NURS FPX 6216 Assessment 4 Preparing and Managing a Capital Budget

NURS FPX 6216 Assessment 4 Preparing and Managing a Capital Budget

Name

Capella University

NURS-FPX 6216 Advanced Finance and Operations Management

Prof. Name

Date

Preparing and Managing a Capital Budget 

Capital acquisition refers to obtaining significant physical assets or investments, such as property, equipment, or renovations, to enhance an organization’s operational capabilities and infrastructure. This involves substantial financial expenditure and supports long-term growth and efficiency improvements (Cerullo et al., 2022). The capital acquisition project at Houston Methodist Hospital aims to renovate a staff lounge in a 35-bed unit to improve comfort, aesthetics, and functionality. This assessment aims to assess the renovation’s financial impact, including accurate cost calculations and potential return on investment. The assessment will also address uncertainties and establish a budget management plan to ensure the project’s success.

Definition of Capital Acquisition 

The capital acquisition involves renovating a staff lounge in a 35-bed hospital unit at Houston Methodist Hospital. The renovation aims to enhance the lounge’s comfort, aesthetics, and functionality, thereby improving the overall well-being and satisfaction of the nursing staff (Cerullo et al., 2022). The renovation scope includes updating the interior design with modern, comfortable furniture, enhancing the space with new amenities such as a fully equipped kitchenette, high-speed internet access, and relaxation areas, and increasing the lounge’s capacity to accommodate more staff members simultaneously. 

The renovated lounge will feature an inviting and aesthetically pleasing environment, with contemporary furnishings designed for comfort and relaxation. Amenities will include ergonomic seating, recreational facilities like a television and reading nook, and practical elements like charging stations and personal lockers (Bruch et al., 2020). The design will prioritize a calming ambiance through soft lighting, soothing color schemes, and artwork, creating a sanctuary for staff to unwind and recharge during breaks. This focus on comfort and amenities aims to enhance job satisfaction and reduce stress, contributing to lower turnover rates and higher productivity.

The project is scheduled to be completed within six months, ensuring minimal disruption to daily operations. This plan assumes stable patient volumes and acuity levels, consistent market prices for renovation materials and services, and a stable workforce with minimal turnover, allowing for predictable staffing needs and consistent use of the lounge facilities. 

Justification of the Need for Capital Acquisition

Justifying the need for the capital acquisition to renovate the staff lounge in a 35-bed hospital unit at Houston Methodist Hospital centers on the profound impact such improvements can have on nursing staff well-being and, consequently, patient care. The renovation is essential because it addresses the nursing staff’s physical and mental health needs by providing a comfortable, aesthetically pleasing, and functional space for rest. By incorporating modern furniture, amenities like a fully equipped kitchenette, high-speed internet access, ergonomic seating, and relaxation areas, the renovated lounge will create an inviting environment that significantly enhances job satisfaction and reduces stress (Monteros et al., 2021). A well-rested and satisfied nursing staff is more likely to deliver compassionate, high-quality care, positively affecting patient outcomes. Patients benefit from more attentive and engaged care providers, improving overall patient satisfaction and potentially quicker recovery times.

Aligning with Houston Methodist Hospital’s mission of providing high-quality, compassionate care, the nurse’s lounge renovation supports these goals by investing in the staff’s well-being. The mission emphasizes patient care and the importance of maintaining a supportive and efficient working environment for healthcare providers. This renovation demonstrates a commitment to creating an optimal workplace, reflecting the organization’s values and dedication to excellence (Maassen et al., 2021). Executive leaders may have mixed reactions to the project budget; those valuing staff well-being will likely support it for long-term gains, while others focused on short-term costs may hesitate. Presenting successful case studies can help garner support by highlighting long-term benefits and mission alignment.

Preparing a Capital Budget

The capital budget for renovating the staff lounge in a 35-bed hospital unit at Houston Methodist Hospital includes direct and indirect expenses, ensuring comprehensive coverage of all project-related costs. The budget has a minimum dollar amount to cover essential updates and consists of a contingency line item to address unexpected expenses (Ren et al., 2021). The direct costs encompass purchasing modern furniture, ergonomic seating, and amenities like a fully equipped kitchenette, high-speed internet access, and entertainment facilities. Indirect expenses cover the costs of design, labor, and project management. 

The comprehensive budget ensures the successful completion of the renovation within the scheduled six-month timeline, aiming to enhance the lounge’s comfort, aesthetics, and functionality, ultimately benefiting the nursing staff and improving patient care. The total estimated budget is $119,750.

Process of Cost Calculations

Calculating the costs of renovating the staff lounge at Houston Methodist Hospital involves several steps and sources of information to ensure accuracy and comprehensiveness. Primary sources of cost information include historical data from previous renovation projects, current market prices for materials and services, and consultations with vendors and contractors. Cost data are obtained from recent price quotes and market research, ensuring they are as current and reliable as possible. To determine these costs, consultations with key stakeholders such as the hospital’s procurement team, facilities management, financial officers, and design experts are crucial (Sdino et al., 2021).

Cost calculation methods include itemizing each expense, such as modern furniture, ergonomic seating, kitchenette equipment, high-speed internet setup, entertainment facilities, and additional amenities like charging stations and personal lockers. Indirect expenses, such as design and planning, labor, project management, and contingencies, are also considered. The estimated budget is $119,750, with a contingency line item to address unexpected costs. 

Budget Management Plan

A collaborative approach with financial officers, administrative staff, and the budget committee is essential to effectively manage the budget for the staff lounge renovation at Houston Methodist Hospital. Key stakeholders such as the hospital’s procurement team, facilities management, and design experts will provide accurate cost estimates and oversee expenditures (Doshmangir et al., 2022). The primary sources of cost information include historical data from previous projects, current market prices, and vendor consultations, ensuring data is current and reliable.

Cost control methods will include regularly monitoring and tracking expenses against the budget, employing a robust approval process for additional costs, and using cost-saving strategies such as bulk purchasing and negotiating with suppliers (Sohn et al., 2020). To manage budget variances, it will be crucial to conduct monthly budget reviews to identify discrepancies early and adjust allocations as necessary. Including a contingency line item in the budget allows for unforeseen expenses, reducing the risk of significant variances.

Assumptions underlying the budget management plan include stable market prices for materials and services, consistent patient volumes, and minimal staff turnover. These assumptions help maintain predictable costs and usage patterns, ensuring the renovation stays within budget and schedule. The budget management plan aims to achieve the project’s goals without financial overruns by working closely with all relevant teams and employing stringent cost control methods.

The Impact of Capital Acquisition on the Financial Health of the Hospital 

The renovation of the staff lounge at Houston Methodist Hospital is expected to positively affect the organization’s financial health by enhancing nurse well-being, leading to lower turnover rates and higher productivity. This improved staff satisfaction directly contributes to better patient care, elevating patient satisfaction scores and potentially increasing patient volumes and hospital revenue (Cerullo, Lin, et al., 2022). This project’s return on investment (ROI) comes from both intangible benefits, such as improved staff morale, and tangible outcomes, like reduced recruitment and training costs for new hires.

The renovation’s ROI will depend on various factors, including improving staff satisfaction and patient care quality. A conservative estimate might see the hospital recovering the renovation cost within three to five years, primarily through savings from lower turnover rates and increased operational efficiency (Thusini et al., 2022). Additionally, considering the depreciation value of new assets, the hospital can spread the capital expenditure over several years, aligning the costs with the period during which the benefits are realized.

Conclusion 

The capital acquisition project at Houston Methodist Hospital aims to renovate a staff lounge to enhance nurse well-being and satisfaction, thereby improving patient care. The project involves a detailed budget management plan to cover all renovation costs and address potential uncertainties. The anticipated return on investment includes intangible benefits like improved staff morale and tangible outcomes like reduced turnover rates. The costs are expected to be recovered within three to five years.

References

Anderson, D. M., Cronk, R., Best, L., Radin, M., Schram, H., Tracy, J. W., & Bartram, J. (2020). Budgeting for environmental health services in healthcare facilities: A ten-step model for planning and costing. International Journal of Environmental Research and Public Health, 17(6). https://doi.org/10.3390/ijerph17062075 

Bruch, J. D., Gondi, S., & Song, Z. (2020). Changes in hospital income, use, and quality associated with private equity acquisition. Journal of the American Medical Association Internal Medicine, 180(11), 1428. https://doi.org/10.1001/jamainternmed.2020.3552  

Cerullo, M., Lin, Y. L., Hain, J. A. R., Ho, V., & Offodile II, A. C. (2022). Financial impacts and operational implications of private equity acquisition of US hospitals. Health Affairs, 41(4), 523–530. https://doi.org/10.1377/hlthaff.2021.01284 

Cerullo, M., Yang, K., Maddox, K. E. J., McDevitt, R. C., Roberts, J. W., & Offodile, A. C. (2022). Association between hospital private equity acquisition and outcomes of acute medical conditions among medicare beneficiaries. Journal of the American Medical Association Network Open, 5(4). https://doi.org/10.1001/jamanetworkopen.2022.9581 

Doshmangir, L., Khabiri, R., Jabbari, H., Zozani, M. A., Kakemam, E., & Gordeev, V. S. (2022). Strategies for utilisation management of hospital services: A systematic review of interventions. Globalization and Health, 18(1). https://doi.org/10.1186/s12992-022-00835-3 

Maassen, S. M., Oostveen, C. van , Vermeulen, H., & Weggelaar, A. M. (2021). Defining a positive work environment for hospital healthcare professionals: A Delphi study. Public Library of Science ONE, 16(2), 1–14. http://eds.a.ebscohost.com/eds/pdfviewer/pdfviewer?vid=7&sid=9b5fb7fd-cd0d-4f45-81c4-52c8389d17f6%40sessionmgr4007 

NURS FPX 6216 Assessment 4 Preparing and Managing a Capital Budget

Monteros, J. C. E. de los, Torres, A. C., Salgado, J. G., Rivera, J. F., Salgado, C. G., & Vázquez, V. C. (2021). Administration of strategic agreements in public hospitals: Considerations to enhance the quality and sustainability of mergers and acquisitions. International Journal of Environmental Research and Public Health, 18(8), 4051. https://doi.org/10.3390/ijerph18084051 

Ren, W., Zhao, Y., Zhong, H., Fu, X., & Wu, J. (2021). Exploring the optimal allocation decision-making of expenditure budget in hospitals under multi-objective constraints: Evidence from urban public hospitals, China. SAGE Open, 11(4), 215824402110581. https://doi.org/10.1177/21582440211058191 

Sdino, L., Brambilla, A., Ovo, M. D., Sdino, B., & Capolongo, S. (2021). Hospital construction cost affecting their lifecycle: An Italian overview. Healthcare, 9(7), 888. https://doi.org/10.3390/healthcare9070888 

Sohn, H., Tucker, A., Ferguson, O., Gomes, I., & Dowdy, D. (2020). Costing the implementation of public health interventions in resource-limited settings: A conceptual framework. Implementation Science, 15(1). https://doi.org/10.1186/s13012-020-01047-2 

NURS FPX 6216 Assessment 4 Preparing and Managing a Capital Budget

Thusini, S., Milenova, M., Nahabedian, N., Grey, B., Soukup, T., Chua, K.-C., & Henderson, C. (2022). The development of the concept of return-on-investment from large-scale quality improvement programmes in healthcare: An integrative systematic literature review. BioMC Health Services Research, 22(1).
https://doi.org/10.1186/s12913-022-08978-0