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Evidence-based nursing14 February 2016 • Nursing Manage
- 1. Evidence-based nursing 14 February 2016 • Nursing Management www.nursingmanagement.com O btaining resources for quality patient care is a major responsibility of nurse manag- ers. Historically, nursing department labor budgets comprise the largest percentage of hospital employees and expense; therefore, careful management is essential to maintain a bal- ance between patient care and cost-effective bud- geting.1 Patient classification systems (PCSs) were adopted in the mid-1970s for the purpose of un- derstanding the utilization of nursing resources and to allow for an objective measure of full-time equivalent (FTE) require- ments.2 Both goals support the development of staffing budgets. The National Institutes of Health Clinical Center utilizes data obtained from the PCS to assist nurse managers in quantifying workload measures for acuity, hours per patient day (HPPD), and length of
- 2. stay adjusted census (LOSAC)—the corner- stones of budgeting direct care staff. PCSs also pro- vide nurse managers with the methodology for moni- toring variance analysis when meeting budgetary performance goals. Supplying nurse managers with the budgetary tools and evidence-based con- cepts to plan and develop a labor budget, and un- derstand and articulate these critical components, establishes credible leadership when advocating for limited resources. Planning The budget is founded on clear, written hospital and departmental goals, which are translated by the budget process into a formal quantitative expression of management’s plans, intentions, and expectations.3,4 Traditional budgeting provides a plan of expected patient activity, communicates operational salary and nonsalary requirements within the organization, and lays the foundation for evaluation and control over the next fiscal cycle.4 Annually, the Clinical Center requests informa- tion from institutes and centers about their intra- mural clinical research program plans for the coming fiscal year. The institutes and centers are queried to forecast inpatient and outpatient activ- ity, planned program and organizational changes, new or closing protocols, and the projected impact
- 3. on Clinical Center department resources that support the clinical research enterprise. Patient ac- tivity is the main driver in developing the budget. Inpatient admissions and days, average daily cen- sus at midnight, outpatient visits, and length of stay are utilized to forecast changes in patient activity. Volume projections Retrospective historical data from the organiza- tion’s financial systems and PCSs are provided in advance of the annual budget planning process.4 The Clinical Center Nursing Department (CCND) uses the executive information system (EIS) mid- night census for trending patient activity. At the Clinical Center, the midnight census includes pa- tients who are on short-term, temporary absences from the hospital for nonmedical reasons, or PASS. In a clinical research setting, PASS can be utilized to reintegrate long-term stay patients back into the community and for the assessment of treatment in the home setting or situations in which patients are admitted to protocols that may have extended periods of time between proce- dures. Patients on PASS are counted toward the nursing unit midnight census; however, nursing doesn’t staff or budget for this. For this reason, the Constructing a nursing budget using a patient classification system By Deborah Kolakowski, DNP, MSN, RN Copyright © 2016 Wolters Kluwer Health, Inc. All rights
- 4. reserved. Evidence-based nursing www.nursingmanagement.com Nursing Management • February 2016 15 Providing a foundation of basic financial concepts and education courses based on evidence and best practices leads to effective allocation and utilization of nursing resources. PCS LOSAC is used to determine patient activity for budgeting of di- rect care staff. The difference in LOSAC and EIS midnight census has historically been the percentage of PASS patients for each patient care unit. The LOSAC doesn’t cap- ture patients on PASS and is reflec- tive of the actual number of pa- tients in beds on the unit within a 24-hour period. The LOSAC sums the length of stay for all classified patients who were on the unit, in- cluding patients with shorter lengths of stay such as new admis- sions, transfers, or discharges. In addition to LOSAC, the CCND in- corporates acuity workload mea- sures and professional judgment into the planning process to ensure accuracy of the FTE budgetary recommendations.5
- 5. Fixed and variable costs The labor budget generally repre- sents the greatest expenditure for a patient care unit cost center and ac- counts for fixed and variable costs.1,4 The cost center is a functional unit within the nursing department, usu- ally referred to as a patient care unit for which cost control and account- ability can be assigned.4 Individual patient care unit cost centers are assigned and rolled up to represent the larger departmental budget for salary and nonsalary expenses. It’s our experience that nurse managers have the most influence and control over determining and monitoring nursing direct care resources to meet patient activity and workload requirements. Staff members who fluctuate in response to changes in workload, census, and patient acuity are con- sidered to be variable costs.3,4 In our organization, this includes nurses, patient care technicians, and behavioral health technicians. Each patient care unit has a different percentage of RN and patient care technician skill mix based on the patient population and care deliv- ery model. Professional judgment
- 6. allows for additional budgeted FTEs based on minimum staffing requirements in the event of low workload and census or to provide resources for new programs of care. Fixed costs remain constant de- spite fluctuations in acuity or cen- sus.4 The CCND determines budget requirements for fixed FTEs based on historical data, organizational priorities, and administrative prac- tices. Fixed costs include support staff, such as unit secretaries, clinical managers, nurse managers, clinical nurse specialists, education specialists, and other departmental administrative nursing positions. Clinical managers are considered direct care staff members who are budgeted as fixed costs to support the planning of daily flexible staff- ing requirements, monitoring of budget variance analysis, and mon- itoring of PCS reliability. FTEs It’s important to understand the concepts of position and FTE when developing the fixed and variable component of the labor budget. A position is a job classifi- cation for one person regardless of the number of hours that person works. Personnel reports describe
- 7. positions by job or skill categories and hours worked (full-time, part- time, or per diem). Budgets and variance analysis reports are gen- erated using position names and summarizing FTE requirements or utilization. FTE is the number of hours of work for which a full-time em- ployee is scheduled routinely each week.2,4 FTE is a conversion of hours for each employee based on his or her commitment base for hours worked. In our organization, 1.0 FTE is defined as working 40 hours in a week. Utilizing 8-hour shifts, one full-time employee works 2,080 hours annually (8-hour shift per day × 5 days per week × 52 weeks per year = 2,080 hours annually).6 One FTE can be divided multiple ways to allow for part-time flexible staffing alternatives. A nurse who works 20 hours per week would equal a 0.5 FTE (20 hours/40 hours for 1.0 FTE = 0.5 FTE). Nurses will typically work alternative shift schedules, such as 4-, 10-, or 12-hour shifts. A part-time nurse working two 12-hour shifts would be considered a 0.6 FTE (24 hours/40 hours for 1.0 FTE =
- 8. 0.6 FTE). Staffing budgets are con- structed using 8-hour equivalent shifts. After the budget is deter- mined, the nurse manager opera- tionalizes budgeted FTEs as full-time or part-time, depending on the needs of the unit to support staffing. Acuity workload measures In our organization, the inpatient PCS methodology is a flexible and adaptive tool that’s used on all pa- tient care units to predict workload Copyright © 2016 Wolters Kluwer Health, Inc. All rights reserved. Evidence-based nursing 16 February 2016 • Nursing Management www.nursingmanagement.com measures used for staffing and budgeting.1 Our patient care units interface with the electronic medi- cal record to automate the classifi- cation of patient needs based on nursing care documentation. To en- sure accurate and credible data for staffing and budgeting, reliability monitoring is completed weekly. HPPD are the hours of nursing
- 9. care provided per patient per day by clinical staff.4 When the budget is prepared, the HPPD explicitly assume some determination of acu- ity.2 It’s our experience that acuity doesn’t fluctuate significantly to change HPPD recommendations unless there’s a new patient popula- tion or new research protocols have been implemented. HPPD are bud- geted utilizing historical perfor- mance data comparing budgeted, actual, and recommended HPPD. Replacement coverage Budgeting of clinical staff requires a portion of an FTE to provide replacement coverage for earned benefit time off and cover health- care institutions that provide 7 days per week coverage. Our replace- ment coverage for benefit time gen- erally includes sick leave, vacation, holiday, and other paid time off. Replacement coverage will vary from one institution to another. At the Clinical Center, this is budgeted at 17% in nursing. As described earlier, FTE em- ployees work 8-hour shifts, 5 days a week. Replacement coverage for the additional 2 days to provide for a 7-day operation is essential. The weekend replacement coverage is calculated as 8 hours/day ×
- 10. 2 days/week × 52 weeks per year = 832 hours/year. 832 hours per year/2,080 hours per FTE = 0.4 FTE or four 8-hour shifts. Therefore, our replacement coverage for both ben- efit time and weekends based on one FTE is calculated as (1.0 + 0.4) × (1.0 × 0.17) = 1.6. For each FTE bud- geted, 0.6 FTE is required to cover time off and weekend coverage. Case study Step one: calculating direct care FTE requirements. To calculate direct care FTE requirements, the LOSAC, HPPD, and replacement coverage are determined. In our example, a divisor of 8 is utilized based on FTE staff working 8-hour shifts. 8 hours/day × 2 days/week × 52 weeks per year = 832 hours/ year. 832 hours per year/2,080 hours per FTE = 0.4 FTE or four 8-hour shifts. For a 32-bed medical- surgical oncology patient care unit’s direct care FTEs: • (22 LOSAC) × (12 HPPD) × (1.4 weekend replacement) × (1.17 bene- fit replacement)/8 hour shifts = 54.1 direct care providers • An additional 0.5 FTE is added for professional judgment for com- plex pharmacokinetic drug studies • total variable direct care FTEs re- quired = 54.6 FTEs.
- 11. This unit has an 89% skill mix component, which will provide 48.6 RNs and 6 patient care technicians. Step two: calculating fixed FTE requirements. This patient care unit has a total of 6.0 fixed FTEs to support administrative and clinical operations, which includes the nurse manager, clinical manager, and administrative support staff. Step three: calculate total FTE requirements. Variable direct care hours are added to the fixed hours to determine total required FTEs. Variable direct care FTE 54.6 + fixed FTE 6.0 = 60.6 FTEs budgeted. Implications for nurse managers Nurse managers and staff responsi- ble for making staffing decisions must be familiar with the business administrative tasks associated with budgets and financial moni- toring.7 It’s been our experience that providing a foundation of basic financial concepts and education courses based on evidence and best practices has led to effective alloca- tion and utilization of nursing re- sources. The next step is the development
- 12. of competencies as clinical staff members expand their roles within the organization to manage nurs- ing resources at the unit level. Utilizing a PCS provides nurse managers and staff with the ability to objectively allocate staffing re- sources based on fluctuations in census and acuity. Variance analy- sis reporting of actual HPPD com- pared with the budget provides trending information for produc- tivity performance and future bud- geting requirements. NM REFERENCES 1. Harper K, McCully C. Acuity systems dialogue and patient classification system essentials. Nurs Adm Q. 2007;31(4): 284-299. 2. Finkler SA. Flexible budget variance analy- sis extended to patient acuity and DRGs. Health Care Manage Rev. 1985;10(4): 21-34. 3. O’Byrne A. Budget monitoring: understand- ing the concepts. Top Hosp Pharm Manage. 1984;3(4):33-41. 4. Rundio A, Wilson V. Nurse Executive Review and Resource Manual. 2nd ed. Silver Spring, MD: American Nurses Credentialing Center; 2013:157-165.
- 13. 5. Ghosh B, Cruz G. Nurse requirement plan- ning: a computer-based model. J Nurs Manag. 2005;13(4):363-371. 6. Beglinger JE. A critical competency: deter- mining and communicating the number of nurses you must hire. Nurs Econ. 2007; 25(3):174, 177. 7. Lim JY, Noh W. Key components of finan- cial-analysis education for clinical nurses. Nurs Health Sci. 2015;17(3):293-298. Deborah Kolakowski is the service chief of Oncology and Critical Care at the National Institutes of Health Clinical Center in Bethesda, Md. The author has disclosed no financial rela- tionships related to this article. DOI-10.1097/01.NUMA.0000479449.43157.b5 Copyright © 2016 Wolters Kluwer Health, Inc. All rights reserved.