Download as PDF, PPTX
![Cost Per Patient Day
CPPD =
[(Total RNs * 8 hours) * hourly salary +
(Total LVNs * 8 hours) * hourly salary +
(Total NAs * 8 hours) * hourly salary)]
/divided by midnight census
04/10/2015 www.drjayeshpatidar.blogspot
.com
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Budget
The document discusses several key aspects of budgeting for nursing services, including: 1) The importance of nursing leaders having budgeting knowledge to efficiently manage operations and meet financial targets. 2) The different types of budgets including operating, revenue, and expense budgets and how they are used. 3) Factors to consider when creating a nursing budget, such as variable costs, staffing needs, and volume projections. 4) The process of analyzing variances between budgeted and actual costs and examining factors that contributed to differences.
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Budget
- 1. BUDGETING FOR NURSING SERVICE Dr.Jayesh Patidar www.drjayeshpatidar.blogspot.com 04/10/2015 1
- 2. Healthcare organizations are increasinglyfocused on cost- containment and efficacious use of financial resources. Today’s nursing leaders require budgeting knowledge in order to efficiently manage operations in the patient care environment and meet financial targets. 04/10/2015 www.drjayeshpatidar.blogspot.com 2
- 3. Budgets A budget isa detailed financial plan, used to carry out organizational goals. The budget includes proposed earnings and expenditures as well as details about how resources( money, time, and people) will be acquired and used. The purpose of the budget is to project future plans and costs. 04/10/2015 www.drjayeshpatidar.blogspot.com 3
- 4. Operating budget-deals primarilywith salaries, supplies, and contractual services It is the financial plan for the day to day activities of the organization containing a statement of expected revenues and expenses for the fiscal year. Revenue Budget- includes expected income based on volume and mix of patients, rates, and discounts. Expense Budget- includes salary and non-salary items that reflect patient care objectives and planned activities for the nursing unit. 04/10/2015 www.drjayeshpatidar.blogspot .com 4
- 5. Cost and Profit CostCenter-the smallest area for which costs are accumulated. They may produce revenue, such as laboratory and radiology or not produce revenue, such as nursing. Profit Center- a unit where performance is measured in terms of profit the difference between revenues and expenses 04/10/2015 www.drjayeshpatidar.blogspot .com 5
- 6. Classification of Costs FixedCosts-expenses that remain the same such as rent or insurance premiums. Variable costs-expenses that change with changes in volume and acuity. Mixed Costs-may vary with volume but not directly. Direct Costs-affect patient care. 04/10/2015 www.drjayeshpatidar.blogspot .com 6
- 7. Salary (Personnel) Budget Thepersonnel budget projects the salary costs that will be paid and charged to the cost center. It accounts for replacement of staff for benefit time, overtime, shift differentials, orientation, on-call hours, bonuses and premiums, and salary increases. 04/10/2015 www.drjayeshpatidar.blogspot .com 7
- 8. Variance Analysis The differencebetween the amount that was budgeted for a specific revenue or cost and the actual revenue or cost that resulted during the course of activities is known as the variance. There is an established level at which a variance needs to be investigated. A variance may be favorable or unfavorable and may be related to patient volume, efficiency in relation to nursing care hours provided, rates in hourly rates paid, or in non-salary expenditures Position Control- a tool to monitor actual numbers of employees to the number of FTE’s budgeted. 04/10/2015 www.drjayeshpatidar.blogspot .com 8
- 9. Why you needbudgeting skills oAbsolutely essential management skill oFinancial viability oQuality patient care oUnit operational efficiency oStaff satisfaction oLeadership expectation oMost nurse managers do not come into the job with these skills 04/10/2015 www.drjayeshpatidar.blogspot .com 9
- 10. Department Patient Nurseratio ICU/CCU/NNN, Burnt 1 1 Paediatric and Emergency 3 1 General Wards 6 1 Isolation ward 2 1 O.P.D (each) 1 Dressing Room (each) 1 OT 3 1 04/10/2015 www.drjayeshpatidar.blogspot .com 10
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- 12. Identify immediate needs Newservices New technology Broken equipment 04/10/2015 www.drjayeshpatidar.blogspot .com 12
- 13. Identify Long-term needs Newservices New patient populations New technology Improved technology Equipment replacement plan Elimination of rentals 04/10/2015 www.drjayeshpatidar.blogspot .com 13
- 14. Give what theywant Get input MDs (Intensivists, surgeons, cardiologist,specialists) RN Staff Respiratory Therapy Ancillary staff 04/10/2015 www.drjayeshpatidar.blogspot .com 14
- 15. Vendors Develop (compliant)vendor relationships throughout the year Be aware of contracted vendors Become knowledgeable about products Ask for demos Ask for references (and check them) Evaluate the literature provided to you Drive a hard bargain Don’t forget trade-in value Consider contract for training costs 04/10/2015 www.drjayeshpatidar.blogspot .com 15
- 16. Hidden Sources Investigate sourcesof funding Technology committees Specialty funds Workplace safety funds Patient safety funds Equipment used in Clinical Trials Vendor trials Contingency Funds04/10/2015 www.drjayeshpatidar.blogspot .com 16
- 17. Make a convincingcase How does this equipment improve quality of patient care? Is it a regulatory compliance issue? Will it improve patient safety? Will it improve staff safety? Will it save you money in the long run? 04/10/2015 www.drjayeshpatidar.blogspot .com 17
- 18. Final Advice Be mindfulof deadlines Allow enough time for each step of the process Vendor response time Paperwork Local/regional/corporate approvals Fiscal year 04/10/2015 www.drjayeshpatidar.blogspot .com 18
- 19. Budget Variance in the OperatingBudget WHY ARE YOU OVER BUDGET? 04/10/2015 www.drjayeshpatidar.blogspot .com 19
- 20. Budget Variance •Payroll budget •Non-payrollbudget 04/10/2015 www.drjayeshpatidar.blogspot .com 20
- 21. Non-payroll Operating Budget Supply Costs Equipment Costs Operational Costs 04/10/2015 www.drjayeshpatidar.blogspot .com 21
- 22. Non-payroll costs •Unit upkeep/ construction •Operational Costs •Education •Conference fees •References materials •Employee recognition 04/10/2015 www.drjayeshpatidar.blogspot .com 22
- 23. Non-payroll (cont.) Transportation Travelerhousing One-time expenses Lost patient belongings 04/10/2015 www.drjayeshpatidar.blogspot .com 23
- 24. Supply Costs Ask yourself, “Isthere a change in the supply OR a change in the patients?” 04/10/2015 www.drjayeshpatidar.blogspot .com 24
- 25. Change in supplycost New product Change in cost of product Change in vendor Change in contract price Substitute product Stocking Issues 04/10/2015 www.drjayeshpatidar.blogspot .com 25
- 26. Change in Patient •Changein volume •Change in patient population •Individual patient need 04/10/2015 www.drjayeshpatidar.blogspot .com 26
- 27. Equipment Cost Purchases Rentals Maintenance Vendor change ContractChange Consider capitated costs for rentals 04/10/2015 www.drjayeshpatidar.blogspot .com 27
- 28. Payroll Budget Simply put… Whatyou pay the people who take care of the patients 04/10/2015 www.drjayeshpatidar.blogspot .com 28
- 29. Payroll Budgeting Tips Budget to full-time equivalents (FTEs) and dollars Account for inflation and salary increases Factor in contractual obligations Estimate non-productive time Account for anticipated changes in patient volume and acuity 04/10/2015 www.drjayeshpatidar.blogspot .com 29
- 30. Payroll budget Volume Acuity Overtime Pay Penalty Pay Registry and Traveler Pay Payroll Variance Volume HPPD CPPD 04/10/2015 www.drjayeshpatidar.blogspot .com 30
- 31. Volume January Patient Days Budgeted= 310 Actual = 434 Variance = 124 To calculate volume variance: Variance days/budgeted days 124/310 = .4 Conclusion: You are 40% over your budgeted volume! 04/10/2015 www.drjayeshpatidar.blogspot .com 31
- 32. Summary of Variance Examine Payroll and Non-payroll costs Look at both in relation to volume Non-payroll Supply cost Equipment costs Other operating costs Payroll Payroll OT and Registry Usage Training Costs Concisely explain why 04/10/2015 www.drjayeshpatidar.blogspot .com 32
- 33. Developing a StaffingMatrix Required information Predicted/budgeted average daily census (ADC) Historical trends Population changes/changes in case mix Changes in service/specialty offerings 04/10/2015 www.drjayeshpatidar.blogspot .com 33
- 34. Hours Per PatientDay HPPD = number of hours worked in the 24 hour period divided by the midnight census Example NOC shift staffed with 4 RNs DAY shift staffed with 5 RNs and a NA PM shift staffed with 5 RNs and a NA Midnight census = 8 HPPD = (16 employees x 8 hours) / census of 8 = 128/8=16 04/10/2015 www.drjayeshpatidar.blogspot .com 34
- 35. Cost Per PatientDay CPPD = [(Total RNs * 8 hours) * hourly salary + (Total LVNs * 8 hours) * hourly salary + (Total NAs * 8 hours) * hourly salary)] /divided by midnight census 04/10/2015 www.drjayeshpatidar.blogspot .com 35
- 36. Developing a PositionControl Document Required information Budgeted Average Daily Census (ADC) Required full-time equivalents (FTEs) in each job category (from staffing matrix) Current hired FTEs in each job category per shift Current Posted FTEs in each job category per shift Historical use of non-productive time 04/10/2015 www.drjayeshpatidar.blogspot .com 36
- 37. ANALYSIS 1. What canwe determine from this position control document? 2. Have we budgeted for enough staff? 3. Do we currently have enough staff? 4. What additional positions would we need to post? 04/10/2015 www.drjayeshpatidar.blogspot .com 37
- 38. Step one: Reviewpast performance: 1. As a starting point, the nurse executive will require to review the following 04/10/2015 www.drjayeshpatidar.blogspot .com 38
- 39. a. The financialrecords from prior financial periods as a basis for planning. b. The present activities of the nursing division. 04/10/2015 www.drjayeshpatidar.blogspot .com 39
- 40. c. The activitiesthat the division plans to institute during the projected financial period. d. Those activities the division plans to delete during the projected period. 04/10/2015 www.drjayeshpatidar.blogspot .com 40
- 41. • Step two:Review the organization's goals and projections: • The nurse executive has to study the organization's goals and financial projections thoroughly. - Items in the major budgetary report that affect the nursing department should be determined 04/10/2015 www.drjayeshpatidar.blogspot .com 41
- 42. • Step three:Review of the variances with higher levels of management : • Once the goal statement is finished, it, (together with the actual versus budget analysis done earlier), should be reviewed with higher level management 04/10/2015 www.drjayeshpatidar.blogspot .com 42
- 43. • The departmentalgoals proposed should be carefully considered; as well as the variances, their causes, and proposed corrective actions should be reviewed. • Once the final statement for the department is in place, the new budgeting process can begin in earnest.04/10/2015 www.drjayeshpatidar.blogspot .com 43
- 44. • Step four:Actual preparation of the budget: • The actual preparation of a new budget can be done based on a previous budgetary plan, or newly proposed plan (if a newly developed or modified service). 04/10/2015 www.drjayeshpatidar.blogspot .com 44
- 45. • To completethe budget, a budget worksheet is essential. Worksheet is "a tool used by managers to prepare their budget". It includes a number of columns including information about: 04/10/2015 www.drjayeshpatidar.blogspot .com 45
- 46. a) Historic informationwith old budget. b) Actual numbers with comments explaining the variances. c) Revenue and costs. 04/10/2015 www.drjayeshpatidar.blogspot .com 46
- 47. What have youlearned? Capital Budget Identify short and long-term needs Work effectively with vendors Plan ahead and allow lots of time Analysis of Operating Budget variance Payroll Non-payroll Staffing Matrices Position Control 04/10/2015 www.drjayeshpatidar.blogspot .com 47
- 48. The quickest wayto get what you want is to help others get what they want. 04/10/2015 www.drjayeshpatidar.blogspot .com 48
- 49. SHIFT TO POPULATIONBASED CARE AND INCREASING COMPLEXICITY OF PATIENT CARE 04/10/2015 www.drjayeshpatidar.blogspot .com 49
- 50. THE GREAT THINGIN THIS WORLD IS NOT SO MUCH WHERE WE STAND… BUT IN WHAT DIRECTION WE ARE GOING…… 04/10/2015 www.drjayeshpatidar.blogspot .com 50
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