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NURS FPX 6216 Assessment 1 Instructions: Mentor Interview

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    NURS FPX 6216 Assessment 1 Instructions: Mentor Interview

    Student Name

    Capella University

    NURS-FPX 6216 Advanced Finance and Operations Management

    Prof. Name

    Date

    Introduction to Mentor Interview

    Nursing leaders should be knowledgeable about the fundamentals of healthcare business and financial management. These aspects assist the leaders in effectively analyzing the current national and international healthcare trends to bring reforms to their organizations. A study in this regard concludes that nurses must have business skills along with clinical skills so that they can maximize the growth of the healthcare system they work in. Moreover, it is essential to meet the needs of the community in the present times.

    Profound knowledge of business acumen enables nurses to become empowered in their leadership and management roles, thus influencing healthcare reforms and innovations (Raftery et al., 2021). One of the basic components of the healthcare business is budgeting the resources (materials and finances). This assessment is based on an interview that was conducted with one of my nursing colleagues, Kate, who completed her Master’s in Business Management degree in 2021 and since then she is working as a business manager at Detroit Community Hospital. The focus of the interview was to discuss different types of budgeting, the budget management approach that is used by my colleague in her organization, and how these approaches impact the provision of care in her organization. 

    Comparison Between Management Process of Operating and Capital Budget 

    Kate began the detailed discussion by explaining two types of budgeting; operating and capital budgeting. She further defined capital budget as an allocation of finances for procurement or preservation of fixed assets. Fixed assets are those resources that are purchased for long-term use like land, building, or any medical equipment. A systematic review explains capital budget as a planning method that helps organizations to evaluate and make decisions about the allocation of resources among different investments (Michelon et al., 2020).

    Kate further elaborated that the process used to manage capital budgeting involves various steps which are; identification, development, selection, and post-audit. She shared her method of managing the capital budget where initially she establishes the objectives of the budget. These goals are set up on SMART guidelines which is that goals are specific, measurable, attainable, realistic, and have a defined timeline to complete. These goals helped her to stay directed in the planning process and make strategic decisions for long-term plans. After identifying the projects and establishing goals, the next step is to recognize the available capital (finances) where analysis is done to identify the organization’s net cash flow which is available for expenditure on these projects.

    This process accounts for the identification of basic funds sources (cash reserves, incomes, and new financial proceeds) and monetary sources which are kept aside for uncertain situations. These resources are then allocated according to the selection and evaluation of the projects and prioritization. The last stage of capital budgeting is to monitor the progress through the compilation of reports which highlights the spending against the approved capital. This step is to ensure that funds are tracked and used for the approved purpose. 

    NURS FPX 6216 Assessment 1 Instructions: Mentor Interview

    On the other hand, Kate explained the operating budget as a forecast budget that includes revenues and expenses expected for a while. The literature presents the operating budget as the expense side which is analyzed using fixed and variable costs (Zhang & Bohlen, 2023). She explained that the operating budget is planned before the start of the year where leaders set an expectation about activities that will be planned throughout the year, what will be the costs associated with them, and which resources will be needed to support these activities. To manage operational budgeting, initially, data is collected from the past two years which is then analyzed for increasing and decreasing revenue trends. Then, an expected number of activities (salaries, supply, and materials, operating cost of administration, etc.) and expected reserves are planned.

    Along with expenses, estimated revenues are also developed which then assists in working out of the hospital reserves. In the end, revenues generated in the year are analyzed. The difference between both processes is that capital budgeting is one-time budgeting used for investments that are performed for long-term use resources and should not be used for personnel or annual costs whereas, the operating budget is performed for annual and personnel costs, and constant revisions are done depending on the circumstances. Some of the uncertainties in the budget management process are situations where extra resources would be required, high-inflation rates, unanticipated staff turnover, malfunctioning investments, and unforeseen disasters. 

    Allocating Resources for Labor, Equipment, and Services

    Further in the interview, Kate identified the importance of equitable allocation of resources for the hospital’s employees, medical supplies and equipment, and healthcare services. A study identified that the recent increase in budgeting pressure and the challenges associated with it have advocated the need for developing certain tools to allocate resources effectively (Seixas et al., 2021). The resources must be allocated according to the organization’s needs and prioritizing the investments using strategic business planning. The process of resource allocation is based on certain assumptions. Initially, the leadership establishes objectives for a year and plans to allocate specific resources for particular objectives. Furthermore, Kate identified that Detroit Community Hospital has developed software that presents the data from the past five years of expenses, resources, and revenues.

    This data helps in analyzing the current and future needs to prioritize tasks and allocate resources accordingly. Lastly, the resources are tracked and monitored by keeping an eye on the progress of the hospital. This monitoring is done on an ongoing basis to check if the objectives are met and changes are done accordingly. For effective resource allocation, Kate has identified certain criteria for her hospital. She elaborated that since her organization is a community-based hospital, it is applicable that she provides the employees a basic salary which is defined under the governmental job codes.

    NURS FPX 6216 Assessment 1 Instructions: Mentor Interview

    However, the bonuses and other benefits are provided according to the key performance indicators (KPIs), staff turnover rates, and the organization’s revenue. Purchasing of medical equipment is undertaken by examining the needs, trends, and innovations which are essential to provide effective patient care as well as employee satisfaction. Resources are allocated for healthcare services by identifying what is best for patient care and providing quality healthcare whereby the demands are fulfilled by providing enough supply to maintain an equitable balance (Shen & Sun, 2022). 

    Effective Approach to Plan for Profitability and Fiscal Success

    Strategic planning is considered a key approach to gaining profit and success for any organization. This involves planning for unknowns, which helps the healthcare sector better equip for unforeseen circumstances. The process used for strategic planning in Detroit Community Hospital begins with a general analysis of the hospital’s performance, needs, outcomes, and financial situation. This analysis is done using a SWOT strategy. Research claims that swot analysis helps in filling the knowledge gaps in any strategic plans and helps leaders to improve their decision related to the organization’s goals and objectives (Benzaghta et al., 2021). Kate recommended using strategic planning as it helps in developing a budget that is aligned with the specific needs of any organization and it also creates a base for continuous improvements in the plans.

    A sub-approach of strategic planning is setting standards. This approach is performed by comparing your organization with other well-established and standard organizations so that effective objectives are set to bring reforms within the organization to achieve the standard marks of the practice (Erdil & Erbıyık, 2019). To ensure fiscal success, it is essential to highlight important aspects like budget creation and management, budget variances, and discretionary spending.  Planning, creating, and managing budgets effectively assists an organization to appropriately manage the available resources as well as achieving organizational goals. It also requires continuous monitoring of the budget and making adjustments as needed.

    NURS FPX 6216 Assessment 1 Instructions: Mentor Interview

    By managing the budget effectively, organizations can optimize their use of available resources and avoid unnecessary expenses, leading to improved financial performance. This consequently results in the organization’s growth and success (Huang, 2019). Ensuring effective evaluation of the budget by looking at budget variances (expected and actual figures) and appropriately addressing the challenges assists in providing effective conclusions for nurse leaders to improve future plans to achieve successful outcomes. This is only possible if an effective budgeting approach is utilized. Moreover creating a budget and effectively managing it using an effective approach impacts positively an organization’s fiscal success by assisting in achieving long-term goals, preventing an organization from discretionary expenses (expenditure on non-essential resources), preparing for emergencies, and enabling the stakeholders to understand and evaluate the revenues generated.

    By minimizing discretionary spending, organizations can allocate more resources toward achieving their strategic goals and improving their financial performance. Other potential options for gaining profitability and fiscal success can be the expansion of services, staff satisfaction for decreasing turnover rates, improving relationships with governmental and nonprofit organizations, and investment in cost-saving IT systems. 

    Evaluation of the Nurse Leader’s Approach to Budget Management

    The financial responsibility of nurse leaders enables them to prepare budgets that are aligned with the hospital’s requirements. Similarly in my interview with Kate, I identified that strategic planning using SWOT analysis is the approach that she has used in her organization. To evaluate her approach and the budget certain criteria are developed. The budget is efficient and equitable, stakeholders are involved, transparency is maintained, quality data is used, and is aligned with the annual planning process (Dahana & Ermwati, 2020). Kate’s approach had been evaluated on these criteria in which the actual results were aligned with the expected outcomes. Moreover, it was easy to compare and analyze the expected expenses and revenue, and it helped in identifying the problems that occurred during the process.

    However, one of the drawbacks observed is that Kate didn’t involve all stakeholders to develop the budget only information gathered was through online software. It is recommended to involve stakeholders to ensure that the budget is equitably created and managed according to the different needs of the organization and employees to ensure that the budget developed is transparent and makes every team member accountable for any undesired outcomes (Abreu & Gomes, 2018). In the case of healthcare budgets, policymakers, administrators, nurses, and other allied professionals should be involved throughout the process to ensure employee and patient-centered budgets are developed to align with the organization’s mission. Budgets must follow these criteria so that equitable allocation of resources is performed, effective plans are made to achieve the organization’s desirable objectives. 

    Conclusion

    In conclusion, budget management and planning are one of the responsibilities of nurse leaders. Nurses must gain knowledge about financial management and business acumen so that they can effectively perform their roles. In terms of budget management, strategic planning and effective use of budget evaluation criteria are essential so that resources are allocated as per the need, specific organizational objectives are determined, the organization gains profit and fiscal achievements, and healthcare services are improved

    References

    Abreu, W. M., & Gomes, R. C. (2018). Measuring collaborative stakeholder influence and open budget actions. Revista De Administração Pública, 52(4), 593–609. https://doi.org/10.1590/0034-7612173451 

    Benzaghta, M. A., Elwalda, A., Mousa, M., Erkan, I., & Rahman, M. (2021). SWOT analysis applications: An integrative literature review. Journal of Global Business Insights6(1), 55–73. https://doi.org/10.5038/2640-6489.6.1.1148 

    Dahana, M. A., & Ermwati, . (2020). Analysis of the budget planning process and budget execution process. European Journal of Business and Management Research5(4). https://doi.org/10.24018/ejbmr.2020.5.4.426 

    NURS FPX 6216 Assessment 1 Instructions: Mentor Interview

    Erdil, A., & Erbıyık, H. (2019). The importance of benchmarking for the management of the firm: Evaluating the relation between total quality management and benchmarking. Procedia Computer Science158, 705–714. https://doi.org/10.1016/j.procs.2019.09.106 

    Huang, W. (2019). Developing a better planning, budgeting, and accounting system. Built on Value, 303–328. https://doi.org/10.1007/978-981-13-7507-1_11 

    Michelon, P. de, Lunkes, R. J., & Bornia, A. C. (2020). Capital budgeting: A systematic review of the literature. Production30. https://doi.org/10.1590/0103-6513.20190020 

    Raftery, C., Sassenberg, A.-M., & Bamford-Wade, A. (2021). Business acumen for nursing leaders, optional or essential in today’s health system? A discussion paper. Collegian28(6), 610–615. https://doi.org/10.1016/j.colegn.2021.08.001 

    Seixas, B. V., Regier, D. A., Bryan, S., & Mitton, C. (2021). Describing practices of priority setting and resource allocation in publicly funded health care systems of high-income countries. BMC Health Services Research21(1). https://doi.org/10.1186/s12913-021-06078-z 

    NURS FPX 6216 Assessment 1 Instructions: Mentor Interview

    Shen, Y., & Sun, Z. (2022). Estimating the spatial correlation and convergence of China’s healthcare resources allocation: Evidence from the Yangtze River Delta Region. Archives of Public Health80(1). https://doi.org/10.1186/s13690-022-00958-4 

    Zhang, R., & Bohlen, J. (2023). Healthcare business budgeting. In StatPearls. StatPearls Publishing. http://www.ncbi.nlm.nih.gov/books/NBK589707/