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