Healthcare Financial Management Budget Exercise
Budgets are complex and represent the organizations financial plans. Planning for the future is based on the budget. With this in mind, complete the following activities.
You are a nurse manager on a 20 bed medical unit. You have been asked to develop a labor budget based on the following.
- Average Daily Census (ADC)= 16
- Unit of service = Patient days
- Workload-Hours per patient day (HPPD)= 8.5
- Earned revenue = $1,800 per patient
- Fixed cost = 5,765,080/year
- Variable costs for this exercise are staff salaries. Average staff salary = $28/hour or $672/day (However, OT is paid at time and a half)
- Unit Manager is a fixed position and not included in unit staffing
Answer the following questions and complete the required calculations (*please show your calculations out to 2 decimal points).
1. In you most recent job, was your position a fixed or variable cost? Did this (fixed or variable) decision make sense for your role in the organization? Defend your response.
2. Assuming you are the manager is the scenario above, what is your skill mix? Give a rationale for your decision.
3. What are your staff (RN, UAP, etc.) ratios? Why did you choose these ratios?
4. Develop a staffing grid which consists of the following components- census, staff, Hours earned, HPPD used, and variance with HPPD. It is common to be overstaffed at lower census numbers. You should aim to be neutral (HPPD and staff) by the time the census reaches 80-90% of ADC (approx. 13-14 patients)
5. At what census per your staffing grid do you run a neutral or positive variance of staffing hours?
6. What is your breakeven census calculating dollar amount using the information above?
7. What is the total FTE requirement for you to staff the unit at the ADC? How many staff should be on the payroll?
8. Historically the unit has had on average a 5% PTO usage/rate. How does this impact the number of FTE's you may need to staff annually?
9. Historically the unit has run about 5% usage of overtime. Does this impact your breakeven census? What is your new breakeven census? Explain your answer.
10. Develop a 2 week schedule that aligns with the information above.
11. How will a charge nurse (out of staffing) impact your schedule and HPPD?