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FINANCIAL EXERCISE 1: COST MANAGEMENT
Financial Exercise 1: Cost Management
Jessie Heller
Liberty University
April 11 , 2021
th
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Financial Exercise 1: Cost Management
1. Basic cost concepts provide essential knowledge needed for nursing leaders. Discuss the cost
per service unit as it pertains to your area of responsibility. How does this impact the entire
organization? What is the impact of direct and indirect costs? Fixed and variable costs? Full
cost versus average costs? What is the relevant range?
Due to being a military organization, cost calculations are not based on a per service unit,
rather they are calculated based on the number of beneficiaries served or as in my case,
surgeries performed per year. Last year the average dollar amount allotted per surgery was
$1154. This includes all surgical procedures, from minor cataract surgery to orthopedics. The
number of surgeries was significantly lower last year than previous years due to COVID-19
limiting elective surgery cases. The financial impact is significant, and the Department of
Defense has had to adjust their costs for all military health facilities to minimize impact to
beneficiaries.
Direct costs are the cost of resources required for direct patient care, while indirect costs
are based on anything required for reasons other than direct patient care (Jones, 2019 p. 147).
An example of direct cost in my unit would be all costs for anesthetic medications required
during a surgical case. An example of indirect cost would be our housekeeping staff or the
salary of our infection control officer, who ensures the entire hospital is using proper protocol
and will pass required inspection.
