Module 3 Assignment 1: Financial Management Case Study vSP22(3)

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.

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 Variable FTEs

1 Nurse Manager

3 Unit Secretaries

44 Total FTEs

Staffing Mix

RN 75%

LVN 10%

NA 15%

Average Salary Scale per Employee

Benefits are 35% of annual salaries

Nurse Manager $86,500.00 per year

Registered Nurses (RN) $38.00 per hour

Licensed Vocational Nurses (LVN) $26.00 per hour

Nurse Aides (NA) $15.00 per hour

Unit Secretary (US) $13.00 per hour

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. Significance 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. Implications 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 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)

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 0.1 4

NA 40 0.15 6

Totals 1 40

2. Compute the annual salary budget for 3 West.

Compute totals for appropriate columns.

Positions FTEs Salary Hours Salary Subtotals Amount of Benefits Total

MANAGER 1.0 $86,500.00 XXXX $86,500.00 $30,275 $116,775

RN 30 $38.00 2080 $2,371,200 $829,920 $3,201,120

LVN 4 $26.00 2080 $216,320 $75,712 $292,032

NA 6 $15.00 2080 $187,200 $65,520 $252,720

Sec 2.5 $13.00 2080 $67,600

Totals 43.5 XXXXX XXXXXX $559,990

3. Your hospital unit, 3 West, is a 60-bed general medical-surgical unit. Over the past year, the ADC (Ave. Daily Census) was 53 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 5 44

Totals 53 243.5

Hours per patient day (HPPD) 4.59

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?

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.)

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 $65,000/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 38.00 2080 $79,040 $27,664 $106,704

LVN -1.5 26.00 2080

NA 1.5 15.00 2080

AHN 1 65,000 XXXXX $65,000 $22,750 $87,750

Totals 2 XXXXX XXXXX 113,620 $39,767 $153,387

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 $86,500 XXXXX

AHN 1 $65,000 XXXXX

RN 38.00 2080

LVN 26.00 2080

NA 15.00 2080

Sec 13.00 2080

Totals XXXXX XXXXX