NR 533 Financial Management in Healthcare Organizations

Week 4: Staffing Budgets/FTEs/Variance Analysis Assignment Lisa Pettit

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Section One—Staffing Budget and FTEs

Personnel Budget Case Study

Sandra Chambers has recently stepped into the role of assistant administrator for the Department of Nursing at Potter Regional Medical Center. In her new position, she is responsible for overseeing the operations of five distinct medical units. Upon reviewing the budgets for these units, Sandra notices that all five are operating at or near full capacity. While four of these units have experienced stable patient volumes over the past two years, the fifth unit has seen a consistent increase in patient volume, currently functioning at 88% capacity. Projections indicate that within the next 12 months, patient volume in this unit will rise by an additional 20%.

Sandra’s primary challenge is to determine whether the current Full-Time Equivalents (FTEs) allocated to the unit are sufficient to maintain quality and safety in patient care with the anticipated increase in patient volume. If the current FTEs are inadequate, Sandra must calculate the number of additional FTEs required to handle the increased demand.

Information Required for FTE Projections

To accurately project the necessary FTEs for the next fiscal year, Sandra must gather comprehensive background information on the unit. The data collection process should include:

1. Historical Data Analysis:
   • Sandra should review historical data from the past year to identify trends in census, patient volume, staffing needs, and vacancies. This data will provide a baseline for understanding how the unit has managed previous workloads and whether current staffing levels have been sufficient.
   • A focus on FTE trends over the past year will help determine whether staffing levels have remained consistent, increased, or decreased in response to patient volume fluctuations.
2. Patient Acuity and Staffing Ratios:
   • It is essential to analyze patient acuity levels to determine the appropriate staffing ratio. Higher acuity patients require more intensive care, thereby necessitating a higher nurse-to-patient ratio. Sandra should consider the complexity of care required by patients in the unit to ensure that staffing ratios are aligned with patient needs.
   • Utilizing patient acuity data will allow Sandra to calculate the optimal number of FTEs required to deliver safe and efficient care as patient volume increases.
3. Trend Analysis Using Spreadsheets:
   • Sandra should use spreadsheets to track key metrics such as patient days, length of stay, occupancy percentages, and staffing ratios. This will help visualize trends and patterns, making it easier to project future staffing needs.
   • By organizing this data into a spreadsheet, Sandra can model different scenarios to determine how changes in patient volume will impact staffing requirements.
4. Unit Background and Organizational Data:
   • Sandra should also familiarize herself with the unit’s previous budgets and staffing plans. Understanding how the unit has historically managed its personnel budget will be critical in planning for future needs.
   • It is also important to consider organizational policies and benchmarks for staffing levels to ensure that the unit remains compliant with institutional standards.

Calculating Average Daily Census (ADC) and Occupancy Rate

Sandra has collected census information for the five units over the last month. To determine which unit is currently at 88% occupancy and is projected to experience a 20% increase in patient volume, the Average Daily Census (ADC) and Occupancy Rate for each unit must be calculated.

ADC and Occupancy Rate Calculations

Unit A

• Total Patient Days: 941
• Number of Beds: 31
• ADC: 94130=31.37\frac{941}{30} = 31.3730941​=31.37
• Occupancy Rate: 31.3731×100≈101.2%\frac{31.37}{31} \times 100 \approx 101.2\%3131.37​×100≈101.2%

Unit B

• Total Patient Days: 424
• Number of Beds: 15
• ADC: 42430=14.13\frac{424}{30} = 14.1330424​=14.13
• Occupancy Rate: 14.1315×100≈94.2%\frac{14.13}{15} \times 100 \approx 94.2\%1514.13​×100≈94.2%

Unit C

• Total Patient Days: 372
• Number of Beds: 13
• ADC: 37230=12.4\frac{372}{30} = 12.430372​=12.4
• Occupancy Rate: 12.413×100≈95.4%\frac{12.4}{13} \times 100 \approx 95.4\%1312.4​×100≈95.4%

Unit D

• Total Patient Days: 841
• Number of Beds: 32
• ADC: 84130=28.03\frac{841}{30} = 28.0330841​=28.03
• Occupancy Rate: 28.0332×100≈87.6%\frac{28.03}{32} \times 100 \approx 87.6\%3228.03​×100≈87.6%

Unit E

• Total Patient Days: 97
• Number of Beds: 6
• ADC: 9730=3.23\frac{97}{30} = 3.233097​=3.23
• Occupancy Rate: 3.236×100≈53.8%\frac{3.23}{6} \times 100 \approx 53.8\%63.23​×100≈53.8%

From the above calculations, Unit D is the one operating at 88% occupancy and is projected to increase its volume by 20% in the coming year.

Projecting FTE Requirements

With the projected 20% increase in patient volume, Unit D will need additional FTEs to maintain quality care. To determine the exact number of FTEs needed, Sandra must:

1. Estimate the Increase in ADC:
   • A 20% increase in patient volume will increase the ADC from 28.03 to 28.03×1.2=33.6428.03 \times 1.2 = 33.6428.03×1.2=33.64.
2. Recalculate the Occupancy Rate:
   • With the increased ADC, the occupancy rate will be 33.6432×100≈105.1%\frac{33.64}{32} \times 100 \approx 105.1\%3233.64​×100≈105.1%, which indicates that the unit will be over capacity and require additional staffing.
3. Determine Additional FTEs Needed:
   • To staff the additional 5.61 patients per day, Sandra will need to calculate the number of FTEs required based on the nurse-to-patient ratio dictated by the patient acuity. If the unit currently operates with a 1:5 nurse-to-patient ratio, this would require approximately 1.12 additional FTEs (assuming each nurse covers an average of five patients per shift).
4. Adjust Staffing Plans:
   • Sandra should prepare to request budget adjustments to accommodate the additional FTEs needed to manage the increased patient volume. This may include hiring additional full-time or part-time staff, as well as considering the use of overtime or agency nurses to meet the demand.

Conclusion

Sandra Chambers faces a significant challenge in ensuring that Unit D at Potter Regional Medical Center remains adequately staffed to handle a projected 20% increase in patient volume. By carefully analyzing historical data, patient acuity, and occupancy rates, Sandra can make informed decisions about the number of FTEs needed to maintain quality care. This proactive approach will help ensure that the unit continues to deliver safe and effective patient care while staying within budgetary constraints.