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NURS FPX 6216 Assessment 4 Preparing and Managing a Capital Budget

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    NURS FPX 6216 Assessment 4 Preparing and Managing a Capital Budget

    Student Name

    Capella University

    NURS-FPX 6216 Advanced Finance and Operations Management

    Prof. Name

    Date

    Preparing and Managing a Capital Budget 

    Healthcare organizations work on a business model alongside the provision of quality care and patient satisfaction. While healthcare providers are primarily concerned about patients and their healthcare, nurse leaders and other administrators of the hospital have the responsibility for both healthcare and financial stability. To successfully manage the finances of the hospitals, leaders must develop operational and capital budgets within their facilities to ensure monetary resources are used efficiently. This assessment is based on preparing and managing a capital budget for a 50-bedded step-down unit.

    I am the nurse leader of this unit and recently, my unit has experienced a high staff turnover rate. Some of the evaluations received from the existing staff and patient surveys have revealed that low nurse satisfaction, poor morale, and a depressing work environment are the contributors to this turnover rate. As an effort, I am planning to create a nurses’ lounge for staff to feel energetic and motivated toward their work. For this purpose, a capital budget will be prepared to analyze the available resources, equitable allocation of finances, and to bring effective outcomes. 

    Definition of Capital Acquisition 

    Capital budgeting is one of the most important aspects of economics in any organization. It is a mechanism to plan and evaluate the decisions related to resource allocation among various projects. These projects are one-time investments and are used for the long term. The purpose of capital budgeting is to invest in those assets which will provide benefits for a longer period and will assist in generating revenue for future cost reduction (Michelon et al., 2020). Thus, the process of acquiring these assets is called capital acquisition. Capital acquisition is a step-by-step process that involves a deep analysis of the available monetary resources and assets. These decisions are significant for any organization and thus require sufficient funds and collaboration of various stakeholders to ensure smooth financial management.

    The purpose of this renovation is to ensure that staff is motivated and satisfied with their work which will eventually result in quality patient care and patient satisfaction. A study supports the claim that achieving effective patients’ health goals prominently depends on enthused healthcare professionals to provide successful and high-quality services (ASADI et al., 2019). Therefore, every effort to ensure that nurses are motivated is essential. The process for this renovation will approximately take six months and the capital acquisition in this budget is based on certain factors where staff’s comfort and recreation are the priority. Other considerable aspects are; 1) the space is breathable enough for 45 nurses and other allied workers, 2) the furniture and other amenities are comfortable for staff to relax in break times during a hectic shift, and 3) the space is less depressing and encourages workers to perform their duties effectively. 

    Justification of the Need for Capital Acquisition

    Nurses’ motivation is considered a significant aspect in the provision of quality healthcare and reducing turnover rates. Nurse leaders are responsible for reforming facility designs and immediately modifying the environment based on the observations within their facilities (Gregory et al., 2022). The renovation of the nurses’ lounge will be beneficial for nurses as well as patients. The enhanced and more staff-centered lounge will help nurses to feel comfortable in their workplaces and interact with co-workers on various issues. This will be an opportunity to learn and gain knowledge from senior colleagues to handle similar situations effectively (Williams et al., 2018). Additionally, this will improve nurses’ performance levels and productivity as nurses will feel valued and empowered which will help nurses to take part in patient care with high morale.

    Consequently, relaxed, enthused, and motivated nurses will be able to work efficiently, provide quality care, ensure patients’ safety, and improve patients’ outcomes. Moreover, employee and patient satisfaction, delivery of quality healthcare, and the organization’s growth in a holistic way are some of our organization’s important goals and missions. Thus, the renovation of staff lounges and the results of this renovation (in terms of staff and patients’ benefits) correlates with an organizational mission to achieve desired patient outcomes and organizational growth by providing quality nursing care. The executives of the hospital will approach this budget as positive impact on the nurses’ turnover rate which has already resulted in an increased financial burden, reduced revenues, decreased patient satisfaction levels, and impaired hospitals reputation. 

    Preparing a Capital Budget

    The preparation of this budget required an extensive effort of six months. The preparations and planning began with collecting data related to available resources within the facility and stakeholders’ perspectives on the renovation of the lounge. Then a plan was established which included; design, requirements, and timelines. The assumptions that were used to create the budget are to create a comfortable, and less stressful work environment for staff cost-effectively. The available finances within the hospital are $400,000 and all other expenses will be sourced from funds and donations. The following budget is created: 


    ASSETS

    QUANTITY

    COSTS (USD)
    Staff lockers45 30,000
    Couches535,000 
    Pantry (water dispenser, coffee machine, and fridge)2, 1, and 110,000
    Tables and chairs2 and 8 60,000
    Television24,000
    Meditation mats103000
    Books and bookshelves 30 and 25000
    The total cost of assets: 167,000

    NURS FPX 6216 Assessment 4 Preparing and Managing a Capital Budget

    The amount left from the available resource is $233,000 which will be utilized for the construction, designing, and for adding necessities and some of the amount was collected from external funds. One of the areas of uncertainty identified was staff preferences and needs. The unavailability of data related to their particular needs was a knowledge gap which if available, would have improved the process of budget planning. The projected budget for that is presented below: 

    ACTIVITIESCOSTS (USD)
    Interior Designing 100,000
    Construction costs 90,000
    IT department costs 20,000
    Costs of uncertain circumstances50,000
    Total: 260,000

    Process of Costs Calculations

    There are three methods used to select the project and determine the costs; Payback Period, Net Present Value (NPV) Method, and Internal Rate of Return (IRR). The Payback Period (PP) is a method that helps in identifying the project which is quickest in generating revenue from the initial investment. While the NPV method is used to analyze the cost flows where the cost of capital is reduced by finding a net value of inflow and outflow of the costs, IRR is a method that does the NPV zero which means that inflow is equal to the outflow (Mollah et al., 2021). These methods are also used during the process of budget management to identify which investments are profitable for the organization.

    The primary sources for cost information in this budget preparation are financial statements from the hospital’s finance department, permissions from the stakeholders, and the costs acquired from external sources. The cost data collected is from the past six months and is reliable as the information has come first-hand from the finance department. The data is analyzed and the important cost computations have been done by a team of personnel that included; accounts executives, finance personnel, and administrators. The accounts department assisted in the allocation of the amount to each asset and activities related to the renovation of the lounge.

    The team together made sure that the project becomes cost-effective, revenue-generating, and have positive outcomes for both nurses and patients. The method used for cost calculation in this budgeting is parametric cost calculation. Parametric cost calculation is done by combining both the data and statistical analysis of the market costs. This method determines the underlying costs of any component of the project and then it is executed according to the needs of the present project (Relich & Świć, 2020). 

    Budget Management Plan

    The budget management plan includes collaboration between various stakeholders. To effectively manage and develop a project, it is significant to ensure collaboration among various stakeholders of an organization as it has a positive impact on the process of planning and execution (Abreu & Gomes, 2018). In this budgeting process, I will collaborate with personnel from the finance, accounting, and construction department, and with the administration of the hospital. The finance and accounts department will assist in providing data related to available monetary resources within the hospital and will provide statistical support in the allocation of these resources thus ensuring that equitable allocation is performed.

    Administrative staff will be involved to approve and process the requests for various costs and materials and ensure that the process is managed effectively within the parameters of the hospital’s regulations. The construction department will be involved in effectively using the cost estimation method as they are the subject matter experts. The five cost control methods that can be used are; 1) planning the budget properly, 2) monitoring all the expenses, 3) effectively use of change methods, 4) deadlines management, and 5) and the earnings will be tracked effectively (Mutya, 2018). 

    The Impact of Capital Acquisition on the Financial Health of the Hospital 

    The renovation of the nursing staff lounge will initially put an extra financial burden on the hospital however, it will have positive impacts in the long run-run. It will reduce the staff turnover rate, eventually cutting off the costs of hiring new nurses. This capital acquisition will ensure that patients are satisfied with the quality of care provided thus will increase the influx of patients and generating revenue from the costs gained from patients’ care which eventually increases the profitability of the organization. Capital acquisition for the staff lounge will assist in creating a less stressful environment for the nurses and eventually will improve their nursing care. It is estimated that 50% of the costs will be reverted in the form of reduced staff turnover rate in the first year of the implementation and the other half will be generated in the form of patient revenue. 

    Conclusion 

    In conclusion, the development of a nursing lounge is essential for reducing staff turnover rate by enhancing their morale and motivation towards the work which will consequently help in achieving patients’ satisfaction. To effectively create this lounge, a thorough budget preparation and management is required which will be done in collaboration with various stakeholders keeping in mind the organization’s mission of patient-centered care and cost-effectiveness. This budgeting process will result in reduced staff turnover and improved outcomes and patient satisfaction. 

    References

    Abreu, W. M., & Gomes, R. C. (2018). Measuring collaborative stakeholder influence and open budget actions. Revista De Administração Pública52(4), 593–609. https://doi.org/10.1590/0034-7612173451 

    ASADI, N., MEMARIAN, R., & VANAKI, Z. (2019). Motivation to care: A qualitative study on Iranian nurses. Journal of Nursing Research27(4). https://doi.org/10.1097/jnr.0000000000000294 

    Gregory, D. D., Stichler, J. F., & Zborowsky, T. (2022). Adapting and creating healing environments: Lessons nurses have learned from the covid-19 pandemic. Nurse Leader20(2), 201–207. https://doi.org/10.1016/j.mnl.2021.10.013 

    NURS FPX 6216 Assessment 4 Preparing and Managing a Capital Budget

    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 

    Mollah, M. A., Rouf, M. A., & Rana, S. M. S. (2021). A study on capital budgeting practices of some selected companies in Bangladesh. PSU Research Review. https://doi.org/10.1108/prr-10-2020-0035 

    Mutya, T. (2018). Cost control: A fundamental tool towards organizational performance. Journal of Accounting & Marketing07(03). https://doi.org/10.4172/2168-9601.1000283 

    Relich, M., & Świć, A. (2020). Parametric estimation and constraint programming-based planning and simulation of the production cost of a new product. Applied Sciences10(18), 6330. https://doi.org/10.3390/app10186330 

    Williams, S. P., Malik, H. T., Nicolay, C. R., Chaturvedi, S., Darzi, A., & Purkayastha, S. (2018). Interventions to improve employee health and well-being within health care organizations: A systematic review. Journal of Healthcare Risk Management37(4), 25–51. https://doi.org/10.1002/jhrm.21284