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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 lockers 45  30,000 Couches 5 35,000  Pantry (water dispenser, coffee machine, and fridge) 2, 1, and 1 10,000 Tables and chairs 2 and 8  60,000 Television 2  24,000 Meditation mats 10 3000 Books and bookshelves  30 and 2 5000 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:  ACTIVITIES COSTS (USD) Interior Designing  100,000 Construction costs  90,000 IT department costs  20,000 Costs of uncertain circumstances 50,000 Total:  260,000 Process of Costs Calculations There are three methods used to select

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