1. Budget, Staffing, and Scheduling

2. Objectives At the completion of this module, the learner will be able to:  Identify components of an organizational budget  Determine staffing needs of a unit  Explain patient classification systems

3. Healthcare Costs Total health care costs are a function of the prices and the utilization rates of health care services (Costs = price x utilization)  Price is the rate that health care providers set for the services they deliver  Utilization refers to the quanitity or volume of services provided.

4. Factors Influencing Health Care Costs Unnecessary care Consumer demands Healthcare financing Pharmaceutical usage Changing population demographics

5. Health Care Financing The Health Care Reform Act of 2010 enacted some changes in health care. More individuals will have health care coverage Health care is financed by four different groups:  Government (45%)  Private insurance (35.9%)  Individuals (15%)  Other (primarily philanthropy) (4.1%)

6. Healthcare Reimbursement Methods Charges – the cost of providing health care plus a markup for profit cost reimbursement  (Retrospective) – amount of health care cost is determined after service is provided Flat reimbursement  (prospective reimbursement) – the third party payer decides in advance what will be paid for a service or episode of care

7. Healthcare Reimbursement Methods Medicare uses a prospective payment system that uses DRGs (Diagnosis Related Groups)  A classification system that groups patients into categories based on the average number of days of hospitalization for specific medical diagnosis  Do not factor in patient acuity so not a good indicator of nursing care required

8. Healthcare Reimbursement Methods Resource-based relative value scale (RBRVS): a flat rate reimbursement method that the federal government uses to pay physicians  Fees are set by estimating the time, cognitive, and technical skills and physical effort required to provide specific care

9. Healthcare Reimbursement Methods Capitated payments  Based on the provision of specified services to an individual over a set period (such as a year)  Providers are paid a per-person-per year fee  If services cost more than the set fee, the provider absorbs the loss  If the services cost less, the provider makes a profit  Mode of payment for health management organizations (HMOs) and other managed care systems

10. Health Care Delivery Reform Strategies Managed CareHealth plan that includes both service and finance; goal is to decrease unnecessary costs, thereby reducing costs Includes HMOs in which physicians serve as the gatekeeper for health care services Organized Delivery Systems (ODS)A joint venture of hospitals, providers and insurance companies that offers a comprehensive health care package. They all share the risks and profits CompetitionProviders are now having to compete for patients based on price, patient outcomes and service quality.

11. Why Should Nurses be Concerned with Healthcare Costs? How the nurse utilizes resources affects the hospital’s bottom line Nurses can directly influence an organization’s revenue by their productivity and decreasing the cost of providing care Should be aware of the cost of supplies Your time and the patient’s time is money Use research to evaluate standard nursing practices

12. Budgets The basic financial document in most health care organizations Detailed plan for carrying out the activities an organization wants to accomplish for a certain period An ongoing activity in which plans are made and revenues and expenses are managed to meet or exceed the goals of the plan

13. Budgets Operating budget:  The organization’s day to day financial plan  An anticipation of the organization’s expenses and revenue for the upcoming year  Contains the supply and expense budget and the personnel budget Cost center – an organizational unit for which costs can be identified and managed The personnel budget is the largest part of the operating budget for most nursing units Unit of service – measure appropriate to the work of the unit is used (patient days, clinic or home visits, hours of service, etc) Workload volume = hours of care per day x number of patient days

14. Personnel Budget Have to forecast how many staff members are needed to provide care Determine FTEs (full-time equivalents) = 40 hours per week x 52 weeks per year = 2080 hours of work paid per year  This consists of productive and non-productive hours  Productive is paid time that is worked  Non-productive is paid time that is not worked (vacation, holidays, orientation, education, and sick time) Calculated by dividing the total patient care hours required by the number of productive hours per FTE Then prepare a daily staffing plan and establish positions

15. Supply and Expense Budget Often called the other than personnel services expense budget (OTPS) Items such as office supplies, minor equipment, books and journals, orientation, training and travel.

16. Revenue Budget Projects the income that the organization will receive for providing patient care Usually established by the financial office Calculated according to the price per patient day Also need to have data about volume and types of patients and reimbursement sources (case mix and payer mix)

17. Capital Expenditure Budget Must have a useful life of more than 1 year and must exceed a cost level specified by the organization Used for large expenses usually costing over $300 to $1000 Pays for new buildings, equipment, etc To account for capital expenditures, the costs of capital items are depreciated A portion of the cost of capital items is allocated to the operating budget as an expense each year over the life of the item

18. Cash Budget Money allocated to pay monthly expenses Organizations can be making a profit and still run out of cash (an increased census can cause a cash shortage because of increased expenditures)

19. The Staffing Process AHRQ Nurse Staffing Model  Developed a conceptual framework for nurse staffing and patient outcomes  See Figure 14-1 page 274 Patient Classification Systems  Sicker patients have higher scores indicating that more nursing resources are required to provide care  Can be used to fine tune daily staffing requirements  Problem is the reliability and validity of the tools-Nurses provide the data and can be subjective  Prototype evaluation system- classifies patients into broad categories and uses those categories to predict patient care needs  Factor evaluation system – more objective; gives each task, thought process, and patient care activity a time or rating. These are summed to determine direct care hours required

20. National Database of Nursing Quality Indicators (NDNQI) Data is collected for the NDNQI database from eight types of units (critical care, step-down, medical, surgical, combined medical-surgical, rehab, pediatric, and psychiatric) Hospitals submit data and can compare their results against similar hospitals and participate in ongoing research on nurse sensitive data A component of NDNQI is hours per patient day (HPPD) required to provide necessary care for patients on a unit

21. External Variables Affecting Staffing Plans State licensing standards  Usually broad in nature unless specific ratios are passed in the legislature JCAHO and other Regulatory Agencies  Do not specify what is “adequate” staffing American Nurses Association  Created the Principles for Nurse Staffing Consumer Expectations  Demand high quality care delivered in a time-efficient manner

22. Internal Organizational Variables Affecting Staffing Staffing policies  Have to comply with state and federal labor laws Structure and Philosophy of Nursing Services Department  Nursing care delivery system affects the staffing mix Organizational Support Systems  Use of unlicensed assistants to help the nurse provide care (Nursing assistants, transporters, unit clerks, etc) Changes in Services that will be offered Projected Units of Service  What is the typical unit census? How does it fluctuate?

23. Forecasting Staffing Needs Nurse managers should consider the following when establishing staffing schedules:  The staffing model of the unit  The skill mix of the nursing staff  The number of positions and FTEs needed to meet the anticipated units of service  The amount of nonproductive paid benefit time allotted to each staff member  Patient outcomes  Availability of resources

24. Scheduling A function of implementing the staffing plan by assigning unit personnel to work specific hours and specific days of the week. Decentralized scheduling: the nurse manager creates the schedule Staff self-scheduling: has the potential to promote staff autonomy and increase staff accountability Centralized scheduling: a staffing coordinator (or office) creates the schedule

25. Evaluating Unit Productivity Goal is to provide more care to more patients while spending the same for fewer salary dollars Average daily census: patient days for a given time period divided by the number of days in the time period Percentage of occupancy= daily patient census divided by the number of beds in the unit Average length of stay = number of patient days divided by the number of discharges

26. Evaluating Unit Productivity Nurse managers must evaluate and explain changes in productivity resulting in a difference between the projected staffing plan and the actual schedule using a variance report Negative variance – labor costs were higher than target; reasons include increased overtime, agency staff, higher education/training costs Positive variance – labor costs are lower than projected; reasons could include inadequate staffing of unit or increased non-professional staff use

27. Reference Yoder-Wise. P.S. (2011). Leading and Managing in Nursing (5 th Edition). St. Louis: Elsevier.