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N4455 Nursing Leadership and Management

Module 3 Assignment 1: Financial Management Case Study vsp21(2)

Name: Shannon Johnston Date: 3/6/21

Overview: Financial Management Case Study

One of the important duties of a nurse leader is to manage personnel and personnel budgets. In this assignment, you will assume the role of a nurse manager. You will use given data to make important decisions regarding budgets and staffing.

Some nurse managers have computer spreadsheets or software applications to help them make decisions regarding budgets and staffing. You will only need simple mathematical operations* to perform the needed calculations in this assignment because the scenario has been simplified. Furthermore, some data have been provided for you that a nurse leader might need to gather or compute in a real setting. Still, you will get a glimpse of the complexity of responsibilities nurse leaders’ shoulder regarding financial management.

 To calculate the percent of the whole a given number represents, follow these steps:

Change the percentage to a decimal number by moving the decimal twice to the left (or dividing by 100).

Multiply the new decimal number by the whole.

Example: What is 30% of 70?

30%= .30; (.30) × 70 = 21

 To find out what percentage a number represents in relation to the whole, follow these steps:

Divide the number by the whole (usually the small number by the large number).

Change the decimal answer to percent by moving the decimal twice to the right (or multiplying by 100).

Example: What percent of 45 is 10?

10 ÷ 45 = .222; so, 10 is 22% of 45.

* You will only need addition, subtraction, multiplication, and division.

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N4455 Nursing Leadership and Management

Case Study

You are the manager for 3 West, a medical/surgical unit. You have been given the following data to assist you in preparing your budget for the upcoming fiscal year.

Patient Data

Average Daily Census (ADC): 55

Budget based on 6.2 Avg. Hours per patient day (HPPD)

(6.2 HPPD excludes Nurse Manager and unit secretaries)

Staff Data

Total FTEs 40.0 Variable FTEs

1.0 Nurse Manager

2.5 Unit Secretaries

43.5 Total FTEs

Staffing Mix

RN 75%

LVN 10%

NA 15%

Average Salary Scale per Employee

Benefits are 35% of annual salaries

Nurse Manager $72,000.00 per year

Registered Nurses (RN) $32.00 per hour

Licensed Vocational Nurses (LVN) $22.00 per hour

Nurse Aides (NA) $14.50 per hour

Unit Secretary (US) $12.00 per hour

This study source was downloaded by 100000785339052 from CourseHero.com on 07-20-2022 00:38:16 GMT -05:00

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N4455 Nursing Leadership and Management

Rubric

Use this rubric to guide your work on this assignment.

Criteria Target Acceptable Unacceptable

Question 1 Both % and FTEs column totals within ± 2 of correct answers

(13-16 Points)

Either % or FTEs column totals within ± 2 of correct answers

(5-12 points)

Neither % nor FTEs column totals within ± 2 of correct answers

(0-4 points)

Question 2 All column (except Hours and Salary) totals within ± 2 of correct answers

(17-20 Points)

At least 3 column totals within ± 2 of correct answers

(5-16 points)

Less than 3 column totals within ± 2 of correct answers

(0-4 points)

Question 3

A. Table

All six values within ± 2 of correct answers

(6-8 points)

At least five values within ± 2 of correct answers

(1-7 points)

Less than five values within ± 2 of correct answers

(0-1 point)

B. Significanc e of variance in HPPD

Response is clearly stated and explains some potential details, ramifications, and/or solutions

(6-8 points)

Response states some potential details or ramifications

(2–7 points)

Response is unclear or lacks potential details or ramifications

(0-2 points)

C. Implication s for nurse leader

Response shows keen understanding of responsibilities of the nurse leader regarding staff budgets

(6-8 points)

Response shows some knowledge of responsibilities of the nurse leader

(2-7 points)

Response fails to demonstrate knowledge of responsibilities of the nurse leader

(0-1 point)

Question 4 All columns (except Hours and Salary) totals within ± 2 of correct answers

(17-20 Points)

At least 3 column totals within ± 2 of correct answers

(5-16 points)

Less than 3 column totals within ± 2 of correct answers

(0-4 points)

Question 5 All columns (except Hours and Salary) totals

At least 3 column totals within ± 2 of correct answers

Less than 3 column totals within ± 2 of correct answers

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N4455 Nursing Leadership and Management

within ± 2 of correct answers

(17-20 points)

(5-16 points) (0-4 points)

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N4455 Nursing Leadership and Management

Questions

1. How many RNs, LVNs, and NAs, by category, are on the staff of 3 West? (Round FTEs to the nearest tenth.) Compute totals for each column.

Positions Variable FTEs % by Position FTEs by Position

RN 40 0.75 30

LVN 40 0.10 4

NA 40 0.15 6

Totals 1.0 40

2. Compute the annual salary budget for 3 West.

Compute totals for appropriate columns.

Positions FTEs Salary Hours Salary

Subtotals

Number of

Benefits Total

MANAGE R

1.0 $72,000 XXXX $72,000 $25,200 97,200

RN 30 $32 2080 $1,996,800 $698,88 0

$2,695,68 0

LVN 4 $22 2080 $183,040 $64,064 $247,104

NA 6 $14.5 2080 $180,960 $63,336 $244,296

Sec 2.5 $12 2080 $62,400 $21,840 $84,240

Totals 15.5 XXXXX XXXXXX $2,495,200 $873,32 0

$3,368,52 0

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N4455 Nursing Leadership and Management

3. Your hospital unit, 3 West, is a 60-bed general medical-surgical unit. Over the past year, the ADC (Ave. Daily Census) was 55 patients.

Use the following data on 3 West during the last year to perform these calculations and answer these questions.

A. Complete this table to calculate the actual average hours of care required per patient day (HPPD) for the patients in 3 West. Round to the nearest tenth

Acuity Mix Average Hours of Care Required

Average Daily Census

(ADC)

Total Hours of Care Per Day

I 1.4 8 11.2

II 3.9 21 81.9

III 5.6 19 106.4

IV 8.8 7 61.6

Totals 55 261.1

Hours per patient day (HPPD) 4.74 rounded to 4.7

B. Remember that your established personnel budget for 3 West assumes a HPPD of 6.2. If your calculated HPPD is different, explain the significance of the variance. (If your calculated HPPD is different than 6.2, you must write more than, “We need more/less nurses.”)

What is the Significance of the variance? If you believe you need more staff, what will be your rationale for making this requires? If you have too much staff, what would your proposal be for bringing your staffing into a better balance?

The variance is -1.5, this is an efficiency variance which shows the difference between the budgeted and actual nursing care hours provided. In this case the census had been lower than anticipated. An average daily census of 55 patients as opposed to the planned 60 ADC; in this situation the unit has more staff than they need based on the negative variance of 1.5. Things such as patient acuity, productivity and nursing skill as well as management and technology can affect this variance. The patient acuity could have also been lower than anticipated which could explain a negative variance.

C. What are the implications for the Nurse Manager? As an example, based on your conclusions in Section B, what other observations would you make as you review your total budget and what would you expect to see as a result? (Ex: supply costs; overtime hours, average census of 50 on a 60-bed unit, etc.)

As the nurse manager I would expect to see a change in staffing to adjust for this change in average ADC. One solution would be to flex one RN (4 less patients) because the ADC is only 55 as opposed to the budgeted 60. I would adjust the total budget and perhaps float that RN to another unit that was short-staffed. Excessive overtime and poor time management by the staff could also lead to this negative variance so as a manager I would update the staff and make adjustments accordingly. The manager can also offer incentive programs to minimize costs and educate the staff members on the importance of time management to limit over time hours. Educating the staff on how much equipment

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N4455 Nursing Leadership and Management

and medications costs is another way in which the manger can educate the staff on the importance of maintaining resources.

4. You have set two new goals for your unit for the next year related to personnel:

 Provide stronger unit management support on evening and night shifts and in the absence of the manager.

 Correct unfavorable efficiency variances due to overtime.

To accomplish these goals, you plan to make these changes:

 Add 1.0 RN FTE position

 Eliminate 1.5 LVN positions

 Add 1.5 FTEs NA positions

 Add 1.0 Assistant HN position at $60,000/year

Calculate ONLY the cost of the proposed recommendations for 3 West. Compute totals for each column. If the change represents a reduction in the budget for that category, record the total as a negative number. If it represents an increase in the budget for that category, record the total as a positive number.

Positions FTEs Salary Hours Salary

Subtotals Benefits Total

RN 1 $32 2080 $66,560 $23,296 $89,856

LVN -1.5 $22 2080 -$68,640 -$24,024 -$92,664

NA 1.5 $14.50 2080 $45,240 $15,834 $61,074

AHN 1 60,000 XXXXX $60,000 $21,000 $81,000

Totals 2 XXXXX XXXXX $43,160 $36,106 $139,266

5. Assume your proposal was approved. Calculate the new personnel budget (You will use your budget from question 2 and account for the changes you requested in question 4). Compute totals for each column.

Positions FTEs Salary Hours Salary

Subtotals Benefits Total

Manager 1 $72,000 XXXXX $72,000 $25,200 $97,200

AHN 1 $60,000 XXXXX $60,000 $21,000 $81,000

RN 31 $32 2080 $2,063,360 $722,176 $2,785,536

LVN 2.5 $22 2080 $114,400 $40,040 $154,440

NA 7.5 $14.5 2080 $226,200 $79,170 $305,370

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N4455 Nursing Leadership and Management

Sec 2.5 $12 2080 $62,400 $21,840 $84,240

Totals 45.5 XXXXX XXXXX $2,598,360 $909,426 $3,507,786

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