NR 630 BUDGETING AND COST MANAGEMENT RATED A+

NR 630 BUDGETING AND COST MANAGEMENT Discuss with the nurse executive/mentor in your practicum setting how various costs are managed. Describe the extent to which cost-benefit analysis is used as a financial strategy to address the relative costs and benefits associated with a project or task. How are costs compared in terms of economic and financial impact? Types of Cost Analysis Cost-benefit analysis—The outcome or benefits of a program are measured in terms of dollars. Cost effectiveness—The benefits are measured in terms of health units. Cost Benefit Analysis Cost-benefit analysis is the measurement of the relative costs and benefits associated with a project or task. Cost-benefit analysis is that resources are scarce and should be allocated in such a way as to maximize the improvement in care for the patient population. To achieve this goal, the following question is asked: Is this procedure, service, or program worth undertaking knowing that the resources involved will not be available for other things that are also beneficial? CBA summarizes both positive and negative impacts of a project. The purpose of CBA is to permit the nurse executive to select among alternative interventions by comparing them in economic terms. • Assessment of the benefits associated with doing the task, providing the service, or developing a new program. • Analysis of the costs associated with the task, service, or new program. • Anticipated cost savings and the productivity benefits that will arise; in other words—is it worth doing the task once the costs and benefits are identified? Cost effectiveness is used to evaluate competing programs that are designed to achieve the same or similar objectives. Because the program outputs are assumed to be the same, attention is focused on the identification and estimation of program costs, thus avoiding many of the difficulties of benefits estimation. For example, both physicians and nurse midwives can provide routine prenatal care, but the costs and effectiveness may be very different. Cost-effectiveness analysis can be used to evaluate the relative merits of the two types of healthcare providers who can serve the needs of the same group of patients. Preference tracks Attainia