Exam 2 budget Flashcards
What is budget?
financial activites
financial plan
an educated guess in order to help us plan appropriately
Why budgeting is important?
Increased Hospital Costs
Older age population
Users of supplies & equipment
Nurses are the major element of personnel budget
✓ If we use our nursing team wisely we can be a great way to cut some of the costs
Significance for patients
Patient outcomes
if nurse:patient ratio is high, chances are we will have POOR outcomes
HCAHPs
Results from these surveys affect REIMBURSEMENT to healthcare organizations
a) What is cost
b) Price =
c) Utilization =
a) the expenses associated with the delivery of healthcare services(かかる費用）
b) Price= RATE ($) set for a service
c) Utilization = QUANTITY (#) of services provided
Costs can include?
Supplies
Labor (Personnel): accounts for 50-60% of expenses
Equipment (Bed, linens, etc)
Utilities (light etc)
Fixed cost?
Costs that DO NOT fluctuate with volume/census
➢ you need to pay regardless if you have 1 patient or 1,000 patients
buildings+equipment
Administrative salaries
Mortgage payments
Not utilities
Variable cost
Fixed + Variable Costs =?
Costs that DO fluctuate in direct # of patients we have
Medical/surgical supplies
Laundry
Food
TOTAL Costs
Revenue
income deriverd from roviding services to pt
Amount received BEFORE expenses are deducted
Reward for providing a service to a patient
Reimbursement?
(MAIN SOURCE OF REVENUE)
✓ Government type payments: medicare, medicaid
✓ Private Insurance
✓ Individual Private Pay
Types of reimbursement
Retrospective reimbursement
Paid AFTER service is rendered/give
“Cost-Based”
“Fee for Service”
No ceiling on amount charged
(cost just kept going up and up, and it became too much)
Prospective Reimbursement?
example? 2
IN ADVANCE amount to be paid (regardless of actual cost)
DRG
Capitation
Prospective Reimbursement
DRG
Diagnosis-Related Groups/medicare
Each DRG has a dollar amount allowed
They looked at the data and saw on average how long does this type of pt stay in the hospital (ex: average 3 days for CHF patient)
So, then they said we’re only going to pay you for 3 days, so by the 3rd day they should feel better and be ready for discharge… if you deviate from that
then they wont plan to pay for that
Prospective Reimbursement
Capitation
HMO, PPO
A mode of payment in managed care systems based on a fixed dollar amount (not change) allocated PER MEMBER/PER MONTH (ex: $150/per adult/month)
Medicare
Who is elagible?
What is ABCD?
Federal Health Insurance
>65 yr
A /arrive inpateint/hospital coverage
B/back outpatient/medical coverage
C/Choice HMO or PPO/ medicare advantage/by private companies approve
D/ outpatient prescription drug
Medicaid
who is elageble?
Federal-State Health Insurance
low-income children and adults
disabilities and low-income seniors
Reimbursement from government
From where?
Centers for Medicare and Medicaid Services (CMS)
CMS payments directly linked Joint Commission
CMS IS THE LARGEST PURCHASER OF MANAGED CARE IN THE U.S.
a) what is Joint Commission?
b) Is accreditation or certification mandatory?
a) enable and empower health care organizations around the world to build a foundation for quality care and patient safety.
b) No, but usually most organizations WANT to so they can get paid by CMS
Managed care is a system that try to integrate what care?
Efficiency of care
Access to care
Control cost of care
One of the things they established was and what they focued on?
Primary care providers (PCP)
prevention, decrease inpatient care
use of clinical practice guidelines
selective contracting
Pharmacy formularies
If we want to see a spicialist, we need to get referral from PCP!
Types of managed care
Health Maintenance Organization
HMO
Less expensive insurance
Fewer options
Need to select PCP
Must see a PCP first before see a specialist
If you’re young and healthy, this is a good option
Types of managed care
Preferred Provider Organization
PPO
More expensive
More options
Greater access
Bundled Payments
Ex
If a particular procedure is a certain amount, Obama care (affordable care act) will pay a certain amount of that. They will give you a sum of money.
Accountable Care Organizations
ACOs are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high-quality care to their Medicare patients.
Hospital Value-Based Purchasing
Reimbursement is based on QUALITY
Rewards acute care hospitals with incentive
payments for the quality of care provided in the inpatient hospital setting.
The Medical Home
Idea is that care is patient-centered, comprehensive, team-based, coordinated, accessible, and focused on quality and safety
New CMS rules
a) Effect on Patients?
b) Effect on hospitals?
Provide a list of atandardcharges to pt
Healthcare price transparency rules (2019)
Hospitals must comply (obey) online in 2019
-required to provide clear, accessible pricing information online
List of standard charges
Value-based system
a) Make cost and quality decisions
b) Control rates and give best quality service
Profit
The amount remaining from revenue after costs (expenses) and obligations are met.
REVENUE – COST = PROFIT
Budget variance
A change in expected revenue or expenses (costs)
✓ This basically messes up our budget
Price: price of supplies will fluctuate
Volume: unexpected increase or decrease
Acuity: unexpected increase or decrease in the intensity of the patient’s needs for care
Wage: wage may be adjusted for factors including inflation and promotion
Budget capital
Long-term investments
new equipment, replacement of equipment, new buildings or renovations
✓ Managers will be more involved in these type of decisions
✓ Includes construction budget
Capital Justification
(we have to justify the money that we are about to spend because remember these are BIG BUCKS)
Service provided
Necessity and/or importance of the service
Expected utilization
Expected life
Products Evaluated
Cost of Equipment
Estimated savings or profits
Added value to the organization
Budget/Operational
A plan for the day-to-day operating
(supplies, minor equipment, and purchased services for each department)
An operational budget focuses on the total revenues and expenses of the organization for the year.
Budget/personnel
This budget is regarding labor and staffing
✓ THE LARGEST OF BUDGET EXPENDITURES
Budgeting process model
ADPEI
describe the processes for developing, monitoring and controlling
Assess
What need to be covered in the budget
Diagnosis
What needs to be accomplished/creaste a cost-effective budget
Plan
Most budget are for a 1 year period
Intervention
ongoing monitoring and analysis
Evaluation
reviewed periodically and modified as needed
Nursing responsibilities for cost effective care
Describe cost effective resource allocation nurseing practice
SUPPLIES
-Properly charge patients
QUALITY
Reduce length of stay
Prevent complications (because insurance wont pay for these!)
TIME UTILIZATION:
Delegate effectively
Nursing Service is the LARGEST expense in HCO
a) Strengths:
b) Weakness:
a) nurses manage the organization and leverage with powerful/accurate real time data
b) quick, short economic gains can be made by decreasing resources in nursing staff (first target)
Solution for improvement
Supply Management
Lean
Five S (sort, set in order, shine, standardise, sustain)
HCAHP scores (improvement)
Decreasing Length of Stay (LOS)
Operational budgets are financial plans for the entire organization day-to-day operations. This type of budget includes which of the following?
a) Payroll, supplies, and expenses
b) Supplies, expenses, and equipment purchases
c) Expenses, equipment purchase, and payroll
d) Payroll, monthly expenses, and large purchase items
a
Rationale:
Day-to-day operations include payroll, supplies, and expenses that change in response to the volume of service.
The capital expenditure budget’s purpose is for purchasing large capital items such as equipment. The cash budget is the operating financial plan for the month, that is, monthly accounts bills and employee salaries.
Who is responsible for cost-containment?
Nurses
Doctors
Hospitals
All of the above
All of the above
Rationale:
Cost containment refers to the effective and efficient delivery of services while generating needed revenues for operations.
Cost containment is the responsibility of every health-care provider, and the viability of most health-care organizations today depends on their ability to use their fiscal resources wisely.
A nurse manager is preparing the annual budget for the coming fiscal year, and is considering what the goal is of using the allocated funds. What stage of the budgetary process is this?
a) Evaluation
b) Diagnosis
c) Planning
d) Assessment
b
Rationale:
The diagnosis phase of the budgetary process considers what goal will be accomplished by using a cost-effective budget that maximizes available resources.
The assessment phase determines what needs to be covered in the budget.
The planning phase maps out the time frame in which the budget will be implemented.
The evaluation phase is the final step in the budgetary process, in which the budget is reviewed periodically and modified as needed throughout the fiscal year.
A nurse manager is evaluating the current fiscal year budget. Which statement regarding the evaluation stage of the budgetary process is most accurate?
a) Most units will have no variation from the projected budget.
b) Large variations from the projected budget must be examined.
c) The CEO is accountable for individual unit budgetary outcome.
d) Budgets are usually created at the beginning and unchanged.
b
Rationale:
Usually, each unit will experience some variation from the projected budget. This must be monitored and the budget periodically adjusted. Large variations from the projected budget must be examined and corrective action taken. Individual unit managers are accountable for their unit’s budgetary outcome.
