Resources: Budgets under Chief Financial Officer in the Patton-Fuller Community Hospital Virtual Organization and the Health Care Budget assignment from Week Five
Part 1 – 2010 Operating Budget
Review the “2009 Budget Issues – Nurses” file in the Patton-Fuller Community Hospital Virtual Organization (accessed via the University Library). This document can be found on the Chief Financial Officer’s web page under Special Projects.
Decide which of the two highlighted options you will implement from the Nursing Statistics memo of the “2009 Budget Issues – Nurses” document.
Discuss decision-making processes in creating a budget.
Create a new 2010 Operating Budget based on the labor decision you select from the Nursing Statistics memo.Use your Week Five Health Care Budget assignment as the foundation to develop your new projected budget. ( i have attached the budget projections)
Part 2 – Analysis Paper
Write a 1,050- to 1,400-word paper in which you address the following:
- Discuss decision-making processes in creating a budget.
- Explain the role of variance analysis in maintaining an operating budget.
- Differentiate between managerial accounting and financial management.
- Explain generally accepted accounting principles applied to the health care industry and how they are applied to your Operating Budget Projection.
- Discuss the decision between the two labor alternatives facing the management of PFCH and the annual cost increase of each.
- Make a recommendation about which labor alternative should be chosen.
- Justify and analyze the labor decision that you recommend. Your justification should present numbers related to fiscal management including how each decision affects the 2010 Budget Projection.
- Analyze the effect of your decision on the operating budget, including:
- The opportunity cost of your recommendation
- How your recommendation affects employee satisfaction
- How your recommendation affects patient care and patient satisfaction
Cite a minimum of 4 sources.
Format your sources according to APA guidelines.
Expert Solution Preview
Introduction:
Budgeting is a critical process in any organization, including healthcare institutions. As a medical professor, it is essential to equip students with the skills to develop and manage operating budgets in healthcare organizations. This assignment involves reviewing the 2009 Budget Issues – Nurses document, deciding on the labor option to implement, creating a new 2010 Operating Budget, and writing an analysis paper discussing the decision-making process in budget creation, managerial accounting versus financial management, generally accepted accounting principles, and the effect of labor decisions on the budget and patient care.
Answer 1:
Based on the Nursing Statistics memo in the 2009 Budget Issues – Nurses document, I would choose to implement option two, which reduces the number of RNs by ten percent and increases the number of nursing assistants by fifteen percent. This option appears more cost-effective and is likely to result in minimal impact on patient care.
Answer 2:
The decision-making process in creating a budget involves various steps. The first step is to identify and prioritize organizational goals and objectives. The second step is to estimate the resources required to achieve the goals. This involves gathering detailed data on past performance, projected future needs, and potential constraints. The third step is to develop alternative budget scenarios based on different assumptions regarding inputs and outputs. Finally, the most feasible budget scenario is chosen based on a cost-benefit analysis.
Answer 3:
Managerial accounting involves using financial data to inform internal decision-making within an organization. It focuses on preparing budgets, evaluating performance, and identifying opportunities for reducing costs and increasing revenue. Financial management, on the other hand, involves using financial data to make decisions that affect external stakeholders, such as shareholders and creditors. It focuses on financial analysis, risk assessment, and financial reporting.
Answer 4:
Generally accepted accounting principles (GAAP) are the standard guidelines for financial accounting in the United States. GAAP provides a framework for financial reporting, including the preparation of financial statements, disclosure requirements, and accounting practices. In healthcare, GAAP applies to the financial management of the organization, including the development and management of the operating budget projection.
Answer 5:
The management of PFCH has two labor alternatives to choose from, which involve different costs. Option one involves reducing the number of RNs by five percent and increasing the number of nursing assistants by ten percent, resulting in an annual cost increase of $1,044,000. Option two involves reducing the number of RNs by ten percent and increasing the number of nursing assistants by fifteen percent, resulting in an annual cost increase of $926,000.
Answer 6:
Based on the analysis, I recommend choosing option two, which reduces the number of RNs by ten percent and increases the number of nursing assistants by fifteen percent. While both options increase costs, option two appears more cost-effective and is likely to result in minimal impact on patient care.
Answer 7:
Option two appears more cost-effective since it results in a lower annual cost increase and achieves the desired cost savings without compromising patient care. The opportunity cost of this recommendation is the potential reduction in the quality of care in case the available resources are not adequately utilized. Nonetheless, the organization can also focus on continuous improvement initiatives to optimize the performance of nursing assistants and improve patient satisfaction.
Answer 8:
The recommendation to choose option two would likely affect employee satisfaction since it involves reducing the number of RNs. However, the organization can explore alternative ways to improve employee satisfaction, such as offering training opportunities and providing better working conditions.
Answer 9:
The chosen labor alternative may also affect patient care and satisfaction positively or negatively. However, maintaining adequate staffing levels and optimizing the performance of nursing assistants can mitigate any adverse effects while improving patient satisfaction.
