PLANNING AND CONTROLLING
Samantha McCurry Johnson
School of Nursing, Liberty University
Financial Exercise: Planning and Controlling Assignment
Author Note
Samantha M. Johnson
I have no known conflict of interest to disclose.
Correspondence concerning this article should be addressed to Samantha M. Johnson.
Email: smjohnson45@liberty.edu
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PLANNING AND CONTROLLING2
Financial Exercise: Planning and Controlling Assignment
1.How does pay-for-performance (P4P) or value-based purchasing (VBP) affect staffing?
2.As the nurse manager of the new 15-bed observation unit you are responsible for reporting to
your nursing director and the finance department any variances identified within your
operating budget. Listed below is your monthly operating report. Please review and discuss the
specific variances and how you will determine the causes of variances.
Actual Budget Variance
Volume/Census 360 420
Supplies $8,550 $7,800
Nursing Labor$58,450$52,575
3.As the nurse manager, you will now need to determine the staff mix based on budgeted full-
time equivalents (FTEs). Consider the formula below:
Actual Price per FTE x Actual Total Number of FTEs = Budgeted Cost
Using the figure in the table above for nursing labor, calculate the Actual Cost and how you
will divide the nursing labor expense based on skill mix. Consider safe staffing requirements,
quality of care and operational needs to meet the demands of the new unit. Provide a detailed
rationale of why and how you arrived at your decision.
4.The productivity standards for your new observation unit are set. You must meet the minimum
target of 95% with a maximum target of 105%. Keep in mind that volume drives productivity
in a positive direction. Using the formulas provided in your assigned textbook readings,
determine the number of patients you need to admit to meet budgeted volumes. Consider the
type of unit you are managing. An observation unit has a minimal stay of six (6) hours and a
maximum stay of forty-eight (48) hours. Most patients are admitted into an appropriate next
level of care (inpatient admission) or discharged home within 24 hours of admission into an
observation unit. This demonstrates a unit with rapid turnover. Also include in your discussion
how nursing labor/staffing will be managed when census/volume drops.
