Week 5 Discussion Board
Discuss the following:
- The invasive radiology department has just purchased a piece of equipment that enables them to perform many of their procedures faster. One of the results of this improvement is that they are able to schedule 20% more cases on an average weekday. During the preplanning of this improvement, the director of short stay was not included and was told her staffing needs might increase by 10%. After the first month of the use of the new equipment, the short stay unit had the following variances. (Chapter 7 #1)
| Budget | Actual | Variance | |
| Volume (patients) | 1,000 | 1,200 | 200 |
| Overtime hours (staffing) | 50 | 75 | 25 |
| Supplies | 5,000 | 5,100 | 100 |
- Which of the variances are positive?
- Which of the variances are negative?
- What does the director need to report to senior leadership as to what has happened and why, and what she is doing to make appropriate adjustments?
- Review the income statement provided in Table 7.2 and address the following questions: (Chapter 7 #4)
- From your analysis, you understand that the net margin for the organization has shown strong growth over the past year. What factor(s) is/are driving this improved performance?
- What concerns do you have regarding current financial performance of this organization? As an executive leader within this organization, what priority issues should this organization address?
- Is your impression of the reported financial performance generally favorable or unfavorable? Why?
Week 5 Module Reading Assignments
Read the following from the course textbooks:
- Waxman, Chapter 7
- Waxman, K. T. (2018). Financial and business management for the Doctor of Nursing Practice. 2nd Springer Publishing Company.
| Discussion Board Initial Posting Rubric | |||||
| Criteria | Ratings | Pts | |||
| This criterion is linked to a Learning OutcomeRelevance to the topic or problem |
|
20 pts | |||
| This criterion is linked to a Learning OutcomeInsight and application of course concepts |
|
40 pts | |||
| This criterion is linked to a Learning OutcomeUse of evidence and support |
|
25 pts | |||
| This criterion is linked to a Learning OutcomeGrammar, Punctuation & APA |
|
15 pts | |||
| Total Points: 100 | |||||
Income Statement
Nurse leaders face numerous challenges as they fulfill their financial management roles. According to Bai et al., (2017), nurse leaders should have an adequate understanding of healthcare accounting issues for effective management of finances in their organizations. For example, they should understand basic financial statements and their use in financial management. Additionally, nurse leaders need to possess budget development competencies and be able to evaluate the impacts of organizational operations on the budget. An organization’s operations can cause either positive or negative variances on the original budget (Waxman, 2018). The purpose of this discussion is to evaluate the budgetary impacts of purchasing a piece of equipment by an invasive radiology department and offering suggestions regarding what the leadership can do to make appropriate adjustments to the budget. The discussion will also evaluate an income statement and describe the impression that it gives regarding the financial performance of the organization.
Question One
Positive Variance
A budget variance occurs when the actual cost either exceeds or is less than the originally budgeted cost. A positive variance is that cost difference that causes financial gains for an organization (Waxman, 2018). In the given budget, the only positive variance is that which is associated with patients’ volume. The department had anticipated a patients’ volume of 1,000 but it ended up receiving 1,200 patients. The revenue associated with additional 200 patients is a financial gain to the organization.
Negative Variances
Negative variances and budgetary differences that are associated with financial losses by an organization. They usually cause additional expenses on top of the costs that that organization had planned for (Waxman, 2018). In the given budget, negative variances are those associated with overtime staffing hours and supplies. As per the original budget, the department had planned that it will have 50 overtime hours but ended up having 75 which attracted additional expenses. Additionally, the original budget indicates that the facility was to utilize 5,000 supplies but ended up receiving 5,100 supplies which also attracted additional costs
Communication and Adjustment
The director needs to inform the senior leadership that the new equipment purchased caused both positive and negative variances in the budget. Precisely, the equipment caused an increase in scheduling thereby increasing patients’ volume. Again, the increase in patients’ volume increased the need for more staffing and this resulted in an increase in overtime hours for the existing nurses. Moreover, the organization required additional supplies to be able to take care of the increased patients’ volume (Kaye et al., 2021). Therefore, to ensure smooth operations going forward, the department should increase the budgetary allocation for hiring additional staff and for acquiring extra supplies.
Question Two
Factors that are Driving Improved Performance
From the income statement given, a number of factors are driving improved performance in the organization. They include increased patients’ volumed and high quality/safety performance scores which contribute to high patient revenue (Waxman, 2018). Focusing on issues that will further improve these areas will result in strong financial growth in the organization.
Concerns and Priority Issues the Organization Should Address
Doctorally-prepared nurses should identify and address issues that might have negative financial impacts on their organizations. The main concerns regarding the current financial performance of the organization include accrued compensations and benefits as well as accrued liabilities (Waxman, 2018). As an executive leader within the organization, the priority issues that the organization should address concern looking for a way to obtain finances for paying the accrued compensations and benefits as well as accrued liabilities.
Impression of the Reported Financial Performance and Conclusion
In my impression, the reported financial performance is generally favorable. It is favorable in that it depicts a high current ratio which indicates that the organization has adequate resources to pay debts over the next 12 months. Again, a positive net worth of 3% is an indication that the organization can control its expenses while at the same time earning profits (Waxman, 2018). The organization can utilize these strengths to take care of the accrued compensations and benefits as well as accrued liabilities for improved financial performance.
References
Bai, Y., Gu, C., Chen, Q., Xiao, J., Liu, D., & Tang, S. (2017). The challenges that head nurses confront on financial management today: A qualitative study. International Journal of Nursing Sciences, 4(2), 122–127. https://doi.org/10.1016/j.ijnss.2017.03.007
Kaye, A. D., Okeagu, C. N., Pham, A. D., Silva, R. A., Hurley, J. J., Arron, B. L., Sarfraz, N., Lee, H. N., Ghali, G. E., Gamble, J. W., Liu, H., Urman, R. D., & Cornett, E. M. (2021). Economic impact of COVID-19 pandemic on healthcare facilities and systems: International perspectives. Best practice & research. Clinical Anaesthesiology, 35(3), 293–306. https://doi.org/10.1016/j.bpa.2020.11.009
Waxman, K. T. (2018). Financial and business management for the Doctor of Nursing Practice. 2nd ed. Springer Publishing Company.