Developing a Nursing Service Business Plan
Question:
Discuss about the Process Orientation and Management Control.
The current assignment aims to formulate a business plan for adding a new 12-bed short stay surgical ward in the 32 bed general surgical ward. The first section of the assignment would focus on discussing steps required to develop a nursing service business plan, type of workload methodology needed to ascertain nurse supply and staff education issues for the new service. The second part would concentrate on identifying the benefits of including the nurse manager in developing cost centre budget and the appropriate budgeting method to be used. In addition, the three main areas of expenditure taken into account for the expenditure budget and issues related to the expenditures have been identified as well. Finally, the assignment would shed light on developing salaries and wages budget for the new combined service.
In this phase, planning needs to be made about the way of combining short stay surgical ward in the 32-bed general surgical ward. Such planning would focus on the financial aspect of the combined service, rational for using resources and the facility of the designed service (Alviniussen and Jankensgard 2015). This would help in providing a clear depiction to all those likely to be affected by the project.
In this step, the hospital needs to be clear regarding its aims and objectives of the project. This would help in clarifying the services to be provided to the patients and other healthcare professionals referring to the service (Anessi-Pessina et al. 2016). In addition, a clear approach at this stage would enable in demonstrating the areas to be audited and evaluated in future.red to meet for accessing the nurse-led clinic. For instance, the clinic could provide leaflets to the patients regarding the services to be provided.
It would not be possible for the clinic to succeed, if the patients and referrers do not know its existence and the services offered. Public needs to be initiated at the planning phase, since it might prompt discussion leading to adjustment of the designed service (Arnaboldi, Lapsley and Steccolini 2015). Leaflets, posters, group discussions, web information and visits to those probable to use it could depict the nature of service, its initiation and explaining the ways and time of accessing the same.
This step needs determining the area where the proposed service would be provided. In this case, the short stay surgical ward would be merged with the 32-bed general surgical ward for developing a new 12-bed service.
Before initiating the service, it is necessary for the healthcare professionals to refer to the services obtaining the referrals along with suggesting for offering education, support and advice. It requires taking into account the suggestions for adjustments or adaptation or it is not felt that the service is warranted at this phase (Baal, Meltzer and Brouwer 2016). Hence, the value of the business case is immense here in order to make clear argument about the service need and viability.
This is a significant element of a nurse-led clinic, since it underpins competent service. It is significant to place structures in place enhancing the ability to view deficits in knowledge base along with the ability for rectifying them. Managing medicines: Medicines could be managed in a variety of ways from supplying them via patient group directions to independent and supplementary prescribing. In case, the route taken is nurse prescribing, the clinic needs to consider the way of maintaining professional development in this area. Audit and evaluation: Ongoing audit and evaluation is crucial in order to meet the requirements of the patients. This implies that the services offered make variation to the service users (Cherry and Jacob 2016). Hence, the service needs to be designed in such a manner that it satisfies the requirements of all the users.The last step denotes the requirement to be kept in mind is that the clinic is a growing service. In addition, it is necessary for the clinic in order to assure paperwork like publicity and job descriptions, which would help in keeping pace with the variations in relation to the offered service.
Benefits of Nurse Manager Involvement in Budget Development
These records denote the knowledge of events related to illness of the patients, their recovery and kind of care that the hospital authority provides (Finkler, Calabrese and Ward 2018). This would help in providing legal protection to the hospital nurses and doctors along with avoiding work duplication.For the new group of staffs to be recruited, there would be a separate group of record providing details regarding their sicknesses, career and development activities along with a personnel note.
For the new staffs to be appointed, they need to be provided with the organisational chart, job description and procedure manual. In addition, there needs to be maintenance of treatment register, personnel performance register along with administration and discharge register.
The hospital would use the compulsory hospital nurse to patient staffing ratios for supplying the excess new nurses to achieve the new service demand. The expansion of the ward because of the inclusion of additional surgical beds implies that there would be increase in the number of patients (Dudin et al. 2015). With the help of nurse to patient staffing ratio, it would be beneficial for the clinic to ascertain the number of nurses to be included. This would help in assuring that the hospital would not encounter a challenge related to insufficient staffs for providing health services to the patients.
The management of personnel in healthcare setting comprises of blending the staffs of various professional backgrounds, skills and qualifications with the aim to maximise patient care (Eldenburg, Krishnan and Krishnan 2017). Even though this staffing method tends to work effectively, it would result in increased utilisation of less qualified staffs leading to insufficient service delivery. The clinic, therefore, needs to take into account the issue of employing numerous less qualified staffs through recruiting employees with the right qualifications.
This enables in keeping track of the expenses related to a specific function. By treating all the cost centres in the form of a separate unit, the organisation could gauge the amount of money it utilises every year for supporting a specific service (Jakobsen and Pallesen 2017). In case, the nurse manager could not establish a cost centre, it would become complex for gauging the cost of service supply. Hence, with the help of cost centre, the nurse manager could plan, gauge and control costs for all the particular functions in the hospital.
As the cost centre budget enables the nurse manager to detect each function cost, it helps in allocating the scarce resources in an effective manner (Kuo and Cheng 2018). For example, if the nurse manager gains an understanding of the actual cost to manage a call centre in the hospital, it would be helpful in computing the expenditure with the profit estimated from a new service. This would result in directing new resources to the most valuable business activity (Webb 2016).
Flexible budget is a budget, which realises the behavioural variation between variable costs and fixed costs in terms of fluctuations in output, turnover or other variable factors. With the help of flexible budgeting, the hospital could estimate the performance and income levels at a provided range of activity levels for this particular service. In addition, it would help in providing correct evaluation of organisational and managerial performance (Langabeer and Helton 2015). For applying flexible budgeting, the hospital could carry out the following steps:
Expenses and Salaries and Wage Budgets
Step 1: Specifying the used timeframe
Step 2: Categorising each cost into variable, fixed and semi-variable costs
Step 3: Ascertaining the kinds of standards to be used
Step 4: Evaluating the patterns of cost behaviour in relation to the previous activity levels
Step 5: Developing pertinent flexible budget for particular activity levels
However, flexible budgeting assumes that the costs are linear and it does not consider the discounts for bulk material purchases. In addition, the method of ascertaining the variable and fixed components of costs is arbitrary and there is little resemblance of the accurate budgeted cost for the fixed activity level.
It is a budgeting method, which is involved in apportioning funding depending on program efficiency and necessity. In contrast to traditional budgeting, no previous items are taken into account while preparing the next budget (Marlowe et al. 2018). The major advantage of zero-based budgeting is that the resulting budget is justified effectively and it is aligned to strategy. In addition, it helps in catalysing wider collaboration across the organisation. Finally, the hospital could minimise costs by avoiding increases in automatic budget and hence, it would increase its overall savings.
However, this type of budgeting system suffers from certain drawbacks. One of them is time consuming and costly nature, since budget is developed from scratch annually. Another drawback is that it might be cost-prohibitive for the hospitals having restricted budget. Finally, this budgeting system could be risky, if there is uncertainty regarding potential savings (McConnell 2018).
In the words of Menifield (2017), output-based budgeting is the method of formulating budgets depending on the association between funding and estimated outcomes. One of the major benefits of this budgeting system is that it increases transparency and involvement in the budgeting process. The stakeholders could be able to draw linkages between allocated funds and proposed results. However, this budgeting system might be costly and the government-identified results might be complicated.
Based on the evaluation of the above three budgeting procedures, zero-based budgeting is considered as the most appropriate. This is because it forms a practical way for the hospital to redesign its cost structures. This is because it would be able to cut down 25% of expense on support and overhead functions along with boosting and competitiveness of the new service.
The three main areas of expenditure, which could be taken into account for the expenditure budget of the proposed service, include the following: The fixed cost of the hospital includes overhead expenditure, staff salaries and bonuses along with building utilities and maintenance. These costs do not change over a short-term in the hospital (Mukherjee, Al Rahahleh and Lane 2016).
The variable cost of the hospital constitutes of staff supplies, patient care supplies, medications along with diagnostic and therapeutic supplies. These costs tend to vary in the hospital for a shorter timeframe.
The semi-variable costs are those costs, a part of which remain fixed and part of which tend to vary over the short-term. Examples of semi-variable expenses in the hospital include electricity, telephone bills and others.
It is assumed that the hospital has yearly costs of $200 million with 15,000 patients each year. The average payment that the patients have made is $13,500 each year, which has lead to revenue of $202.5 million. 2/3rd of the costs have been fixed, while 1/3rd of the costs have been variable and semi-variable. Hence, if the community enhances primary care for minimising 10% people attaining hospital care. In this case, the variable cost of the hospital would decrease by 10% to $60 million, while the fixed costs remain at $133 million (Paulsson 2017). Even though the overall expense would decline to $193 million, the revenue would fall to $182 million with 10% lower patients resulting in a loss of $11 million.
Combining the Surgical Wards
The cost centre that would be generated within the hospital constitute of general services, ancillary services, in-patient services, outpatient services and other cost centres. The in-patient services take into account the direct costs of hospital-affiliated nursing facilities along with other long-term care units (Shanks 2016). The other cost centres comprise of a group of non-reimbursable cost centres like gift shops and offices of the physicians.
|
Particulars |
Amount (in $) |
|
Wages |
30,000 |
|
Medical insurance |
7,200 |
|
Retirement benefits |
2,400 |
|
Workers’ compensation premiums |
600 |
|
Employer Medicare taxes |
435 |
|
Fringe benefits |
800 |
|
Total wages and salaries |
41,435 |
Table 1: Salaries and wages budget for the proposed nursing service
(Source: As created by author)
Finally, the total number of working hours for each staff is 1,832.
The overall direct cost of payroll could be divided by the overall number of working hours to obtain hourly rate. In this case, the hourly rate would be $22.62 ($41,435/1,832). This rate would help the hospital to charge for accruals related to payroll and it has the amount of money present at the time a staff seeks a vacation, sick or holiday leave (Waxman 2017). There might be re-computation of the rates with the change in the actual costs of payroll.
Conclusion:
Based on the above discussion, it could be found out that the hospital would use the compulsory hospital nurse to patient staffing ratios for supplying the excess new nurses to achieve the new service demand. The expansion of the ward because of the inclusion of additional surgical beds implies that there would be increase in the number of patients. The management of personnel in healthcare setting comprises of blending the staffs of various professional backgrounds, skills and qualifications with the aim to maximise patient care. The clinic, therefore, needs to take into account the issue of employing numerous less qualified staffs through recruiting employees with the right qualifications. Finally, the cost centre that would be generated within the hospital constitute of general services, ancillary services, in-patient services, outpatient services and other cost centres.
References:
Alviniussen, A. and Jankensgard, H., 2015. Enterprise risk budgeting: bringing risk management into the financial planning process.
Anessi-Pessina, E., Barbera, C., Sicilia, M. and Steccolini, I., 2016. Public sector budgeting: a European review of accounting and public management journals. Accounting, Auditing & Accountability Journal, 29(3), pp.491-519.
Arnaboldi, M., Lapsley, I. and Steccolini, I., 2015. Performance management in the public sector: The ultimate challenge. Financial Accountability & Management, 31(1), pp.1-22.
Baal, P., Meltzer, D. and Brouwer, W., 2016. Future costs, fixed healthcare budgets, and the decision rules of cost?effectiveness analysis. Health economics, 25(2), pp.237-248.
Cherry, B. and Jacob, S.R., 2016. Contemporary nursing: Issues, trends, & management. Elsevier Health Sciences.
Dudin, M., Kucuri, G., Fedorova, I., Dzusova, S. and Namitulina, A., 2015. The innovative business model canvas in the system of effective budgeting.
Eldenburg, L., Krishnan, H.A. and Krishnan, R., 2017. Management Accounting and Control in the Hospital Industry: A Review. Journal of Governmental & Nonprofit Accounting.
Finkler, S.A., Calabrese, T.D. and Ward, D.M., 2018. Accounting fundamentals for health care management. Jones & Bartlett Learning.
Greene, J.P., Kyaw-Tun, L.W., Rahman, R., Che Othman, E., Hassan, A., Mohamed, M., Akhtar, M., Owen, J., Bertuzzi, A., Walshe, J. and McDermott, R., 2016. Cost effectiveness of therapeutic clinical trials for the Irish Health Service Executive: A single centre analysis of hospital and state budget cost savings.
Jakobsen, M.L.F. and Pallesen, T., 2017. Performance budgeting in practice: The case of Danish hospital management. Public Organization Review, 17(2), pp.255-273.
Kuo, Y.Y. and Cheng, M.H., 2018. Budgeting and financial management of public infrastructure: The experience of Taiwan. Value for Money: Budget and financial management reform in the People’s Republic of China, Taiwan and Australia, p.221.
Langabeer, J.R. and Helton, J.R., 2015. Health care operations management. Jones & Bartlett Publishers.
Marlowe, J., Kioko, S., Kasdin, S., Mou, H., Atkinson, M.M., Tapp, S., Srithongrung, A., Gorina, E., Maher, C., Joffe, M. and Su, M., 2018. Public budgeting & finance.
McConnell, C.R., 2018. The effective health care supervisor. Jones & Bartlett Learning.
Menifield, C.E., 2017. The basics of public budgeting and financial management: A handbook for academics and practitioners. Rowman & Littlefield.
Mukherjee, T., Al Rahahleh, N. and Lane, W., 2016. The capital budgeting process of healthcare organizations: a review of surveys. Journal of Healthcare Management, 61(1), pp.58-76.
Paulsson, G., 2017. Process orientation and management control in health care organizations. In Modernizing the public sector: Scandinavian perspectives. Routledge Taylor & Francis Group.
Shanks, N.H., 2016. Introduction to health care management. Jones & Bartlett Publishers.
Waxman, K.T. ed., 2017. Financial and business management for the doctor of nursing practice. Springer Publishing Company.
Webb, A., 2016. Budget Management. In Handbook of Intensive care: Organization and Management (pp. 339-357).
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
