Operational Plan and Correlating Budget
Project Description
The 4 West is an organization that delivers health care for the community. Recently, the organization has decided to replace the existing medical-surgical unit into a new acute care oncology unit. The oncology is a specialty in medicine that deals with cancer. The CNO (Chief Nursing Officer) has informed the nurse director that 4 west is to become a specialized oncology unit. Since the hospital is planning the transition from the medical-surgical unit to the oncology unit, the hospital will need a new operational plan and correlating budget to assist the hospital to deliver high quality healthcare at lower costs.
Objective of this project is to develop an operational plan and correlating budget for the hospital to assist in effective transition from the medical-surgical unit to the oncology unit,
Project Details and Data
To start the budget plan, it is critical to use the organizational previous salary expenses as a guide. The paper employs market adjustments and wage increases in the industry to prepare the staff budget. The following are the data used to prepare the budget:
4 West is a medical unit with 28 bed surgical unit.
Acuity is equated with 5.5 hours of nursing care for patients per patient day.
The new oncologist is projected a 25% increase in volume.
The project prepares the staffing plan and the rational for changing the unit from medical/surgical to oncology staffing.
Rational for Staffing Plan
Zhang et al. (2006) argue that personnel plan is very critical for the quality of healthcare delivery. The importance of medical staffing plan for the quality of healthcare delivery makes the staffing plan to receive a great deal of attention. Major benefits of staffing plan are the ability to control costs, which consequently enhances efficiency. Our organization will be able to control costs as well as improving efficiency with effective staffing plan. With staffing plan, our organization will be able to estimate the minimum level of staff needed for healthcare operations. However, the difficulty that we are going to face is to establish an evidence-based minimum staffing ratio with patients.
Clarke, & Donaldson, (2010) also support this argument by pointing out that effective staffing enhances quality of care delivered to patients. Typically, effective staffing plan enhances organizational competitive advantages because staffing plan will reduce the waiting time of patients, which will assist our organization to deliver high quality care for patients. Evidently, the high quality services that we will deliver in the community will attract patients to our oncology unit, which will assist our organization to enhance competitive advantages.
A report by the Nurse World (2010) reveals that there is a strong relationship between effective staff planning and safe patient outcome. Typically, organization will enjoy the following benefits from the implementation of effective staff planning:
Reduce medication and medical errors,
Decrease patients’ complications,
Decrease patients’ mortality,
Improve patients’ satisfaction,
Reduce staff fatigue,
Decrease nurse burnout,
Improve job satisfaction and staff retention. (Nursing. 2010).
Evidence has shown that safe staff planning nearly eliminate one-fifth of all hospital deaths, which consequently reduce the risk of adverse patients events. (Kane, 2007). Reducing medical errors is very critical in the light of preventable hospital-acquired illness or injuries. Evidence has shown that mandatory staffing plan saves cost of operations and reduces the amount hospitals spend on staff recruitment and training. Typically, the costs of recruiting and retaining medical are estimated reaching between 1.1 and 1.6 times of a registered nurse annual salary, which is estimated to reach $71,344 according to Bureau of Health Profession. Effective staff planning can assist organization to yield cost saving reaching nearly $3 billion because the plan will eliminate extra days patients stay at hospitals which will consequently eliminate infection at hospitals.
Apart from enhancing quality of healthcare, our organization will also abide to medical law through effective staff planning. The law requires medical participation hospitals to include at least 55% of direct care nurses in a staffing plan. With staffing plan, our organization will be able to eliminate almost one-fifth of hospital death, which will consequently reduce relative risks of adverse events within our hospitals. (Nursing, 2010)
Preparing a Staffing Plan
This section prepares the staff budget for the 4 West and incorporates transition from medical/surgical to oncology staffing. The transition will require the hospital to incorporate the following:
The transition to the use of Patient Care Technicians,
The staffing plan with related full time employee and salary cost.
Supply cost changes included in budget ($300/patient per day to $900/patient per day),
Educational costs (staff),
Base of the project is 80% on the medical-surgical unit to 100% census as an oncology unit.
The transition to the use of Patient Care Technicians
The 4 West hospital will require a number of Patient Care Technicians for effective transition. A patient care technician is very critical for the transition because the patient care technician will be responsible for the technical management of blood filtering for the treatment of cancer disease. However, registered nurses will supervise the hospital patient care technicians. Moreover, the patient care technician will be responsible for the machine operation, which will be used to treat cancer patients. The patient care technicians will also be responsible for:
disinfecting the 4 West equipment,
Starting the equipment as well as monitoring the patients,
Disconnect cancer patients from equipments
Assisting nurses to inject needles into patients veins,
Preparing accurate report regarding our patients.
Our organization will need to organize specialized training programs for our in-house staff since the in-house staff has already understood the culture of our organization. The training program will assist our prospective patient care technicians to understand medical procedures. The training program will assist the patient care technicians to achieve full certification to become a CNA (certified nursing assistant).
Salary for Patient Care Technicians
Our patient care technicians will be earning an average salary of $30,550 yearly. The salary estimate is calculated based on the salary category of Bureau of Labor Statistics. According to Bureau of Labor Statistics, a patient care technician earns at least $30,000 annually in 2012. Our staff budget plan will be based on the official release of Bureau of Labor Statistics. (Bureau of Labor Statistics.2014).
Important Assumption
The general assumption is that the current and long-term interest rates will not be more than 10%. Moreover, the tax rates will not be more than 25%. The generally assumption is presented in the Table 1.
Table 1: General Assumptions
Year 1
Year 2
Year 3
Plan Month
1
2
3
Current Interest Rate
10.00%
10.00%
10.00%
Long-term Interest Rate
10.00%
10.00%
10.00%
Tax Rate
25.32%
25.00%
25.32%
Apart from the general assumption, the important assumption is that our oncology unit will be between 90% and 95% full. The projecting capacity for the 4 West medical unit is 24 bed surgical unit. Each patient is assumed to be billed between $300 per day and $900 per day depending on the patient’s health complication. However, private patients will be billed slightly higher.
Personnel Plan
Our Oncology unit of the 4 West will rely on the specialist oncologists, skilled nurses, and patient care technicians. We will also provide special training for the staff to deliver a holistic medical care. Our commitment is to deliver fair wages in our personnel plan. To enhance effective and efficient patient’s care, all our full-time staff will enjoy the following benefits:
full health benefits, sick leave, two-week paid vacation per year, and Two-week paid vacation per year for senior staff. (Goodman, 2012).
We will include all the benefits in the personnel monthly payments.
Our part-time positions are as follows:
1 Medicare Billing / Holistic/Specialist.
Our organization will require the following medical and caretaking staff to meet our staffing goals:
2 full-time oncologist working between 35 and 40-hour week from 9pm to 7am, (switching between 4 and 3 days/week). Will start training when hired,
1 part time oncologist working 35 hrs/week, between 5-10pm.
5 Patient Care Technicians and 5 registered nurses.
Apart from the services of medical staff, our organization will also require the service of development and administrative personnel who will include:
One full-time Financial Manager,
One part-time Medicare Billing Specialist ( To work 20 hours/week) and One part-time Development officer.
Our personnel plan is delivered in the table 2.
Table 2: Personnel Plan
Year 1
Year 2
Year 3
Medical/Clinical Personnel
Medical Director
$66,000
$66,000
$67,000
Oncologists ( Full-time working 35-40 hrs, night)
$117,000
$118,000
$119,000
Register Nurses – swing shift, 30 hours per day
$34,125
$58,500
$59,000
Subtotal
$217,125
$242,500
$245,000
Caretaking Personnel
Elder Assistants
$221,520
$223,000
$255,000
Other
$0
$0
$0
Subtotal
$221,520
$223,000
$255,000
Administrative Personnel
Medicare Liason and Billing Specialist
$33,600
$34,000
$34,500
Financial Manager
$64,800
$65,000
$65,500
Part-time Marketing
$0
$0
$0
Subtotal
$98,400
$99,000
$100,000
Fundraising Personnel
Part-time- Development Officer
$14,400
$15,000
$15,500
$0
$0
$0
$0
$0
$0
Subtotal
$14,400
$15,000
$15,500
Total People
14
14
14
Total Payroll
$551,445
$579,500
$615,500
Based on the personnel plan for our organization, the paper presents the budget plan for the oncology unit.
Budget plan
Budget plan
Year 1
Year 2
Year 3
Funding
$860,700
$868,800
$876,900
Direct Cost
$76,140
$89,424
$91,287
Medical/Clinical Payroll
$217,125
$242,500
$245,000
Non-reusable Medical Equipment
$4,800
$5,000
$5,000
$0
$0
$0
Total Direct Cost
$298,065
$336,924
$341,287
Gross Surplus
$562,635
$531,876
$535,613
Gross Surplus %
65.37%
61.22%
61.08%
Operating Expenses
Caretaking Expenses
Caretaking Payroll
$221,520
$223,000
$255,000
Groceries
$16,800
$18,000
$20,000
Cleaning Supplies
$1,200
$1,200
$1,300
Other Caretaking Expenses
$0
$0
$0
Total Caretaking Expenses
$239,520
$242,200
$276,300
Caretaking %
27.83%
27.88%
31.51%
Administrative Expenses
Administrative Payroll
$98,400
$99,000
$100,000
Other Expense Account
$0
$0
$0
Depreciation
$1,200
$1,500
$1,800
Property Taxes
$12,000
$13,000
$14,000
Utilities
$24,000
$25,000
$26,000
Insurance
$14,400
$15,000
$15,000
Payroll Taxes
$82,717
$86,925
$92,325
Grounds & Building Upkeep
$4,800
$5,000
$5,000
Other
$0
$0
$0
Total Administrative Expenses
$237,517
$245,425
$254,125
Administrative %
27.60%
28.25%
28.98%
Fundraising Expenses:
Fundraising Payroll
$14,400
$15,000
$15,500
Brochures, Marketing
$800
$1,000
$500
Fundraising Expenses
$0
$0
$0
Total Fundraising Expenses
$15,200
$16,000
$16,000
Fundraising %
1.77%
1.84%
1.82%
Total Operating Expenses
$492,237
$503,625
$546,425
Surplus Before Interest & Taxes
$70,398
$28,251
($10,812)
EBITDA
$71,598
-$29,751
($9,012)
Interest Expense
$20,479
$17,200
$13,450
Taxes Incurred
$0
$0
$0
Net Surplus
$49,919
$11,051
($24,262)
Net Surplus/Funding
5.80%
1.27%
-2.77%
Our organization will provide training for our new and old staff to meet our organizational goal. We will provide training programs for all our newly hired and old staff to be more competent. We will provide in-house training for all our oncologists, registered nurses and patient care technicians. On the job, training will also be delivered for all our staff. The training will be based on the following program:
Standards of care
Evidence-based practice
Clinical practice
Professional performance standards.
However, the training program for our oncologist will be as follows:
Types of cancer
Principles of management
Importance of follow-up. (International Atomic Energy Agency, 2009).
To enhance our organizational performances and our managers will be responsible in monitoring the budget and care quality. One of the strategies that we will use to monitor our budget is by calculating our ability to meet the budget target at the end of every quarter. The manager will use budget variance to evaluate our budget performances. The budget variance is the difference between the budget and actual budget. The budget variance will monitor:
The extent we have been able to reduce costs
The sale increase or decrease
Net surplus, and Percentage of staff retentions.
Our management will also use the pro-formal cash flow as being revealed in the Appendix 1 to evaluate our budget performances. After each fiscal year, we will prepare the actual cash flow and compare with the pro-formal cash flow, the strategy will assist in evaluating our budget. Our management will also have the obligation to monitor the quality of care using the feedback response from customer. The increase or decrease in the number of patients will also be used to evaluate the standard of quality of care we deliver. Moreover, we will calculate the number of patients who have been cured from cancer from our hospital vs. The number of patients not able to receive total cure. All these strategies will be used to evaluate the quality of care we deliver. Our aggregate scores will be used to improve our budget performances.
Reference
Bureau of Labor Statistics.(2014). Healthcare Occupations. Occupational Outlook Handbook. USA.
Clarke, S.P. & Donaldson, N.E. (2010). Chapter 25. Nurse Staffing and Patient Care Quality
and Safety.
Goodman, A.(2012). Oncology Nurse Staffing Is Variable and Multifactorial. Nursing News.
International Atomic Energy Agency (2009). A Syllabus for the Education and Training of Radiation Oncology Nurses. Austria, IAEA.
Nursing (2010). Nurse Staffing. American Nurse Association. Department of Government Affairs.
Nursing. (2010).Safe Staffing The Registered Nurse Safe Staffing Act H.R. 1821. American Nurses Association, Department of Government Affairs.
Zhang, N, J. Unruh, L. Liu, R. et al. (2010). Minimum Nurse Staffing Ratios for Nursing Homes. Nursing Economics,; 24(2):78-85.
Appendices
Appendix 1
Pro Forma Cash Flow
Year 1
Year 2
Year 3
Cash Received
Cash from Operations
Cash Funding
$645,525
$651,600
$657,675
Cash from Receivables
$173,236
$216,805
$218,830
Cash from Operations (Subtotal)
$818,761
$868,405
$876,505
Additional Cash Received
Sales Tax, Received
$0
$0
$0
New Current Borrowing
$5,000
$0
$0
Other Liabilities
$0
$0
$0
Long-term Liabilities
$0
$0
$0
Sales of Current Assets
$0
$0
$0
Sales of the Long-term Assets
$25,000
$0
$0
New Investment Received
$0
$35,000
$40,000
Subtotal Cash Received
$848,761
$903,405
$916,505
Expenditures
Year 1
Year 2
Year 3
Expenditures from Operations
Cash Spending
$551,445
$579,500
$615,500
Bill Payments
$237,601
$277,935
$283,575
Spent on Operations (Subtotal)
$789,046
$857,435
$899,075
Additional Cash Spent
Sales Tax, Paid Out
$0
$0
$0
Repayment of Current Borrowing
$5,500
$0
$0
Liabilities Principal Repayment
$0
$0
$0
Principal Repayment of Long-term Liabilities
$25,000
$35,000
$40,000
Purchase of Current Assets
$0
$0
$0
Purchase of Long-term Assets
$0
$0
$0
Dividends
$0
$0
$0
Subtotal Cash Spent
$819,546
$892,435
$939,075
Net Cash Flow
$29,215
$10,970
($22,570)
Cash Balance
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