Chapter 20 - Managing Cost & Budget
A nurse manager approves two staff nurses to attend a national conference. When
reviewing the budget, the nurse manager looks at which line item?
a. Cash budget
b. Capital budget
c. Operating budget
d. Supply and expense budget - ANS-ANS: C
Rationale: The operating budget includes a personnel budget, which takes into
account productive and non-productive paid work hours. Education hours are
covered under nonproductive paid work
hours in the operating budget.
\A nurse manager discovers that the actual number of visits per patient in a home
health service is 3.8 visits per day when the standard is 5 visits per day. Based on
this information, the nurse manager:
a. concludes that the complexity of care in each visit has arisen.
b. concludes that patient volume has been decreased.
c. decides that more information is needed before a conclusion can be reached.
d. initiates a training session regarding the importance of ensuring that visits are
made. - ANS-ANS: C
Rationale: Variance from measures of productivity or ratio of outputs to inputs does
not necessarily offer
an explanation of whether or not care was delivered as needed. Before proceeding
to any
further conclusion, the nurse manager will need to investigate reasons for the
decreased output.
\A nurse manager is planning to request three new infusion pumps at a cost of
approximately $1500 each. This item would typically be included in which budget?
a. Operating
b. Strategic
c. Unit of service
d. Capital - ANS-ANS: D
Rationale: Items that have a useful life of longer than a year, which is likely with the
pumps, and that
have a cost that usually exceeds $300 to $1000 (specific amount is set by the
organization) are
, considered capital items. Operating budget items include what is used on a
day-to-day basis,
such as staffing.
\A nurse manager is planning to request three new infusion pumps at a cost of
approximately $1500 each. What would BEST support the capital request?
a. Number of patient care hours anticipated for the year
b. Cost comparisons; how much and how often infusion pumps are used; condition
of existing pumps
c. Outline of cost for each pump
d. Estimation of total cost; no further details - ANS-ANS: B
Rationale: Complete well-documented justifications are needed because the
competition for limited
resources is stiff. Justifications should be developed using the principle of any
business case and should include, at minimum, projected amount of use; services
duplicated or replaced;
safety considerations; need for space, personnel, or building renovation; effect on
operational
revenues and expenses; and contribution to the strategic plan.
\A staff nurse regularly works two 12-hour shifts each week and one 8-hour shift
every other week. How many FTEs is this position?
a. 0.6
b. 0.7
c. 0.8
d. 1 - ANS-ANS: B
Rationale: Assuming that a full-time RN works 2080 hours/year (40 hours x 52
weeks), the nurse works
(24 hours x 52 weeks + 8 hours x 26 weeks)/2080, which is 0.7 FTE.
\After a major flu vaccination campaign, an agency bills a private insurance company
for allowable costs for administration of each vaccination according to the schedule
established
by the insurance company for reimbursement. This is an example of which major
payment method?
a. Cost-based reimbursement
b. Charges
c. Contractual allowance
d. Prospective reimbursement - ANS-ANS: A
Because the agency is submitting costs after the campaign is completed and in
accordance with an established schedule of allowable costs, a retrospective,
A nurse manager approves two staff nurses to attend a national conference. When
reviewing the budget, the nurse manager looks at which line item?
a. Cash budget
b. Capital budget
c. Operating budget
d. Supply and expense budget - ANS-ANS: C
Rationale: The operating budget includes a personnel budget, which takes into
account productive and non-productive paid work hours. Education hours are
covered under nonproductive paid work
hours in the operating budget.
\A nurse manager discovers that the actual number of visits per patient in a home
health service is 3.8 visits per day when the standard is 5 visits per day. Based on
this information, the nurse manager:
a. concludes that the complexity of care in each visit has arisen.
b. concludes that patient volume has been decreased.
c. decides that more information is needed before a conclusion can be reached.
d. initiates a training session regarding the importance of ensuring that visits are
made. - ANS-ANS: C
Rationale: Variance from measures of productivity or ratio of outputs to inputs does
not necessarily offer
an explanation of whether or not care was delivered as needed. Before proceeding
to any
further conclusion, the nurse manager will need to investigate reasons for the
decreased output.
\A nurse manager is planning to request three new infusion pumps at a cost of
approximately $1500 each. This item would typically be included in which budget?
a. Operating
b. Strategic
c. Unit of service
d. Capital - ANS-ANS: D
Rationale: Items that have a useful life of longer than a year, which is likely with the
pumps, and that
have a cost that usually exceeds $300 to $1000 (specific amount is set by the
organization) are
, considered capital items. Operating budget items include what is used on a
day-to-day basis,
such as staffing.
\A nurse manager is planning to request three new infusion pumps at a cost of
approximately $1500 each. What would BEST support the capital request?
a. Number of patient care hours anticipated for the year
b. Cost comparisons; how much and how often infusion pumps are used; condition
of existing pumps
c. Outline of cost for each pump
d. Estimation of total cost; no further details - ANS-ANS: B
Rationale: Complete well-documented justifications are needed because the
competition for limited
resources is stiff. Justifications should be developed using the principle of any
business case and should include, at minimum, projected amount of use; services
duplicated or replaced;
safety considerations; need for space, personnel, or building renovation; effect on
operational
revenues and expenses; and contribution to the strategic plan.
\A staff nurse regularly works two 12-hour shifts each week and one 8-hour shift
every other week. How many FTEs is this position?
a. 0.6
b. 0.7
c. 0.8
d. 1 - ANS-ANS: B
Rationale: Assuming that a full-time RN works 2080 hours/year (40 hours x 52
weeks), the nurse works
(24 hours x 52 weeks + 8 hours x 26 weeks)/2080, which is 0.7 FTE.
\After a major flu vaccination campaign, an agency bills a private insurance company
for allowable costs for administration of each vaccination according to the schedule
established
by the insurance company for reimbursement. This is an example of which major
payment method?
a. Cost-based reimbursement
b. Charges
c. Contractual allowance
d. Prospective reimbursement - ANS-ANS: A
Because the agency is submitting costs after the campaign is completed and in
accordance with an established schedule of allowable costs, a retrospective,
