The relationship between economics, resources, budgeting, and staffing
As a healthcare provider, it is essential to understand the relationship between economics, resources, budgeting, and staffing, and how these issues affect the ability to provide safe, quality care to patients. Two basic types of health care budgets affect nursing: capital and operating budgets. Capital budgets are used to plan investments and upgrades to physical assets that lose or gain value over time. Operating budgets include personnel costs and annual facility operating costs. In this assignment, you will select a healthcare budget to analyze and present your findings to stakeholders.
Analyze a healthcare organization’s capital or operating budget and create a slide presentation of your findings and recommendations for stakeholders. The presentation should include the following content:
Budget Analysis (2-3 slides)
Obtain a current or previous capital or operating budget or annual report that exists within your healthcare organization from your supervisor or research a healthcare organization budget that is publicly available. Include background information and some context about the healthcare organization. Include a copy of the budget as one of the slides in the presentation.
Identify the components of the budget and describe which categories within the budget are impacted by patient outcomes (e.g., patient satisfaction, HCAHAP scores length of stay, readmissions) and which categories may impact patient care.
Organizational Budget Procedures/Processes (4-5 slides)
Interview a leader in your organization or research online to find details on your chosen organization budget procedures and processes.
Describe the role of the budget within the specific healthcare organization or unit and how it impacts patient outcomes.
Identify titles/roles of people in the organization who help create and manage budgets for this organization.
Outline the process for reviewing and revising budgets and/or submitting budget requests within this unit, department, or organization.
Discuss the process for communication of budgetary decisions within the organization.
Recommendations for Improvement (5-7 slides)
Review the budget and identify expected or unexpected items or outliers. Describe whether that issue, opportunity, or concern is capital vs. unit and what implications this has on patient care and healthcare practice.
Scenario: We will analyze the Operating Budget of a hypothetical 150-bed community hospital, "Nairobi Community Hospital," located in Nairobi, Nairobi County, Kenya. This hospital provides a range of inpatient and outpatient services, including medical-surgical, maternity, pediatrics, and a busy emergency department. The budget we will analyze is for the fiscal year 2024-2025.
Nairobi Community Hospital - Operating Budget Analysis & Recommendations
(Slide 1: Title Slide)
- Title: Operating Budget Analysis & Recommendations - Fiscal Year 2024-2025
- Presenter: (Your Role - e.g., Nurse Leader, Healthcare Management Student)
- Date: April 1, 2025
- Organization: Nairobi Community Hospital
(Slide 2: Background & Context)
- Nairobi Community Hospital:
- 150-bed community hospital located in Nairobi, Nairobi County, Kenya.
- Provides a range of inpatient and outpatient services: Medical-Surgical, Maternity, Pediatrics, Emergency Department, Outpatient Clinics.
- Serves a diverse population within Nairobi and surrounding areas.
- Mission: To provide high-quality, compassionate, and accessible healthcare to our community.
- This analysis focuses on the Operating Budget for Fiscal Year 2024-2025.
(Slide 3: Copy of the Hypothetical Operating Budget - Summary)
(This slide would contain a summarized version of a typical operating budget. Due to limitations in creating a visual table here, I will describe the key components that would be listed. Imagine a table with the following categories and example figures in Kenyan Shillings (KES)):
| Category | Budgeted Amount (KES) | Actual Amount (KES) - Previous Year (for context) | Variance (KES) | Variance (%) |
|---|---|---|---|---|
| Revenue | ||||
| Patient Service Revenue | 500,000,000 | 480,000,000 | 20,000,000 | 4.2% |
| Other Operating Revenue | 10,000,000 | 9,500,000 | 500,000 | 5.3% |
| Total Revenue | 510,000,000 | 489,500,000 | 20,500,000 | 4.2% |
| Expenses | ||||
| Personnel Costs | ||||
| Salaries & Wages | 250,000,000 | 240,000,000 | 10,000,000 | 4.2% |
| Benefits | 75,000,000 | 72,000,000 | 3,000,000 | 4.2% |
| Total Personnel Costs | 325,000,000 | 312,000,000 | 13,000,000 | 4.2% |
| Facility Operating Costs | ||||
| Supplies (Medical & Non-Med) | 50,000,000 | 48,000,000 | 2,000,000 | 4.2% |
| Utilities | 15,000,000 | 14,500,000 | 500,000 | 3.4% |
| Maintenance & Repairs | 10,000,000 | 9,000,000 | 1,000,000 | 11.1% |
| Insurance | 5,000,000 | 4,800,000 | 200,000 | 4.2% |
| Other Operating Expenses | 20,000,000 | 19,000,000 | 1,000,000 | 5.3% |
| Total Facility Costs | 100,000,000 | 95,300,000 | 4,700,000 | 4.9% |
| Other Expenses | ||||
| Depreciation | 30,000,000 | 30,000,000 | 0 | 0% |
| Interest Expense | 10,000,000 | 10,000,000 | 0 | 0% |
| Total Other Expenses | 40,000,000 | 40,000,000 | 0 | 0% |
| Total Expenses | 465,000,000 | 447,300,000 | 17,700,000 | 4.0% |
| Operating Income | 45,000,000 | 42,200,000 | 2,800,000 | 6.6% |
(Slide 4: Budget Components and Impact on Patient Outcomes)
-
Personnel Costs (Salaries & Wages, Benefits):
- Impacted by Patient Outcomes:
- Patient Satisfaction (HCAHPS): Adequate and skilled staffing levels directly influence the time nurses and other staff can spend with patients, their responsiveness to needs, and the overall patient experience. Higher satisfaction can lead to better scores.
- Length of Stay: Sufficient staffing can facilitate timely care delivery, medication administration, and patient education, potentially reducing unnecessary delays and the length of stay.
- Readmissions: Adequate staffing and experienced nurses contribute to thorough patient education, effective discharge planning, and early identification of potential complications, which can lower readmission rates.
- May Impact Patient Care: Insufficient staffing due to budget constraints can lead to nurse burnout, increased errors, delays in care, and compromised patient safety. Lower pay or benefits can hinder recruitment and retention of qualified staff, negatively affecting the quality of care.
- Impacted by Patient Outcomes:
-
Facility Operating Costs (Supplies, Utilities, Maintenance):
- Impacted by Patient Outcomes:
- Patient Satisfaction: Availability of clean and comfortable facilities, functioning equipment, and necessary supplies contribute to a positive patient experience.
- Length of Stay: Malfunctioning equipment or lack of necessary supplies can delay procedures and treatments, potentially increasing the length of stay.
- Readmissions: Use of high-quality medical supplies and well-maintained equipment can reduce the risk of complications and infections, potentially lowering readmission rates.
- May Impact Patient Care: Budget cuts in essential supplies (e.g., wound care, medications) or deferred maintenance on critical equipment can directly compromise the ability to provide safe and effective patient care.
- Impacted by Patient Outcomes:
(Slide 5: Organizational Budget Procedures/Processes - Role of the Budget)
- Role of the Budget at Nairobi Community Hospital:
- Financial Roadmap: Serves as a financial blueprint outlining expected revenues and planned expenditures for the fiscal year.
- Resource Allocation: Guides the allocation of financial resources to various departments and services based on strategic priorities and anticipated needs.
- Performance Measurement: Provides a benchmark against which actual financial performance can be measured and variances analyzed.
- Accountability: Establishes financial accountability for department managers and leaders.
- Supports Strategic Goals: Aligns financial planning with the hospital's overall mission, vision, and strategic objectives (e.g., improving patient outcomes, expanding services).
- Impact on Patient Outcomes: By ensuring adequate resources are available for staffing, supplies, and equipment, the budget directly influences the hospital's capacity to deliver safe, quality patient care and achieve positive outcomes.
(Slide 6: Organizational Budget Procedures/Processes - Titles/Roles in Budget Creation & Management)
- Key Personnel Involved in Budget Process:
- Chief Executive Officer (CEO): Provides overall strategic direction and final approval of the budget.
- Chief Financial Officer (CFO): Oversees the entire budget process, develops financial guidelines, and consolidates departmental budgets.
- Director of Finance/Budget Manager: Works closely with department heads to develop and monitor budgets, provides financial analysis, and ensures compliance with budget guidelines.
- Nurse Leaders (Chief Nursing Officer, Nurse Managers): Develop and manage the nursing department's budget, including personnel costs, supplies specific to nursing care, and staffing requests, based on patient care needs and workload.
- Department Heads/Managers (across all departments): Responsible for developing and managing their respective departmental budgets, justifying resource requests, and monitoring expenditures.
- Physician Leaders (Medical Directors): Provide input on resource needs related to medical services, equipment, and staffing.