NURS FPX 6216 Assessment 4 Preparing and Managing a Capital Budget

Preparing and Managing a Capital Budget

Preparing and managing a capital budget is a critical aspect of financial management in any organization, including healthcare facilities such as St. Anthony’s Medical Center. Effective budget management requires a thorough understanding of the organization’s financial situation and an in-depth analysis of its current and future needs (Gamessa et al., 2022). One area that requires careful consideration is the acquisition of capital, which can significantly impact an organization’s financial health. This assessment explores the process of preparing and managing a capital budget for St. Anthony’s Medical Center, with a focus on the acquisition of renovation of a 35-bed floor and the associated costs of staffing and equipment.

Capital Acquisition

In order to maintain the quality of care provided to patients, St. Anthony’s Medical Center has developed a comprehensive capital acquisition plan for the fiscal year 2023. The plan aims to address the increasing demand for healthcare services in the community by expanding the 35-bed floor and acquiring new medical equipment.

NURS FPX 6216 Assessment 4 Preparing and Managing a Capital Budget

The expansion of the 35-bed floor is crucial to meet the growing demand for inpatient services. The Medical Center currently has a 35-bed floor, which will be expanded to provide additional patient rooms. This will reduce wait times and improve patient satisfaction, increasing revenue. Additionally, the Medical Center plans to purchase new medical equipment, including state-of-the-art diagnostic and treatment tools such as a better Electronic Healthcare System, patient monitoring devices, and other equipment that will enhance patient care. This equipment will increase efficiency, reduce wait times, and improve patient satisfaction (Mansour & Nogues, 2022). 

Assumption

The Medical Center assumes that the purchase of new medical equipment will improve patient care and increase revenue and that the equipment cost will not exceed the allocated budget. It is also assumed that the new equipment will be installed and fully operational within the allocated timeline.

Justification of Capital Acquisition

The capital acquisition for St. Anthony’s Medical Center is justified as it will provide significant benefits to the nursing staff, ultimately improving patient care. The renovation of the nurse’s lounge will create a more comfortable and conducive environment for nursing staff to rest, recharge, and collaborate, reducing stress and burnout levels (Mansour & Nogues, 2022). As a result, nurses will be able to provide better care, leading to improved patient outcomes. The renovation of the nurse’s lounge also supports the mission and goals of the medical center. St. Anthony’s Medical Center’s mission is to provide high-quality healthcare services to its patients while supporting its employees’ well-being. By investing in the renovation of the nurse’s lounge, the medical center is demonstrating its commitment to the health and well-being of its nursing staff, ultimately contributing to the organization’s overall success (Morrow et al., 2023). 

NURS FPX 6216 Assessment 4 Preparing and Managing a Capital Budget

When presenting the budget for the nurse’s lounge renovation, it is essential to consider how executive leaders will likely react (Brunt & Bogdan, 2022). It may be necessary to demonstrate the long-term benefits of the renovation, including improved staff retention rates, reduced costs associated with staff turnover, and improved patient satisfaction. It is also helpful to outline alternative funding sources or cost-saving measures to help alleviate any concerns about budget allocation (Bowblis, 2022). 

Cons and Alternative Approach

Renovating the nurse’s lounge presents potential drawbacks, including high costs and competing priorities. The medical center may have limited resources for capital acquisition, and updating medical equipment or improving patient care may be more pressing concerns. Instead, the medical center could explore alternative forms of support for nursing staff, such as additional training, flexible work schedules, or addressing root causes of burnout and stress.

Capital Budget

The capital budget is an essential component of financial planning for any organization, including St. Anthony’s Medical Center. This budget outlines the estimated spending and costs associated with major investments or acquisitions, such as expanding facilities or purchasing new medical equipment. The table below presents the capital budget for St. Anthony’s Medical Center, outlining the spending and cost for FY 2022 and the budget for FY 2023.

Table 1: Capital Budget St. Anthony’s Medical Center (Capella University, n.d.)

Areas of Uncertainty 

The areas of uncertainty that require further investigation to improve the accuracy of the capital budget for St. Anthony’s Medical Center include unexpected delays or cost overruns, external factors impacting the plan, and the need for more information to forecast operating revenue and expenses accurately.

Calculating Costs

The process of cost calculation for St. Anthony’s Medical Center entails identifying all expenses linked to the capital acquisition plan, which encompasses expanding the 35-bed floor and procuring new medical equipment. The cost estimates are sourced from multiple avenues, including vendors, contractors, and similar projects. The expenses are then categorized based on their nature, such as construction, equipment, and professional fees. A possible approach for cost estimation is the bottom-up method, which involves estimating the cost of individual items or activities involved in the project and summing them up to determine the total project cost (Ricci de Araújo et al., 2021). This method can be particularly useful for items like medical equipment, where vendors can obtain specific costs. Additionally, a competitive bidding process can be used to obtain multiple quotes for medical equipment, reducing the possibility of vendor bias and unreliable information.

NURS FPX 6216 Assessment 4 Preparing and Managing a Capital Budget

Several data points are identified as questionable during the cost calculation, particularly the estimated costs for medical equipment and professional fees (Hinrichs-Krapels et al., 2022). Vendors are the source of medical equipment cost estimates, which may result in vendor bias and unreliable information. Furthermore, the cost estimates for professional fees are derived from prior projects, leaving room for uncertainty about their applicability to the present project.

Budget Management Plan

Effective budget management is essential for the financial health and sustainability of St. Anthony’s Medical Center. To achieve this, the medical center can collaborate with various stakeholders, such as financial or administrative staff or budget committees (Alzghaibi et al., 2022). This collaboration ensures the budget aligns with the organization’s financial goals and strategies. Regular meetings with these stakeholders can also help identify potential issues and areas for improvement in the budget.

St. Anthony’s Medical Center can employ cost-reduction initiatives, negotiate with suppliers, and monitor the budget regularly to control costs. Cost reduction initiatives involve identifying and implementing measures to reduce unnecessary expenses, improving supply chain management, and optimizing staffing levels. Negotiating with suppliers can also help reduce costs associated with purchasing medical equipment, supplies, and services (Li et al., 2022). Regular budget monitoring can help identify any deviations from the budget plan and allow for prompt corrective action to be taken. get free NURS FPX 6216 Assessment 4 Preparing and Managing a Capital Budget

Managing budget variances is crucial to ensure St. Anthony’s Medical Center stays within its financial targets. Identifying the causes of budget variances can help determine if they are due to external factors or internal issues. Corrective action can be taken based on the causes of variances, such as reducing expenses or increasing revenue. If necessary, the budget can be adjusted to account for unforeseen circumstances or changes in the external environment.

Impact on the Financial Health of the Organization

The renovation of St. Anthony’s Medical Center will have a significant impact on its financial health. While it is expected to improve the quality of care provided to patients and enhance the hospital’s reputation, it will also require a substantial investment of capital (Hu et al., 2022).

The return on investment for the renovation will depend on various factors, including the cost of the renovation and the hospital’s ability to attract and retain patients. However, if executed effectively, the renovation could yield a positive return on investment in the long run. The estimated project timeframe is 4 months.

NURS FPX 6216 Assessment 4 Preparing and Managing a Capital Budget

It is important to consider the depreciation value of the renovation when assessing its impact on the hospital’s financial health (Witvorapong et al., 2022). The value of the renovated assets may decrease over time, which could affect the hospital’s balance sheet and financial performance. 

Area of Uncertainty

Uncertainty surrounds the renovation’s return on investment, necessitating a thorough cost-benefit analysis to identify potential financial benefits, including revenue growth and reduced costs. The estimated 4-month timeframe for recovering renovation costs suggests a quick turnaround, but ongoing operational and unforeseen expenses must be considered.

Conclusion

In conclusion, St. Anthony’s Medical Center has developed a comprehensive capital acquisition plan to address the increasing demand for healthcare services in the community. The plan includes expanding the 35-bed floor and acquiring new medical equipment, improving patient care, reducing wait times, and increasing revenue. The capital budget outlines the estimated spending and costs associated with these investments.

References

Alzghaibi, H., Mughal, Y. H., Alkhamees, M., Alasqah, I., Alhlayl, A. S., Alwheeb, M. H., & Alrehiely, M. (2022). The impact of financial resources on implementation of large-scale electronic health records in Saudi Arabia’s primary healthcare centers: Mixed methods. Frontiers in Public Health, 10. https://doi.org/10.3389/fpubh.2022.1037675 

Bowblis, J. R. (2022). The need for an economically feasible nursing home staffing regulation: Evaluating an acuity-based nursing staff benchmark. Innovation in Aging, 6(4). https://doi.org/10.1093/geroni/igac017 

Brunt, B. A., & Bogdan, B. A. (2022, November 27). Nursing professional development leadership. Retrieved from Nih.gov website: https://www.ncbi.nlm.nih.gov/books/NBK519064/ 

Capella University, (n.d.). Vila Health: Developing an operating budget. https://media.capella.edu/CourseMedia/nurs-fpx6216element236949/wrapper.asp?sso=true

Gamessa, T. W., Abebe, S. T., Abate, L. D., Abo, M. K., Mekonnen, A. A., Tadesse, Z. K., … Simegn, G. (2022). Planning and budgeting of medical devices among Ethiopian public hospitals. ClinicoEconomics and Outcomes Research, 14, 405–413. https://doi.org/10.2147/ceor.s363376 

Hinrichs-Krapels, S., Ditewig, B., Boulding, H., Chalkidou, A., Erskine, J., & Shokraneh, F. (2022). Purchasing high-cost medical devices and equipment in hospitals: A systematic review. BMJ Open, 12(9), e057516. https://doi.org/10.1136/bmjopen-2021-057516 

Hu, X., Jin, W., Yang, A., & Hu, Z. (2022). Management of capital liquidity in public hospitals under the epidemic situation of COVID-19. Frontiers in Public Health, 10. https://doi.org/10.3389/fpubh.2022.977221 

Li, J., Mao, Y., & Zhang, J. (2022). Maintenance and quality control of medical equipment based on information fusion technology. Computational Intelligence and Neuroscience, 2022, 1–11. https://doi.org/10.1155/2022/9333328 

Mansour, S., & Nogues, S. (2022). Advantages of and barriers to crafting new technology in healthcare organizations: A qualitative study in the COVID-19 context. International Journal of Environmental Research and Public Health, 19(16), 9951. https://doi.org/10.3390/ijerph19169951 

Morrow, E., Zidaru, T., Ross, F., Mason, C., Patel, K. D., Ream, M., & Stockley, R. (2023). Artificial intelligence technologies and compassion in healthcare: A systematic scoping review. Frontiers in Psychology, 13. https://doi.org/10.3389/fpsyg.2022.971044

Ricci de Araújo, T., Papathanassoglou, E., Gonçalves Menegueti, M., Grespan Bonacim, C. A., Lessa do Valle Dallora, M. E., Carvalho Jericó, M., Basile‐Filho, A., & Laus, A. M. (2021). Critical care nursing service costs: Comparison of the top‐down versus bottom‐up micro‐costing approach in Brazil. Journal of Nursing Management, 29(6), 1778–1784. https://doi.org/10.1111/jonm.13313

Witvorapong, N., Ngamkiatphaisan, S., & Sriratanaban, J. (2022). Cost analysis of a teaching hospital in Thailand: Impacts of the first wave of COVID-19. PLOS ONE, 17(9), e0273771. https://doi.org/10.1371/journal.pone.0273771