Staffing Budgets/FTEs/Variance Analysis Assignment V1
Section One—Staffing Budget and FTEs
Personnel Budget Case Study
Sandra Chambers has recently accepted the position of assistant administrator for the department of nursing at Potter Regional Medical Center where she will oversee the operations of five medical units. As she evaluates the budgets for the different cost centers, she finds that all are being used at near or full capacity. The activity in four of the five has remained steady over the past 2 years. A fifth unit has realized a steady increase in patient volume during that time and is currently at 88% capacity. It has been projected that within the next 12 months the volume of patients moving through that unit will increase by 20%. Sandra needs to determine if the current FTEs for the unit will be sufficient to ensure quality and safe care continues to be provided, and if not, what is the number of FTEs that will be needed to cover a 20% increase in volume.
1. Suggest all the information Sandra needs to collect in order to project the FTEs needed for the next fiscal year accounting for the projected increased capacity. Remember, she is new to her position so be sure to include background data on the unit itself as it relates to previous budgets, nursing staff, and the organization. In other words, summarize your approach to this Case Study.
2. Sandra has collected the following census information on all five units for the last month, in
addition to what was asked in question number one. Calculate the ADC and Occupancy Rate for each unit using the Daily Census/Occupancy Rate table to determine which unit is currently at 88% occupancy rate and projected to increase over the next year.
Unit
Beds 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Total Patient Days
A 35 31 30 31 30 29 30 31 30 31 29 29 32 31 33 31 31 33 34 34 34 34 32 30 32 31 30 30 33 31 34 0 941
B 15 15 14 11 9 7 12 12 15 13 13 16 15 15 15 16 16 15 14 15 16 15 13 13 17 16 15 16 16 14 15 0 424
C 13 10 12 11 11 11 13 13 13 12 13 12 12 12 13 13 13 13 13 13 13 13 13 13 12 12 12 12 13 13 13 0 372
D 32 30 27 27 24 26 23 27 29 28 28 25 27 30 26 31 31 30 30 30 32 32 32 26 25 25 25 23 31 31 30 0 841
E 6 6 3 3 3 3 5 5 5 2 2 2 2 4 4 3 3 0 0 0 6 5 5 3 3 3 2 5 4 3 3 0 97
(adapted from…..Healthcare Financial Management Association (2012). Managing fiscal resources: A budget and productivity case study. Retrieved from hfmamd.org
Average Daily Census/Occupancy Rate
Unit ADC Occupancy (%)
A
B
C
D
E
The Unit with an 88% occupancy rate is _____.
3. Using data contained in the first questions, complete the table below and determine the Average Length of Stay (ALOS) for the following three units. Show your work.
Unit # Beds Patient Days # Discharges Average Length of Stay (ALOS)
A 110
C 96
D 85
What is the ALOS for the unit you identified earlier at an 88% occupancy rate? _____
You have determined the Unit for which Sandra must make FTE projections. For the remaining questions in this section, refer to the figures used and or obtained related to the Unit identified in Question 1.
Additional information includes
the budgeted hours of care per patient day (HPPD-budgeted) is 8.8; and
each employee receives 300 paid non-productive hours/year.
4. Calculate the number of FTEs needed for the Unit. Show the formulas used and all calculations. Include the reference used for your calculations at the beginning of your work.
5. Calculate the TOTAL FTEs needed accounting for nonproductive time. Include the reference used for your calculations at the beginning of your work.
6. Sharon now knows how many total FTEs are currently needed on the unit to provide safe, quality care to the patients on the unit. However, with a 20% projected increase in occupancy rate and average length of stay remaining steady on the unit, how will the required FTEs be affected?
7. Calculate the TOTAL FTEs required to reflect an increased patient volume of 20% (don’t forget to account for nonproductive time). Include the reference used for your calculations at the beginning of your work.
8. When Sharon calculated the number of FTEs budgeted currently in this unit and compared it to the number of actual FTEs being paid for, she found she was under budget by three FTEs. Explain how that could have happened and how this information affects her FTE budget request for the next year.
Section Two—Variance Analysis
Variance Analysis Case Study
During the month of February, an outpatient surgery clinic has incurred a significant unfavorable variance. The director of the clinic is quite concerned, as this has never occurred before. The director gathers information on total nursing care hours, average hourly rate of the employees, and total patient visits to determine what caused the variance. In addition, the director receives the patient acuity levels for the month of February.
Budget Actual Budget Variance
Patient Days 420 510
Nursing Care Hours
HPPD 5.0 5.6
Average Hourly Pay $35.00 $45.00 $10.00
Total Payroll Costs
(Table adapted from Rundio, A. (2022). The nurse manager’s guide to budgeting and finance (3rd ed.). Sigma Theta Tau International)
1. Complete the monthly personnel report for the surgical unit.
2. Calculate each of the following. Include the formulas used with reference. Remember, as this monthly report deals with payroll, the variances should be in dollars.
a. Volume (efficiency) variance:
b. Quantity (volume) variance:
c. Cost (price) variance:
3. What is the total variance in personnel budget for this month?
4. Analyze all the factors that made the differences and why the variances occurred. How can this variance be justified?
5. In what ways might these variances inform the current or future budgets?
