Costs And Budgetary Analysis Of Medical Unit – Nursing Case Study

Positions and FTEs by Position

Discuss about the Report on Nursing Case Study in Finance?

The given report reflects about the costs and budgetary analysis of the medical unit of 33- west. The organization is suffering from the variances of costs to meet the requirements of the concerned patients. The total amount of Hours per patient day (HPPD) is taken as 4.2 hours. However, it may be seen that the actual amount of HPPD may be more than 4.2 hours. Based on the given analysis, several recommendations can be given to the nursing unit to minimize the total amount of costs and variances of their cash budget.

Positions	Variable FTEs	% by Position Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	FTEs by Position
RN	34	0.65	22.1
LVN	34	0.2	6.8
NA	34	0.15	5.1
Total		34

Table 1: Calculation of FTEs by Position

The above table reflects that the total amount of FTE’s is 34. With the help of the segmentation of the total amount of variables of FTE’s of the unit and total amount of percentage by position, the total amount of FTE’s by position has been calculated.

Positions	FTEs	Salary	Hours	Salary Subtotals	Benefits	Total
MANAGER	1	80,000	860	80,000	12000	92,000
RN	22.1	35	860	665210	99781.5	764991.5
LVN	6.8	24	860	140352	21052.8	161404.8
NA	5.1	13	860	57018	8552.7	65570.7
US	2.2	11	860	20812	3121.8	23933.8
Totals						1,107,901

Table 2: Personal budget of the unit

There are different forms of human resources that are present in the respective hospital unit. These are the manager, RN, LVN, NA, US. All the respective amount of salary, hours and subtotals has been calculated based on the number of hours estimated. The fringe benefits are estimated to be around 15 percent and is calculated based on the salary subtotals of the nursing unit.  By adding up the total amount of salary subtotals and fringe benefits, the respective total has been calculated for all the FTE’s and nursing manager of the firm.

There are the total amount of FTE’s that are present in the respective amount of units. The salary of the manager is 80000 per year. Consequently, the total amount of salary and the respective budget has been prepared for all the other FTE’s as well as the total amount of US (Noh, 2015)

The given personal budget reflects that total amount of personal budget required is 1,107,901.

It is also assumed that the Hours per patient day (HPPD) are 4.3 hours. In addition to this, a total amount of working days is assumed 200 days.

Calculation of Hours per patient day

Acuity Mix	Average Hours of Care Required	Average Daily Census	Total Hours of Care Per Day
(ADC)
I	1.5	3	4.5
II	4.3	14	60.2
III	5.7	21	119.7
IV	9	4	36
Totals		220.4
Hours per patient day (HPPD)	5.247619048

Table 3: Calculation of Hours per patient day (HPPD)

The above table reflects that that HPPD is coming 5.24. It is more than 4.3. Therefore, it will have a negative implication on the personal budget of 3-West.   In addition to this, several changes are also required in terms of personal budget analysis. Therefore, the given unit will require an additional number of nurses to take care of the patients.  Apart from this, the unit will also incur the additional amount of budget will also increase by a considerable amount. The total amount of variances is coming to be 5.2-4.3 = 0.9.  It is a significant amount of variance as it may a pivotal impact on the resources of the unit. The total amount of capacity of the unit may also have to reduce to keep it at par with the required amount of budget (Bekaert and Hodrick, 2012)

Personal Budget of the Unit

The given variances in Hours per patient day can have a major implication on the nursing manager of the respective unit.  The average amount of salary of the nursing manager will increase due to the higher amount of HPPD.  The nurse manager may also find it difficult to allocate the total number of duty hours among the 34 FTE’s.  The total amount of supply costs, Average Daily Census, and overtime costs may also increase by a considerable percentage. Apart from this, the total percentage of fringe benefits will increase by 15 percent due to the total amount of overcome costs. On the other hand, the total amount of supply costs of the resources will also increase from the previously planned budget. Average Daily Census may also decrease to control the total amount of costs of the budget.  Due to this reason, the nursing manager will have to face several problems due to a higher amount of HPPD while allocation of resources. There is no scope of overtime hours for the respective FTE’s as it will further increase the total amount of fringe benefits as well as the salaries of all the human resources (Grieve, 2013).

Positions	FTEs	Salary	Hours	Salary Subtotals	Benefits	Total	Previous	Variances
MANAGER	1	68,000	1048	68,000	10200	78,200
RN	24.1	35	1048	883988	132598	1016586.2
LVN	4.8	24	1048	120730	18109	138839.04
NA	6.6	13	1048	89918	13488	103406.16
US	2.2	11	1048	25362	3804.2	29165.84
Totals						1,366,197	1107901	258,296

Table 4: Adjusted Personal budget of the unit

Based on the requirements of the unit, the organization has set up an updated variable cost. With a proper allocation of the resources and by making HPPD 5.24 from 4.3, the newly formed budget has a total amount of 258,296.  

Therefore, the firm has failed to minimize the total amount of unfavorable variances.  Several allocations of resources were implemented by the respective firm. However, the variances are still on the higher side.  Before the allocation of resources, the total amount of variances was more than 258,296. It has minimized after the changes in hours of some of the FTE’s.

It is recommended that organization needs to minimize the total amount of costs of all the respective FTE’s.  In addition to this, the total amount of fringe benefits may be increased to cut down the total amount of costs. On the other hand, the total amount of resources is also required to be rearranged to minimize the effect of the variances. However, the total amount of FTE’s requires to be increased due to minimize the total amount of resources (Lach, 2014).

It is important to cut down the costs of the salaries of all the managers to minimize and curtail down the variances of the total amount of costs. In addition to this, it is also essential to prepare a variances cost sheet to rectify in what areas the total amount of variances is required. It will further assist the medical unit to recover from the higher amount of expenses that resulted from a higher amount of Hours per patient day of the surgical unit.

Positions	FTEs	Salary	Previous Salary	Hours	Previous hours	Salary Subtotals	Benefits	Total	Previous	Variances
MANAGER	1	40,000	80,000	1152.8	860	40,000	6000	46,000	52,000	-6,000
RN	22.1	30	35	1152.8	860	764306.4	76430.64	840737	917168	-76,431
LVN	3.8	20	24	1152.8	860	87612.8	8761.28	96374.08	105135	-8,761
NA	6.6	10	13	1152.8	860	76084.8	7608.48	83693.28	91302	-7,608
US	3.2	10	11	1152.8	860	36889.6	3688.96	40578.56	44268	-3,689
Totals	36.7	40070	80083	5764	4300	1004893.6	102489.36	1,107,383	1107901	-518

Calculation of Hours per patient day (HPPD)

Table 5: Recommended Personal budget of the unit

The above table reflects that; there are several changes are required to be made to minimize the total amount of variances. With the help of the given recommended budget, the respective unit can totally minimize the overall variances of the given personal budget. The major changes that took place are a minimization of the resources of LVN and increase of US. On the other hand, the total amount of salary of the nursing manager will be minimized by around 50 percent of the respective amount. The rate of fringe benefits can be minimized from 15 percent to 10 percent.  This will further help to minimize the total amount of variances by a considerable percentage. The total amount of hours is taken as 5.2 hours per day; therefore, the total amount of hours has increased annually by comparing with the previous budget of the nursing unit. In addition to this, the salaries of all the FTE’s have decreased to meet the requirements of the treatments of the patients effectively (Li, 2013)

Conclusion

The above report concludes the importance of maintaining the effective cash budget for every industry. The key findings of the report are that the actual amount of (HPPD) Hours per patient day is 5.28, while 4.3 is the targeted HPPD of the unit. In order to attain the concerned targets, an effective cash budget is recommended to the nursing unit. The recommended budget reflects the importance of minimization of costs in terms of their salary structure. The main target of the organization is to provide (HPPD) Hours per patient day of around 5.28 hours. In accordance to that, the personal budget of the firm has been modified.

References

Bekaert, G. and Hodrick, R. (2014). International financial management. Harlow, Essex: Pearson.

Brooks, R. (2013). Financial management. Boston: Pearson.

Dalbor, M., Hua, N. and Andrew, W. (2014). Factors that Impact Unsystematic Risk in the U.S. Restaurant Industry. The Journal of Hospitality Financial Management, 22(2), pp.89-96.

Grieve, I. (2013). Microsoft Dynamics GP 2013 financial management. Birmingham, UK: Packt Pub.

Lach, H. (2014). Financial Conflicts of Interest in Research. Nursing Research, 63(3), pp.228-232.

Li, S. (2013). The Challenge of Managing Government-Industry Relationships. JFRM, 02(04), pp.84-86.

Li, S. and Qiu, J. (2014). Financial Product Differentiation over the State Space in the Mutual Fund Industry. Management Science, 60(2), pp.508-520.

Madura, J. (2012). International financial management. Mason, OH: South-Western, Cengage Learning.

Noh, Y. (2015). Financial effects of open innovation in the manufacturing industry. Management Decision, 53(7), pp.1527-1544.