Purpose

The purpose of this discussion is to explore the DNP-prepared nurse’s role in meeting the organization’s mission through effective planning, budgeting, and determining the allocation of resources.

Instructions

This week, you will have an opportunity to estimate the budget for your practice change project. The practice change project includes the estimated resources with associated expenses and the estimated revenues. The practice change project budget must balance to a positive number or to zero. (A negative balance reveals there is insufficient planning and revenues needed for the project to be successful.)

Reflect upon your readings and professional experience and complete the budget for your practice change project.

1. The first step is to download the attached table and enter your budget details in the table. When finished, save and upload the document as an attachment.
   1.  Table TemplateLinks to an external site.
2. Start by listing all of the Resources needed for your budget. Some resources that may be needed in your budget are listed here and some items may not apply to your project:
   1. number of staff and their roles-
   1. education time for staff (how many and how long)
   1. office and/or medical supplies
   1. marketing materials
   1. statistician consult
   1. meeting rooms
   1. overhead (if renting the room)
   1. any other resources not covered in this list
3. Next, estimate the Expense for each of the resources. The expenses in your budget can be estimated.
   1. Example: When estimating the salary and benefits for staff, first calculate the number of hours X the hourly salary (adding in the estimated cost of employee benefits) X the number of individuals. An example is 20 nurses for 3 hours at an average salary and benefit of $50 hour: 20 x 3 x 50 = $3000.
4. Next, discuss the Revenue sources that will pay for the expenses. All expenses in the budget must have a revenue source. Examples of revenue sources include the following:
   1. Institutional Budget Support (if the hospital or facility is paying the costs of salary, supplies, and/or services).
   1. In-Kind Donation (If you, or a department, or both are paying the statistician consult or out-of-pocket payment for the refreshments for meetings, etc.)
   1. There are limited projects in which billing for a new procedure or new treatment type is applicable.
      1. Equation: encounter charge X # patients per day X # days per week X # weeks
      1. If the organization is currently billing for the visit or treatment or procedure, then do not include this in your budget. Check the state laws for rules regarding billing and reimbursement for services such as telehealth.
         1. Link (website): Medicaid and Medicare Billing for Asynchronous TelehealthLinks to an external site.
         1. Link (website): Billing for Telehealth During COVIDLinks to an external site.
      1. Grant money: If grant money is used, state the name of the grant and the specific elements within the budget that the grant is paying for. Add the revenues for the exact elements of the budget. Please ensure that the grant funding states it will pay for that specific expense(s) in your budget.
   1. Balance the Budget. Add the expenses and the revenues then subtract the expenses from the revenues. The result should be a zero-dollar balance or a positive dollar balance.
      1. Equation: revenues – expenses = 0 or positive $$
   1. Examine your role in monitoring and controlling your practice change project expenses and resources.

https://telehealth.hhs.gov/providers/billing-and-reimbursement/medicaid-and-medicare-billing-for-asynchronous-telehealth

https://telehealth.hhs.gov/providers/billing-and-reimbursement?gclid=CjwKCAiA24SPBhB0EiwAjBgkhl_ZQSbmld5Bz2-xQptJ1cGlyA47A7TqaxmjTUvKGWgTs_2z4TescxoCbakQAvD_BwE

Staff includes 2 nurses, one coordinator, one therapist, and Nurse Practitioner

Planning most virtual visits, therapy through Zoom meeting.

Project topic- Mindfulness Based Stress Reduction as an Alternative Treatment for Mild to Moderate Depression 

To improve the daily personal and professional functioning of patients with psychiatric mental illness such as major depressive disorder or anxiety disorder.

Translation Science Model: Knowledge-to-Action Model

PICOT- In adult patients with mild to moderate depression at an outpatient mental health clinic, does implementation of MBSR compared to standard care improve depression symptoms in 8-10 weeks?

From Practice Readiness form

Week 1:

• Eligible patients informed about the study project, sign informed consent

• Baseline depression assessment performed using PHQ-9

• Participants instructed on project expectations

Weeks 2-9:

• Participants allocated to 2-4 groups for weekly in virtual lessons on mindfulness meditation, and mindful movement based on the Palouse mindfulness based stress reduction program (Hoge et al., 2022). Participants instructed on downloading and using MyPossibleSelf app for daily guidance and logging of MBSR activities. The project leader will collect weekly logs of MBSR activities and schedule VSEE FaceTime or Zoom meetings to review progress and answer questions.

Week 10:

• Post-test depression assessment performed using the PHQ-9

• Data analyzed for pre-and post-test comparisons.

resources from class

Variance Analysis

Variance refers to the difference between what has been projected for the budget and the actual results. Variance analysis is the aspect of budgeting in which the actual results are compared with the budgeted expectations. A variance is usually considered favorable if it improves net income and unfavorable if it decreases income. The DNP-prepared nurse responsible for the budget must understand and monitor inputs to the budget that may create a variance to the plan. For example, volume/census, acuity, salaries, and forecasted staffing requirements should be monitored for a nursing unit budget. For ambulatory care or outpatient settings, indicators such as the average number of appointments per day, average number of patient encounters per provider per day, average office visit cycle time, average expense per encounter, and net profit or loss are monitored.

Typically, the individual who has oversight of the budget will be expected to review the monthly budget to identify and explain the variance. Corrective action plans are developed to manage these variances.

Example: Unit capacity is 28, budget ADC is 24.9, budget direct RN HPPD is 6.01, budget direct NA HPPD is 3.28, budget total direct HPPD is 9.29, and total worked is 10.25.

Target RN-to-patient ratio is 1:4 Target NA ratio is 1:7.3.

Note. Adapted from “Budgeting in Acute Care Settings,” C. Suby, in K. T. Waxman (Ed.) Financial and Business Management for the Doctor of Nursing Practice (3rd ed., p. 145), 2023, Springer Publishing Company. Copyright 2023 by Springer Publishing Company, LLC.

What is your analysis of the variances in this budget report?

Answer

The differences between budgeted and actual HPPD, productive hours, productive FTE, and productive hourly expense are so small that the units are meeting these budget targets. The RN overtime hours reflect the budgeted 4.0 hours per productive FTE and the 6.5 average overtime hours per productive FTE. Overtime hours are over budget by 62.5% and reflect the same 62.5% budget overrun as the overtime hours.

Statement of Revenue and Expenses

The formula for the statement of revenue and expenses:

Operating revenue – Operating expense = Operating Income

Revenue is the money the organization receives (for patient visits, procedures, or hospitalizations, etc.). Knowing how revenue is generated and spent is vital for the DNP-prepared nurse. Money is received from Medicare, Medicaid, private insurance companies, managed care, and patients who self-pay for services (Rundio, 2022).

Having sound knowledge about the billing practices of the organization is important for the DNP-prepared nurse. Ensuring that providers are accurately documenting care, including history and physicals, for example, will help ensure that billing will occur at a higher rate (Waxman & Knighten, 2023). With reimbursement shifting to pay for performance, it is imperative that healthcare organizations focus their efforts on providing quality, patient-centered care that meets the highest standards in order to receive the maximum possible reimbursement.

Expenses include the cost of supplies, staff, and activities necessary to run a unit or organization. In an operating budget, the two main areas found are employment costs and non-salary-related expenses. Items taken into consideration with employment costs include salaries, overtime, new employee orientation, education, holiday and shift differential pay, and benefits. Typical non-salary expenses include supplies (medical and office), equipment (including leased and rentals), maintenance, and travel (educational opportunities for staff) (Rundio, 2022).

Statement of Net Worth

The Statement of Net Worth gives a financial snapshot at a given point in time.

Assets – Liabilities = Net worth

Assets are the items your company owns that can provide future economic benefit. Liabilities are what you owe other parties. Current assets and current liabilities provide an indication of the cash flow of the business during the coming year.

Subtracting current liabilities from current assets determines the amount of working capital in the business and the value of the business.

Statement of Cash Flow

The Statement of Cash Flow is a summary of the actual cash received (inflow) or disbursed (outflow) during a stated period, such as monthly, quarterly, or annually. The cash flow statement measures how well a company generates cash to fund its operating expenses, pay debt obligations, and fund investments.

Balance Sheet

The Balance Sheet shows the organization’s assets, liabilities, and net worth on a stated date as a snapshot in time, usually at the end of the organization’s fiscal year. The basic accounting equation is used as a foundation for the balance sheet.

Assets = Liabilities + Equity

Workload or Unit of Service (UOS)

Workload volume forecasts are necessary for effective budgeting. The UOS is distinct for each unit; for inpatient units, it is patient days. Workload variations must also be identified. Planning for variable trends can lead to reduced costs without a decrease in care.

• Direct care hours per patient day
• Indirect care hours per patient day
• Total worked hours per patient day
• Total paid hours per patient day (Waxman & Knighten, 2023)

Admission, Discharge and Transfer Work Intensity Index©

It can be difficult to accurately capture the extent of how intense or busy a unit is. The following is a formula developed by the Labor Management Institute (LMI) to calculate the admissions, discharges and transfers (ADT) (Waxman & Knighten, 2023):

(Total Admissions + Discharges +Transfers in 24 Hours) / Midnight Census

Using the calculated ADT activity can be beneficial to the DNP-prepared nurse as this may provide justification for additional staffing during peak activity times.

Cost Center

Distinguishing costs associated with individual units is important for financial accountability. This allows for corrective action to be taken for each identified cost center when applicable. Other names for cost center include department number or cost unit (Waxman & Knighten, 2023).

Hours per Patient Day or Unit of Service

A usual method for comparing levels of care from one cost center to another is through the use of the number of hours per patient day (HPPD). Determining if hours are total worked (or productive) or total paid (annual) as the difference may vary considerably with any comparison.

Essential Hours

• Hours Classification: encompasses direct, indirect, total works, nonproductive, and total paid hours
• Direct Care Worked Hours: hours worked in the direct provision of patient care
• Indirect Care (or Fixed) Worked Hours: hours worked but not in the direct provision of patient care
• Total worked (or Productive) Hours: actual hours worked
• Nonproductive Hours: paid time off (sick, vacation, and holiday); some organizations may also include education, orientation, and meetings as nonproductive time
• Total Paid (or Annual) Hours: all hours paid from the cost center (productive and nonproductive hours)

Basic Formulas

When obtaining the average total worked (productive) hours of care and total paid hours provided per patient, divide the total worked (productive) hours and total paid hours on a patient unit for a specified period of time by the UOS during that same period (Waxman & Knighten, 2023). Example:

1. Total Worked (Productive Hours):
   1. 1760 total direct worked hours + 336 total indirect hours = 2096
2. Total Nonproductive Hours:
   1. 256 Benefit hours (time paid but not worked)
3. Total Paid Hours: 2096 + 256 = 2352
4. Hours per Unit of Service (hours per Patient Day or HPPD):
   1. Total direct (variable) worked hours per UOS or HPPD: 1760 divided by 348 = 5.06
   1. Total indirect (fixed) worked hours per UOS or HPPD: 336 divided by 348 = 0.97
   1. Total worked (productive) hours per UOS or HPPD: 2096 divided by 348 = 6.02
   1. Total paid hours per UOS or HPPD 2096 + 256 = 2352 divided by 348 = 6.76
5. Average Daily UOS (Example Average Daily Census [ADC])
   1. Divide the total UOS (patient days) by days in the survey period: 348 divided by 14 = 24.9

Full Time Equivalents (FTEs)

• Direct FTEs
• Indirect FTEs
• Total worked or productive (direct and indirect) FTEs
• Total nonproductive FTEs
• Total paid or annual FTEs (Waxman & Knighten, 2023)

Full-Time Equivalents and Formulas

• 2096 total worked hours ÷ 80 hours/2 weeks = 26.2 FTEs
• 2096 total worked hours ÷ 8-hour shift = 262 8-hour shifts
• 2096 total worked hours ÷ 12-hour shift = 174.66 12-hour shifts (Waxman & Knighten, 2023)

Productive Cost or Dollar per Patient Day

The Cost of Care per Day or Unit of Service is a mathematical calculation of the cost of care in worked hours per day or unit of service (UOS) using average salary costs by category of employee and the primary metric for units of service (Hours per Patient Day [HPPD]).

Hours per UOS and FTEs must first be determined; then, average salary information by category of employee is used to calculate dollars or cost per UOS goals per unit. Unit-specific staffing pattern or Variable Staffing Plan (VSP) for each increment of workload is used for this calculation.

Targets for dollars or cost per UOS will vary among units depending on tenure of employees, approved overtime, special pay, and use of agency staff. Total worked (productive) and total paid targets are beneficial in budget monitoring in order to evaluate operational decision making. When the actual cost per inpatient day is over budget and the HPPD is within budget, then the unit was staffed with overtime and other premium pay (travel nurses, etc.) (Waxman & Knighten, 2023).

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