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Preparing and Managing a Capital Budget
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Preparing and Managing a Capital Budget
Managing a capital budget is one of the most important tasks for a nursing manager
because capital budgets for medical units are some of the most expensive in the industry due to
the complexity of delivering health care. With adequate design and planning, developing and
implementing a nursing facility's capital budget will be an effective use of time and energy. Over
the past three years, the 50-bed step-down unit in the hospital has experienced high turnover and
staff dissatisfaction. This year, the nursing lounge underwent a redesign to help alleviate these
issues.
Capital Acquisition
Any project or investment made by an organization or company requires capital support.
Therefore, acquiring capital is essential to ensuring financial resources are available to support
the project or investment. Capital acquisition describes raising capital to fund a project or
investment (Hansen et al., 2022). This process requires analyzing financing sources and types of
assets. Making decisions about capital acquisition is a crucial and challenging issue for
organizations. All small and medium-sized enterprises are facing more difficult decisions about
capital acquisition.
The nursing lounge provides a place to relax during breaks away from the public
examination room. The nursing lounge serves as an essential work environment, providing
established staff communities and spaces for medical teams to develop other aspects of their
work that are significantly important outside the examination room. Nursing lounges are spaces
where staff can collaborate, form social relationships, and recharge (Maassen et al., 2021). The
construction department will renovate the nurse lounge to modernize it. The construction
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department will incorporate new furniture with comfortable seating, update the flooring to a
more appealing type, and redesign the locker cabinet in a modern fashion for everyone working
there. The new and improved nursing lounge will feature more comfortable seating, spacious
furniture, improved flooring, and sophisticated locker cabinets for every team member.
Justification For the Capital Acquisition.
Overall, the lounge renovation is going to be beneficial to the nursing staff. A more
modern, comfortable, and people-oriented lounge will give the nursing staff, after a hectic day or
schedule, a place to relax and find their own. This facility will motivate conversation among staff
and also provide an opportunity to relax before commencing another shift. The lounge will also
facilitate conversation among staff relating to professional issues and hopefully give insight into
issues arising in the field of work (Smith et al., 2023). The productivity and performance of the
nursing staff will increase as they will perceive that the organization values their contributions
and efforts. Relaxation and the opportunity to exchange professional knowledge will motivate
the nursing staff to deliver the highest quality patient care, improving service delivery and patient
satisfaction.
Satisfied and contented nursing staff will fulfil the hospital's mission to "enhance the
lives of others with a humanly caring spirit" and enhance patient care outcomes. Daily stretching,
afternoon naps, and relaxation exercises like meditation will increase hospital staff productivity.
Delivering the best patient service experience is critical to the hospital's survival, and staff
lounge renovations will create the perfect environment for ebony and ivory nurses to seek
asylum and share news and gossip. Increased social interactions among nurses will eventually
improve patient care and service delivery (Maassen et al., 2021). Given the benefits to the
nursing staff and patients in general and the reduced hiring costs resulting from fewer departures
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and increased turnover, the executive leaders will be pleased to see the renovation Budget
approved. The renovation will undoubtedly benefit the hospital in the long run by reducing costs,
attracting more patients and increasing profits. Even though the renovation is not a simple task
and will initially strain the hospital's finances, it will undoubtedly lead to positive anticipation
among the executive management.
Capital Budget Preparation
Before the actual renovations begin, we will spend six to eight months preparing and
planning the renovation budget. This phase will entail budget presentations, resource evaluations,
and the establishment of an acquisition timeline. We expect the project to take one to one and a
half years from design and planning to completion. The nursing staff's demographic demands a
comfortable and recreational environment (Capano et al., 2020). We express the capital outlay of
$450,000 (total project cost) in dollars; the hospital's capital reserves will provide 70%
($315,000), while an external lender or financier must secure the remaining 30% ($135,000) at
an annual interest rate of 6.75% estimated from the current prices of the services and the costs of
different items (Ahmed, 2022).
Cost Calculation and Budget Management Plan
The project preferably requires the job order costing method. The job order costing
method will categorize the costs of the service bundles. It is possible to identify the cost of
successful procedures. Management will receive the information to guide the project in the right
direction and make managerial decisions. Job order costing can help management identify the
most beneficial and suitable construction for renovation. It also provides a methodology for
determining unit costs. The accounting department can help calculate costs and allocate and
identify expenditures (Boyd, 2022). We will allocate the overhead costs to several processes
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within the Budget. We will determine the costs of individual processes and incorporate them into
the overall Budget trend. Precise cost estimates can increase nurses' job satisfaction and reduce
the potential for medical errors.
An experienced accounting team for both Budget management and process cost
administration will be a valuable resource. Administrative personnel will also participate to make
sure the process runs smoothly. The Budget Committee will be present to provide advice on
budget preparation and administration. Keeping process costs within the budget, one of the most
important cost-control measures depends on how well you prepare the budget, which shapes your
project's future. We will allocate sufficient time to obtain a more accurate budget estimate to
effectively manage budget preparation, thereby reducing projected cost variances (Hansen et al.,
2022). Furthermore, to keep track of your project's cost, one should monitor every little detail
associated with it. Time management is another crucial factor in keeping the project budget on
track; if one is not effectively managing time, one risks extending one project, leading to a cost
increase instead of extra profit due to the increased project cost, which is directly proportional to
the duration of the project (Hansen et al., 2022). There may be budget variances throughout the
project. It is possible that managing this variance leads to significant savings and avoids
overpricing. To facilitate variance management, we prepare a budget for unexpected changes.
Formulate contingency plans to deal with the budget situation.
The Impact of The Capital Acquisition On The Financial Well-Being Of The Hospital
The cost of renovating the hospital's nurses' staff lounge will be a significant long-term
investment. It reduces the chance of hiring new staff and losing patients due to inadequate
service, and it is also an important capital investment for the hospital. Enhancing the lounge's
appeal to nurses will encourage improved service delivery to both customers and patients,
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attracting more customers and generating more revenue for the hospital (Smith et al., 2023).
Given the strong correlation between the project's success and enhanced patient services,
increasing patients translates into increased revenue, resulting in a payback period of
approximately 3 years. The calculations clearly show that an increase in patients will lead to a
corresponding increase in revenue, even with the annual depreciation of the lounge's machinery,
furniture, and other equipment.
Ultimately, the renovation of the lounge area will reduce staff turnover and ensure a
successful capital budget, which will provide more funds to make changes in the staff working
environment and make them more productive (Maassen et al., 2021). But when staff are satisfied
and feel appreciated, they will make patients feel well cared for and access hospital objectives
and missions. An improved lounge area will proudly show the nursing staff that they are very
thankful.
Conclusion
In conclusion, our hospital's step-down facility is ideal for providing treatment to patients
safely and effectively. However, the recurring high staff turnover has presented quite an
impediment for our hospital in terms of being able to provide consistent, high-quality service to
patients. In light of this critical issue, the hospital has decided to refurbish the nurses' lounge.
This move will go a long way in helping boost staff morale and create an overall conducive
environment in the nurses' workplace. The creation of an attractive and comfortable nurses'
lounge will cater to nurses' needs by providing a place for them to relax and unwind after long
hours of work. This, in turn, will increase nurses' job satisfaction, which will lead to better nurse
retention in our hospital. Eventually, it will improve conditions for the nurses, which in turn will
help the hospital fulfill its mission of providing the best possible care for patients. The plan for
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the lounge refurbishment clearly outlines how we can make these improvements so that the
hospital operates at the highest possible level while still serving the community.
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References
Hansen, D. R., Mowen, M. M., & Heitger, D. L. (2022). Cost management 5 th edition: Cengage
Learning
Boyd, K. W. (2022). Cost accounting for dummies. John Wiley & Sons.
Ahmed, R. (2022).FDevelopment of an Integrated Data-Driven Budget Allocation Approach for
Maintenance Management in Healthcare FacilitiesF(Doctoral dissertation, Concordia
University).
Capano, C., Hariharan, J., Moud, H. I., & Asutosh, A. (2020). Construction Cost Predication
Model Using Macro Economic Indicators.FEPiC Series in Built Environment,F1, 382-389.
Maassen, S. M., Van Oostveen, C., Vermeulen, H., & Weggelaar, A. M. (2021). Defining a
positive work environment for hospital healthcare professionals: A Delphi study.FPloS
one,F16(2), e0247530.
Smith, S. A., Kokoczka, L., & Cottrell, C. (2023). Utility of a “Lavender Lounge” to Reduce
Stress Among Critical Care Registered Nurses: A Cross-Sectional Study.FAmerican
Journal of Critical Care,F32(3), 198-204.
