Week 4: Staffing Budgets/FTEs/ Variance Analysis Assignment Guidelines with Scoring Rubric ALL ANSWERS 100% CORRECT AID GRADE A+

Sandra Chambers has recently accepted the position of assistant administrator for the department of nursing at Potter Regional Medical Center where she will oversee the operations of five medical units. As she evaluates the budgets for the different cost centers, she finds that all are being used at near or full capacity. The activity in four of the five has remained steady over the past 2 years. A fifth unit has realized a steady increase in patient volume during that time and is currently at 88% capacity. It has been projected that within the next 12 months the volume of patients moving through that unit will increase by 20%. Sandra needs determine if the current FTEs for the unit will be sufficient to ensure quality and safe care continues to be provided. 1. Suggest all the information Sandra needs to collect in order to project the FTEs needed for the next fiscal year accounting for the projected increased capacity. Remember, she is new to her position so be sure to include background data on the unit itself as it relates to previous budgets, nursing staff, and the organization. In other words, summarize your approach to this Case Study. To correctly project the upcoming fiscal year’s personnel budget, Sandra will need to gather data on average daily census (average number of beds occupied every day), average patient days, hours of care per patient day, average length of stay and hours of care per for each patient day. Also, she needs to collect information regarding staffing mix, salaries and benefits offered for each position, vacation coverage needs, sick leave and unplanned absences, average productive and nonproductive hours per patient as well as the unit’s patient acuity. She will also need information regarding other expenses other than those based on staff remuneration such as clerical supplies, equipment maintenance, service contracts, and medical supplies. 2. Sandra has collected the following census information on all five units for the last month, in addition to what was asked in question number one. Calculate the ADC and Occupancy Rate for each unit using the Daily Census/Occupancy Rate table to determine which unit is at 88% occupancy rate and project to increase over the next year. Unit Beds 1 2 3 4 5 6 7 8 9 10 31 Total Patient Days A 34 0 941 B 15 0 424 C 13 0 372 D 25 25 23 31 31 30 0 841 E 6 6 3 3 3 3 5 5 5 2 2 2 2 4 4 3 3 0 0 0 6 5 5 3 3 3 2 5 4 3 3 0 97 (adapted from…..Healthcare Financial Management Association (2012). Managing fiscal resources: A budget and productivity case study. Retrieved from Chamberlain College of Nursing NR 533 Financial Management in Healthcare Organizations NR 533 Staffing_FTE_Variance AGR 4.30.18nhs 3 Average Daily Census/Occupancy Rate Unit ADC Occupancy (%) A 941/30=31.4 941/(35x30) = 90% B 424/30=14.1 424/(15x30) = 94% C 372/30=12.4 372/(13x30) = 95% D 841/30=28.0 841/(32x30) = 88% E 97/30=3.2 97/(6x30) = 53% The Unit with an 88% occupancy rate is D . 3. Using data contained in the first questions, complete the table below and determine the Average Length of Stay (ALOS) for the following three units. Show your work. Unit # Beds Patient Days # Discharges Average Length of Stay (ALOS) A patient days/110 discharges = 8.6 C patient days/96 discharges = 3.9 D patient days/85 discharges = 9.9 What is the ALOS for the unit you identified earlier at an 88% occupancy rate? 9.9 You have determined the Unit for which Sandra must make FTE projections. For the remaining questions in this section, refer to the figures used and or obtained related to the Unit identified in Question 1. Additional information includes • the budgeted hours of care per patient day (HPPD-budgeted) is 8.8; and • each employee receives 300 paid non-productive hours/year. 4. Calculate the number of FTEs needed for the Unit. Show the formulas used and all calculations. Include the reference used for your calculations at the beginning of your work. Hours of care = Patient Days x HPPDChamberlain College of Nursing NR 533 Financial Management in Healthcare Organizations NR 533 Staffing_FTE_Variance AGR 4.30.18nhs 4 = 841 x 8.8 = 7,400.8 hours For the whole year, Hours of Care = 7,400.8 x 12 = 88,809.6 FTE = Hours of Care/1 FTE Equivalent Given that 1 FTE Equivalent per year = 2080patient hours, then: In this case, FTE = 88,809.6/2080 = 42.7 Thus, the number of FTEs needed for the unit is 42.7 5. Calculate the TOTAL FTEs needed accounting for nonproductive time. Include the reference used for your calculations at the beginning of your work. Total Hours/employee/ year = 2080 Nonproductive hours/employee/year = 300 Thus Productive hours/employee/year = Total hours/employee/year – Nonproductive hours/employee/year = 2080 – 300 = 1780 Therefore, TOTAL FTEs needed given nonproductive time = Hours of Care/ Productive hours/employee/year = 88,809.6/1,780 = 49.89 Thus, the FTEs needed while accounting for nonproductive time are 49.89 6. Sharon now knows how many total FTEs are currently needed on the unit to provide safe, quality care to the patients on the unit. However, with a 20% projected increase in occupancy rate and average length of stay remaining steady on the unit, how will the required FTEs be affected? Current Average Daily Census = 28 Projected increase = 20% Future Daily Census = Current CDC x Projected increase = 28 x 1.2 =33.6, which is rounded off to 34 Total patient hours per year given the increase = Future CDC x HPDD x 30 x12 = 34 x 8.8 x 30 x 12Chamberlain College of Nursing NR 533 Financial Management in Healthcare Organizations NR 533 Staffing_FTE_Variance AGR 4.30.18nhs 5 =107,712 Future FTEs = 10712/2080 = 51.78 7. Calculate the TOTAL FTEs required to reflect an increased patient volume of 20% (don’t forget to account for nonproductive time). Include the reference used for your calculations at the beginning of your work. TOTAL FTEs needed given nonproductive time = Hours of Care/ Productive hours/employee/year = 107,712 / 1780 = 60.51 8. When Sharon calculated the number of FTEs budgeted currently in this unit and compared it to the number of actual FTEs being paid for, she found she was under budget by three FTEs. Explain how that could have happened and how this information affects her FTE budget request for the next year. According to,,,,, a budget is an educated guess of the future; actual activity level may fluctuate. For example, in this case, it could be that average occupancy rate (Average Daily Census) increased significantly than projected .To cover the unit’s daily needs for the upcoming year, Sharon must adjust her budget to reflect the higher activity level. Therefore she must increase her estimate by three FTEs otherwise the unit would not be capable of he million dollar question most nurse leaders struggle with is: "How many FTEs do I need on my position control (staffing roster) to cover my daily needs?" Although unit census may fluctuate, you must make an educated guess as to how many FTEs you need to cover the departmental needs the majority of the time and not create too many low census situations. This question leads us into the complicated discussion of units of service and what drives the intensity of staffing needs, otherwise known as hours per patient day (HPPD). Section Two—Variance Analysis Variance Analysis Case Study During the month of February, an outpatient surgery clinic has incurred a significant unfavorable variance. The director of the clinic is quite concerned, as this has never occurred before. The director gathers information on total nursing care hours, average hourly rate of the employees, and total patient visits to determine what caused the variance. In addition, the director receives the patient acuity levels for the month of February. Budget Actual BudgetChamberlain College of Nursing NR 533 Financial Management in Healthcare Organizations NR 533 Staffing_FTE_Variance AGR 4.30.18nhs 6 Variance Patient Days Nursing Care Hours HPPD 5.0 5.6 0.6 Average Hourly Pay $35.00 $45.00 $10.00 Total Payroll Costs $73,500 $128,520 $55,020 (Table adapted from: Rundio, A. (2016). The nurse manager’s guide to budgeting and finance, 2nd. Ed, Indianapolis, IN: Sigma Theta Tau International) 1. Complete the monthly personnel report for the surgical unit. 2. Calculate each of the following. Include the formulas used with reference. a. Volume (efficiency) variance: Efficiency Variance = (AH-BH) x BR x AV Where: AH = Actual caregiving hours accorded to patients BH = Budgeted Caregiving hours BR = Budgeted caregiving rate per hour AV = Actual volume (actual patient days) BV = Budgeted Volume (Budgeted patient days) In this case: AH = 5.6 BH = 5 BR =