Man: Test 2 Budget

Question 1

projects the salary costs that will be paid to each cost center for the budget period. Healthcare is labor intensive
-Use historical data about unit census fluctuations in forecasting short/long term staff needs
-Look for under/over staffing
Cognizant of staffing mix: staffing based on a pre determined standard

Answer 1

Personnel Budget

Question 2

A. all those expenses with supplies anything related to health care, small ticket items less than 1500$, can be equipment, electricity, maintance

Answer 2

Operating Budget

Question 3

flat percentage or line by line budgeting, Simplest method Current year expenses X inflation rate
Positive- easy
Negative- not accurate, major change can set up to be wrong, no real incentive to every reduce cost= last year and add a little bit

Answer 3

Incremental Budgeting:

Question 4

• re-justify their program needs every budgeting cycle, go back to zero
o Labor intensive for nurses
o Use decision package to set funding priorities
o Positive—very accurate
o Negative- time consuming

Answer 4

Zero-Based Budgeting:

Question 5

Steps: List all current and proposed activities
List alternative plans for carrying out
List costs for each alternative
List adv and disadv for continuing or discontinuing

Answer 5

Zero-Based Budgeting:

Question 6

•adjusted over course of the year depending on volume
o Automatically calculates what expenses should be, given volume occurring
o computer generated, labor costs, and capital expenditures/ idea across the year where you should be budget wise

Answer 6

Flexible/variable Budgeting:

Question 7

• cost and prices of things

Answer 7

Expenditures

Question 8

: do not vary with volume, remain the same no matter what Ex: mortgage won’t change no matter how many pts come in

Answer 8

Fixed expenses

Question 9

: vary with volume, things that change with acuity of pts Ex: wages with hourly when more pt, more products used with more pts

Answer 9

Variable expenses

Question 10

: controlled by manager, things that you can control Ex: makes a call how much staff to use that day could have more or less

Answer 10

Controllable expenses

Question 11

: not controlled by manager, can’t have control Ex: equipment breaks

Answer 11

Non-controllable expenses

Question 12

: Costs that can be attributed to a specific source, straight effect on pt Ex: medications and treatments. Costs that are clearly identifiable with goods or service; touch patient

Answer 12

Direct

Question 13

: Costs that cannot be directly attributed to a specific area. These are hidden costs and are usually spread among different departments. necessary but not directly related to pt Ex: copier and cost of paper, maintance salary, human resource, housekeeping services

Answer 13

Indirect

Question 14

: source of income or the reward for providing a service to a patient.
-what you bring in

Answer 14

Revenue

Question 15

: Smallest functional unit for which cost control and accountability can be assigned. May be within a unit.

Answer 15

Cost Center

Question 16

Step #1: Determine # of forecasted hours of pt care=what we expect, pt volume, change in enviro, physicians (based on last year)

Answer 16

Personnel Budget Steps

Hppd x pt days = workload

Question 17

Step 2.

Determine the # of productive hrs per FTE’s

Answer 17

personnel budget steps
-add up all nonproductive hours then multiple how many days X number hour shift then subtract from 2080
15 vacation + 7 holidays+4sick days =26
26x8=208
2080-208=1872

Question 18

Step #3: Determine the # of FTE’s needed for the predicted workload

Answer 18

personnel budget steps
- Required pt care hrs / productive hrs= total fte needed

82420workload /1872 prod hrs= 44 fte

Question 19

Step #4: Determine Staff Mix (Unit total)

Answer 19

personnel budget steps

- take percent X fte

Question 20

Step #5: Determine daily staffing distribution:

Answer 20

personnel budget steps

-percent( time of day) x # rns

Question 21

Step #6: Determine cost of salaries: include total hours bc they need paid for time off

Answer 21

personnel budget steps
- take amount averg hrly rate X 2080= #
fte of staff (step 4)
then step 4 x #

Question 22

large ticket items, equipment and procedural item, set by organization anything over certain $/ separated out bc they have to be justified and approved
Ex: beds, MRI
-Not used in daily operations
-More expensive than operating supplies
-Composed of Long-term planning or major acquisitions component, and a short term budgeting component

Answer 22

C. Capital-

Question 23

= difference between the amount budgeted for a specific revenue or cost and the actual revenue or cost

Answer 23

Variance

Question 24

-might pay more or less depending on pt census= more pt not necessarily bad, few pt as long as salary lower okay

Answer 24

Salary Variance

1. Volume

Question 25

• volume consistent but some reason paying more or less of salary = Ex: training, overtime pay, acuity goes up need more staff

Answer 25

Salary Variance

2. Efficiency

Question 26

• amount of salary is more, give raise, resource or float nurse get paid more/ could go down bc pay cut or weekend option

Answer 26

Salary Variance

3. Rate

Question 27

• supplies and cost of things, any reason why, volume acuity increase or decrease in costs

Answer 27

Nonsalary Expenditure Variance

Question 28

can use as a guide before shift, or can use it after the fact
-every unit has an average number of hours of care for each pt

Answer 28

Budget as a Guide-
Nursing care hrs/pt day (NCH/PPD)

nursing hours workedin 24 hours/ patient census

Question 28

How can lower= reprocess stuff, comparing supply companies, reimburse items=02 sat, make sure good sterile technique, limiting waste, rental equipment instead of buy, just in time stock=don’t order by bulk only buy enough so they don’t expire, keep charge stickers

Answer 28

Operating budgets

Question 29

Count how many pas each day and add all together for the year, do not effect acuity level

Answer 29

Step 1 personnel budget

Pt days

Question 30

Hours of patient care needed each day

Answer 30

Step 1 personnel budget

Hppd

Question 31

Salary variance

Answer 31

Volume
Efficiency
Rate

Question 32

do need to reduce cost and keep down, don’t want to do it so much that they effect quality Ex: cut lab and test= not right diagnosis

Answer 32

Cost Containment-

Question 33

• get good results with amount of money spent, good quality care with the amount that you have, balance with containment

Answer 33

Cost Effective

Question 34

-look at broad big picture, how to distribute across all units, visionary role, forecasting what expect to happen in health care= more pt next year, consider political things like health care, try to inspire rest of org to get on board with budget

Answer 34

Responsibilities for High Level

Administration

Question 35

-making sure everyone follows budget month to month=watch, staffing, resources, how budget is spent on equipment and supplies, articulate to staff about budget

Answer 35

Responsibilities for High Level

manager

Question 36

• follow the budget, mindful of waste=front line, is responsibility to have basic

Answer 36

Responsibilities for High Level

staff

Question 37

• true commercial insurance, stay and then billing happens after the fact, here is what they billed, here is what the insurance paid this is what you owe

Answer 37

Cost-based (retrospective)

Question 38

• Diagnosis Related Groups, pay a set rate by diagnosis, doesn’t matter how long you stay, tried to motivate to lessen cost of health care to get out hospital quicker

Answer 38

Flat-rate (prospective)

Question 39

going to pay provider fee per person per month or year, no matter how many services they provide, amount of dollars set per group, keep under make profit, selective contracting if I get this big group of pts I will discount service to begin with to get a big group= trying to eliminate cost, pt still pay co pay

Answer 39

Capitated/Managed Care- (HMO)