budget timeline can be viewed in your textbook reading this week. The rationale for a new budget item or an increase in a budget line item may be clear to us, as the leaders, but may not be clear to senior leadership.
When developing a budget, aspects of the overall budget must be considered and reviewed carefully to ensure quality of patient care is not compromised. Reimbursements for organizations are becoming more closely tied to outcomes to providing high-quality care that is at the forefront of healthcare leaders (Finkler, Jones, & Kovner, 2013). Some leaders and organizations may also adopt a specific performance budget to target a specific goal or multiple goals for an area or organization. For example, an organization may wish to increase its patient-satisfaction scores throughout the organization. Leaders may be directed to allot more specific resources in this area for a specific position, incentives, or other items they feel may enhance this specific outcome measure. An example of this type of a performance budget is highlighted in your textbook reading this week.
Some quantified areas of a budget may include the number of patient days or other expected specific service-area measures. The leader considers the goals, mission, vision, philosophy, policies, and organization-wide assumptions of the healthcare organization when preparing the annual budget.Generally, the organization will provide a set of specific, measurable objectives the budget should accomplish. This information should be communicated to leaders before the budget process is initiated. Often, the final budget is a compromise between the leader and senior leadership.
Preparing an annual budget requires the leader to reflect critically on all elements of the budget to determine if any changes are required for the next budget. For example, with the new goal of becoming a Magnet-designated facility, the budget for continuing education, clinical ladders, and time off to attend shared governance meetings must be considered in the future budget.
When the operating budget is developed, some of this financial information is reflected in the pro forma for the specific department or area. When the leader reviews monthly financial information, it provides an opportunity to readjust specific areas as needed to meet budget or exceed the budget, or use fewer dollars than anticipated to ensure financial targets are met by the end of the year. Reviewing the financial information after the budget is developed and approved is part of the budget-control process.
Pro formas
As we have discussed previously, the budgeting process is very complex, and there are many steps and tools a nurse leader can utilize to help ensure the most accurate budget can be achieved, whether it be keeping on track with your current budget or projecting for the next fiscal year. Pro forma financial statements are a summary of a financial organization’s position at a given time (Finkler, Jones, & Kovner, 2013). Most organizations utilize a financial-summary statement in some format, which typically includes their financial position at the end of the fiscal year, revenues and expenses, and cash receipts and payments.
One of the most common types of financial statements is the balance sheet. The balance sheet may also be termed the statement of financial position. The pro forma balance sheet indicates, for each future year, what the end-of-the-year financial-projections results will reflect. Generally, any projections longer than 3 years would not be an accurate reflection due to the changes that occur within healthcare.
Summary
This week, we discussed pro forma concepts and how they can assist the nurse leader in his or her role. Next week, we will discuss various aspects of financial risk the nurse manager may encounter within a healthcare organization.
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Category Points % Description
Introduction 30 15% Introduction clearly introduces your budget- development assignment and purpose of assignment.
Steps to budget development 25 12.5% Steps to develop budget are clearly articulated.
Analysis of sample budget 30 15% Analysis of the proposed sample budget is clearly articulated.
Strategies to improve budget development 30 15% Strategies to improve the budget development are clearly articulated.
Evidence to support budget strategies 30 15% Minimum of three scholarly, empirical evidence sources supporting your budget strategies.
Conclusion 30 15% Concluding statements summarizing content are present.
Text, title page, and references are consistent with APA format 10 5% Text, title page, and references are consistent with APA format.
Ideas and information from other sources are cited correctly 10 5% Ideas and information from other sources are cited correctly.
Rules of grammar, word usage, and punctuation are followed 5 2.5% Rules of grammar, word usage, and punctuation are followed.
Total 200 100
A quality assignment will meet or exceed all of the above requirements.
NR533 Week 5 Budget Development Assignment: Background Information
Proposed Salary Budget for Cardiac Unit at SLMC
To develop a budget, you would take the following steps:
1. Establish Hours Per Patient Day (HPPD) on the cardiac unit
a. Calculate the total care hours required for the year:
# Of Patient Days X Average Care Hours per 24 Hour Period = Total Care Hours
10,000 8.0 = 80,000
Total care hours required for the year
b. Calculate the hours of care per patient day (HPPD):
Total Care Hours Required for the Year / Number of Patient Days
80,000 / 10,000 = 8.0 care hours
(Note: Midpoint for care hours in a med-surg unit = 7.4; midpoint for patient care hours in an ICU = 14-16.)
2. Determine the Cardiac Unit’s Expected Census
a. Determine daily census and occupancy rate of unit:
Patient Days / 365 days per year
10,000 / 365 = 27.4 patients per day
Total beds in cardiac unit = 30
Occupancy = 27.4 patients per day / 30 beds X 100 = 91.3%
3. Apply HPPD to Census and Determine Full-Time Equivalents (FTEs)
a. Determine FTE requirements for number of expected patient care hours:
Total Care Hours / 1,768 productive hours per FTE
(1,768 = 85% of 2,080;
40 hours per week X 52 weeks per year = 2,080;
Less vacation, sick, education time)
80,000 / 1,768 = 45.25 FTEs
The other way to calculate FTE would consist of:
Average Daily Census X HPPD X 365 day/year
Number of Productive Hours per Employee
27.4 X 8.0 X 365 = 45.25 FTEs
1,768
4. Determine Your Needed Positions by Type and Shift
a. Calculate how many staff members are required per 24-hour period:
Divide total care hours by 365 days per year
80,000 / 365 = 219 hours of care per day
(Alternative approach: 27.4 patients per day X 8.0 HPPD = 219)
Assuming employees work 12-hour shifts:
219 / 12 = 18.25 shifts per 24-hour period .
b. Assign staff by type:
80% RN staff; 20% aides
.80 X 18.25 = 14.6 RN shifts
.20 X 18.25 = 3.7 aide shifts
c. Assign staff by shift:
Day Shift Night Shift Total
50% 50%
RNs 7.37.314.6
Aides 1.851.853.7.
18.3
Modify to determine the actual number of staff members on duty each shift—i.e., 7 RNs on days; 7 RNs on nights; 2 aides on days; and 2 aides on nights.
7 7 14
2 2 4
18
5. Incorporate All Fixed Cardiac Unit Staff Members
a. Add in fixed staff:
Nurse manager and two secretaries (one per shift)
Day Shift Night Shift Total
Manager 1 1
Secretary 1 1 2
RNs 7 7 14
Aides 2 2 4
Total 11 10 21
6. Convert Staff Positions to FTE Positions
a. Calculate FTEs by type and shift:
Divide total FTEs required by the 18.25 daily staff shifts
45.25 / 18.25 = 2.5
Each shift calls for employing 2.5 FTEs. An adequate number of FTEs are needed to provide coverage for the other 3–4 days out of the week, vacation, sick time, and education time.
Multiply 2.47 by the staff type needed per shift.
RNs days = 2.5 X 7 = 17.5
RNs nights = 2.5 X 7 = 17.5 (35 RNs)
Aides days = 2.5 X 2 = 5.0
Aides nights = 2.5 X 2 = 5.0 (10.0 aides)
Secretary days = 2.5 X 1 = 2.5
Secretary nights = 2.5 X 1 = 2.5 (5.0 secretaries)
Nurse Manager = = 1.0 (1.0 manager)
51 Total FTEs
(Note: When manager and secretaries were not included, the FTE equaled approximately 45 FTEs.)
7. Design a Template for Full-Time and Part-Time Positions on the Cardiac Unit
Note: The staffing office or finance department may already have templates or a previous copy of a budget you may use to assist with this process.
8. Calculate Labor Costs
a. Prepare Personnel Cost Budget:
On the basis of hours by type of employee, a cost budget can be prepared. You can use a spreadsheet to prepare the labor-cost budget. Incorporate hourly rate of employees (based on years of experience, full-time versus part-time, per diem), shift and weekend differentials, overtime hours accrued by employee (due to heavy workload shifts), and fringe benefits.
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