Preparing and Managing a Capital Budget Assignment Paper

Scenario

You are the unit manager of a 50-bed, step-down unit, and it is time for you to prepare your annual capital budget. You have seen a significant turnover in your nursing staff in the past three years. A review of exit interviews and patient surveys indicates low nurse satisfaction, poor morale, and complaints of an antiquated and depressing work environment. You have researched the impact of a positive working environment on staff productivity and morale and decided to request a renovation of the nurses’ lounge as the main purchase in your capital budget. You will present your request as a quality improvement investment. Preparing and Managing a Capital Budget Assignment Paper

Instructions

Note: The requirements outlined below correspond to the grading criteria in the Preparing and Managing a Capital Budget rubric, so be sure to address each point. You may also want to review the performance level descriptions for each criterion to see how your work will be assessed. Additionally, the Guiding Questions: Preparing and Managing a Capital Budget document, linked in the Resources, provides additional considerations that may be helpful in completing your assignment.

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Prepare a capital budget for a facility renovation.

Note: You may use the budget in the Vila Health: Developing a Capital Budget multimedia exercise from this week’s studies as an example of how you might format your table. You may also use a budget format used in your organization or a format you find in any of the course resources or on the Internet. Preparing and Managing a Capital Budget Assignment Paper

• Describe the capital acquisition.
• Justify the need for the capital acquisition.
• Prepare the capital budget.

Note: Assemble your budget figures in a table, using a format of your choice. You may use either Microsoft Word or Excel to create your budget table.

• Describe the process for calculating costs.
• Present a plan for budget management.
• Explain how the renovation will affect the financial health of the organization.
• Present budget data and information clearly and accurately.
• Integrate relevant and credible sources of evidence to support your budget data and information, correctly formatting citations and references using APA style.

Submission Requirements

If you used Microsoft Excel to create your budget table, submit the Excel file along with your budget narrative. You may also add the Excel file to your Word document as an embedded object. Preparing and Managing a Capital Budget Assignment Paper

Preparing and Managing a Capital Budget

Organizations like the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) and the National Committee for Quality Assurance, or NCQA, keep an eye on the quality criteria that hospitals and other healthcare organizations must meet in order to maintain their accreditation. These cover a variety of topics, including readmission rates, how frequently patients fall, nursing and medical errors, and more. Annual reports are delivered on the same date. In the case of a scenario with 50 intermediate care or high dependence beds, the efficacy of the staff of nurses is going to directly affect the standards of care provided in a nursing unit like this one. As a result, elements like a high turnover rate will have a negative effect on the standard of care provided in the unit.

Staff retention needs to be prioritized and taken into account as a quality improvement (QI) activity in order to prevent the aforementioned. The application of transformational leadership and the availability of all the tools and equipment required by nurses to carry out their duties have both been proved in studies to be successful methods of achieving this (Robbins & Davidhizar, 2020). This raises the nurses’ morale and increases job satisfaction. A transformative nurse leader fosters a friendly work environment where nurses may express their ideas and comments without feeling intimidated. Additionally, they encourage employees to report faults and errors without worrying about being victimized, fostering psychological safety at work. Preparing and Managing a Capital Budget Assignment Paper

According to Antwi and Bowblis (2018) and Tawfik et al. (2019), the outcome typically includes increased job satisfaction, high morale, high staff retention rates (low turnover), decreased burnout, enhanced patient safety, and an overall improvement in the standard of healthcare and nursing care provided. In the past three years, this 50-bed high dependency unit has had a significant staff turnover rate; the primary causes have been attributed to low staff morale, out-dated equipment, and an unfavorable work environment. In this paper, the unit’s nurse manager suggests a capital budget with the goal of reducing staff turnover through capital spending. The entire project is an effort to increase quality.

The Intended Capital Acquisition

The purchase of long-term or fixed assets is covered by a capital budget (Malenko, 2019). The nurse manager of the unit typically creates capital budgets independently from recurring or operational budgets. The items or capital assets in a capital budget are frequently pricey and have a productive life of more than a year. Typically, the nurse manager is required to explain why such expensive capital assets are necessary. The justification for the proposed capital acquisition in this instance is to:

1. Replace dated and ineffective equipment to improve the productivity and efficacy of the nurses.
2. Reduce nursing blunders and errors by investing in more cutting-edge health information systems (HIS) and technology.
3. Improve patient safety and the productivity of the nurses.
4. Making the workplace entertaining, safe, and welcoming.
5. Boost employee motivation, morale, and job satisfaction. Preparing and Managing a Capital Budget Assignment Paper

This hospital step-down unit houses patients with high degrees of acuity close to those who require critical care in the intensive care unit, or ICU. As a result, extraordinarily good patient outcomes necessitate high-quality nursing care. By suggesting capital acquisition or expenditure, the nurse manager aims to inspire the nursing staff, raise their morale, and enhance their job satisfaction in order to improve the quality of care.

This capital acquisition will comprise of the following elements:

1. Renovating and furnishing the nurses’ lounge to give them a sense of value and appreciation.
2. Buying 25 smart infusion pumps to make administering intravenous (I.V.) therapy easier and boost employee satisfaction.
3. Investing in and installing a Pyxisᵀᴹ MedStationᵀᴹ automated medication dispensing cabinet (ADC) and system to lower nurse errors with medication administration.
4. To make the job of the nurses even easier, the current electronic health record (EHR) system will also be upgraded (McGonigle & Mastrian, 2021). Preparing and Managing a Capital Budget Assignment Paper

Assumptions

The above strategy is based on the presumptions that follow: there is unlikely to be much price increases throughout the budget’s creation and its implementation after acceptance; nurses will be able to use the new innovations incorporated into the hospital’s upgraded EHR system without the need for upskilling (which increases cost); and financing is going to be accessible for the quality enhancement initiative given that it is quite capital-intensive.

How The Demand for the Capital Procurement is Justified

The department has had a high staff turnover rate over the last three years, which has been linked to nurses’ low morale and lack of satisfaction with their work. The out-dated equipment in the department and the dismal and uninteresting work atmosphere, according to the leaving nursing staff were also identified as additional causes. This reduced the level of care that the nurses could provide, which led to poor results for patients and mistakes brought on by equipment that was malfunctioning.

To improve the dreary work environment, it is suggested that the nurses’ lounge be renovated and furnished. To make the nurses’ jobs easier, new intelligent infusion pumps and enhanced electronic clinical systems are all suggested. The benefits of these upgrades include increased patient safety and staff morale; however, the drawbacks include a sizable capital investment and an increase in maintenance expenditures in the operating or recurrent budget. Preparing and Managing a Capital Budget Assignment Paper

The Capital Expenditure and Cost Calculation Procedure

The capital budget created by the unit’s nurse manager is shown below, along with all the capital items that have been suggested for purchase to raise the caliber of care. The total capital investment will be an estimated $712,600.

The ADC will enhance the administration of medications and drastically lower the frequency of nurse medication errors. The nurses’ lounge remodeling will improve their morale and produce a friendly workplace that values their efforts (Jacobs et al., 2018). The administration and effectiveness of IV therapy will be improved by smart infusion pumps, according to the budget. Along with additional features targeted at increasing nurse productivity and streamlining their job, the EHR upgrade also includes patient data management systems (PDMS), electronic sign-out and hand-off tools, bar code medication administration (BCMA), electronic medication administration record (eMAR), and other features. Preparing and Managing a Capital Budget Assignment Paper

The knowledge gaps and areas of uncertainty in this budgetary plan include the potential for the initial EHR system vendor to be unable to integrate the suggested clinical systems and make them interface, the possibility that nurses will need upskilling (a cost to the organization) in order to use the suggested electronic clinical systems, and the possibility that inflation will cause the budgeted costs to increase at the time of execution.

In order to determine the estimated cost of the undertaking, the process for estimating the above costs included comparing the current costs of the capital assets and speaking with construction professionals. Since there won’t be more than three months between approval and implementation, there was no attempt to account for inflation. The price of both the refurbishment and the EHR upgrade is the only piece of information that may be in doubt. This is due to the fact that the figures are merely estimates that could be higher or lower than the actual expenditures. Preparing and Managing a Capital Budget Assignment Paper

Strategy for Managing the Budget and the Effect on the Fiscal Wellness of the Business

The strategy for managing the budget calls for staying within the estimated budgetary constraints, improvising when the projections fall short, selecting the lowest-priced suppliers of capital assets, and maybe saving and returning any leftover funds to the organization’s coffers. In the event of insufficient funding, it is assumed that the required quality of capital assets will still be realized even after improvisation. Due to the high cost of capital assets, this capital investment will have a significant impact on the organization’s financial standing.

The organization’s five-year strategic plan accounts for capital expenditure across the entire company, thus the impact will be reduced. The Board of Directors’ decision to lower some of the proposed assets to cut costs and whether the capital budgets of the other hospital units would be so large that they force reduction of all budgets are the only areas of ambiguity or knowledge gaps.

Conclusion

Similar to the operational or recurrent budget, the nursing manager has a vital role in capital budgeting. Any anticipated capital investment must be justified because investing in capital assets is quite expensive. The expense is however worth t as it helps to retain nursing staff and improve the quality of care.  Preparing and Managing a Capital Budget Assignment Paper