Develop an operating budget and a capital budget and analyze how they are designed and managed.
Collapse All
Introduction
Effective financial management is a crucial aspect of maintaining the fiscal stability of healthcare organizations, with nurse leaders assuming a significant role in this endeavor. Nurse leaders must build on their knowledge of evidence-based practice to cultivate a broader use of evidence in their fiscal management decision-making. Most nurse leaders work with operating budgets but will also have input into capital budgets. The purpose of this assessment is to build a strong understanding of both operating and capital budgets and the differences between them in terms of fiscal management and the role of the nurse leader.
Note: Each assessment in this course builds on the work you completed in the previous assessments. Therefore, you must complete the assessments in this course in the order in which they are presented.
Scenario
You are the nurse leader at your organization. You have been tasked with creating an operating and capital budget. It’s your responsibility to consider the strategic plan you discussed in your previous assessment and apply it to the development of the capital and operating budgets.
Instructions
Using the provided Capital and Operating Budget Template [XLSX], create both budgets and explain your decisions in an accompanying paper.
Budget Spreadsheet
Capital Budget (think long-term):
Create a capital budget with line items that are specific to the business needs.
·       Buildings, equipment, and working capital.
·       Cash flow in.
·       Cash flow out.
·       Utilities.
Operating Budget (think day-to-day operations):
Create an operating budget with line items that are specific to the business needs.
·       Marketing materials.
·       Direct labor.
·       Salaries.
·       Insurance.
Narrative Component
Capital Budget:
Explain how the capital budget was designed and created.
·       Explains how costs were estimated.
·       Justify the need for each expense or service.
Describe the process for calculating costs in the capital budget.
·       Explain breakdown costs for each of the major cost categories (ie., salaries, fringe benefits, equipment, travel, supplies, other direct costs, and indirect costs), as well as any additional categories required by the organization.
·       Considers the elements of indirect costs and how they were calculated.
Explain ongoing management of the capital budget.
·       Explain the role of the nurse leader in ongoing budget management.
·       Include considerations for the organization’s financial sustainability.
Operating Budget:
Explain how the operating budget was designed and created.
·       Explains how costs were estimated.
·       Justify the need for each expense or service.
Describe the process for calculating costs in the operating budget.
·       Explain the breakdown costs for each of the major cost categories.
·       Considers the elements of indirect costs and how they were calculated.
Explain ongoing management of the operating budget.
·       Explain the role of the nurse leader in ongoing budget management.
·       Include considerations for the organization’s financial sustainability.
Submission Requirements
·       Files to submit: Submit the Excel file along with a budget narrative as a Word document.
·       Format: Format your paper using the current APA style. Refer to Evidence and APA for help. Use the APA Style Paper Tutorial [DOCX] to help you in writing and formatting your analysis. Be sure to include:
o  A title page, reference page, and appropriate section headings.
·       References: Include a minimum of five properly formatted citations and references. Refer to the Nursing Master’s Program (MSN) Library Guide for library research information.
Competencies Measured
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and scoring guide criteria:
·       Competency 1: Develop an operating budget for a healthcare organization.
o  Create an operating budget with line items that are specific to the business needs.
o  Explain how the operating budget was designed and created.
o  Describe the process for calculating costs in the operating budget. Explain ongoing management of the operating budget.
·       Competency 2: Develop a capital budget for a healthcare organization.
o  Create a capital budget with line items that are specific to the business needs.
o  Explain how the capital budget was designed and created.
o  Describe the process for calculating costs in the capital budget.
o  Explain ongoing management of the capital budget.
·       Competency 4: Communicate effectively with diverse audiences, in an appropriate form and style, consistent with applicable organizational, professional, and scholarly standards.
o  Integrate relevant and credible sources of evidence to support budget data and information, correctly formatting citations and references using APA style.
Scoring Guide
Use the scoring guide to understand how your assessment will be evaluated.
Collapse All
Criterion 1
Create a capital budget with line items that are specific to the business needs.
Distinguished
Creates a capital budget with line items that are specific to the business needs. Identifies knowledge gaps, unknowns, missing information, unanswered questions, or areas of uncertainty (where further information could improve the budget). <07e617dc-3e12-4e85-a011-e6330d1eb9fe>
Proficient
Creates a capital budget with line items that are specific to the business needs. <609bdbe5-766c-4a4a-bb55-c8d71388f09c>
Basic
Creates a capital budget, but fails to address all business needs, does not cover a one-year time period, does not conform to standard formatting conventions, or otherwise contains errors. <536756e5-f2ce-442f-bffc-d8df55c9bf5e>
Non Performance
Does not create a capital budget with line items that are specific to the business needs. <930474b0-2323-4c1e-be33-a85fc5f50999>
Criterion 2
Create an operating budget with line items that are specific to the business needs.
Distinguished
Creates an operating budget with line items that are specific to the business needs. Identifies knowledge gaps, unknowns, missing information, unanswered questions, or areas of uncertainty (where further information could improve the budget). <95d668f3-c7dc-4276-9dc7-3a1db7f0dae9>
Proficient
Creates an operating budget with line items that are specific to the business needs. <9cce043d-dc77-47af-a4de-66f363133b1b>
Basic
Creates an operating budget, but fails to address all business needs, does not cover a one-year time period, does not conform to standard formatting conventions, or otherwise contains errors.
Non Performance
Does not create an operating budget with line items that are specific to the business needs. <8bf8baf8-c8ac-497c-8935-2046ba4114fa>
Criterion 3
Explain how the capital budget was designed and created.
Distinguished
Explains how the capital budget was designed and created. Impartially acknowledges conflicting data or information that was not incorporated in the budget.
Proficient
Explains how the capital budget was designed and created. <84511118-a8be-49e9-b9e9-f40d27c5603e>
Basic
Provides an incomplete explanation of how the capital budget was designed and created. <65375fe1-88c1-4a34-88c4-7993bf738e6d>
Non Performance
Does not explain how the capital budget was designed and created.
Criterion 4
Describe the process for calculating costs in the capital budget.
Distinguished
Describes the process for calculating costs in the capital budget. Includes details and references that support the process. <40a0f7d9-7d01-47a2-a428-2cd40a57244d>
Proficient
Describes the process for calculating costs in the capital budget. <422bf777-052f-402a-847c-92d9c4731e87>
Basic
Provides an incomplete or partially inaccurate description of the process for calculating costs in the capital budget. <3aafbf82-c84d-4a80-a0eb-55710d550e68>
Non Performance
Does not describe the process for calculating costs in the capital budget. <93e02db4-9f0a-49a4-ae28-aeb2f891b6cd>
Criterion 5
Explain ongoing management of the capital budget.
Distinguished
Explains ongoing management of the capital budget. Includes details and references that support the process. <1a961d4c-d63a-4e7a-8c4b-5c81cd80b52b>
Proficient
Explains ongoing management of the capital budget.
Basic
Provides an incomplete or partially inaccurate explanation of ongoing management of the capital budget. <5b4e408b-ab8a-49a6-9e11-4939b7117f8d>
Non Performance
Does not explain ongoing management of the capital budget. <8e39f4b9-09e6-4732-8602-c205070c4ddc>
Criterion 6
Explain how the operating budget was designed and created.
Distinguished
Explains how the operating budget was designed and created. Impartially acknowledges conflicting data or information that was not incorporated in the budget. <77b3b8d2-234f-4543-aff9-f9b81cf11eaa>
Proficient
Explains how the operating budget was designed and created. <618bfb3e-2d93-49d1-8901-a60fb7cf0d39>
Basic
Provides an incomplete explanation of how the operating budget was designed and created.
Non Performance
Does not explain how the operating budget was designed and created.
Criterion 7
Describe the process for calculating costs in the operating budget.
Distinguished
Describes the process for calculating costs in the operating budget. Includes details and references that support the process. <000e29df-3fb5-49a2-b526-a5eaa04b74fc>
Proficient
Describes the process for calculating costs in the operating budget. <0c2fd5a1-b6b7-4a78-aa44-dc8a6533e503>
Basic
Provides an incomplete or partially inaccurate description of the process for calculating costs in the operating budget. <10b2a14c-72b4-475e-b4ca-868f67b5c0e7>
Non Performance
Does not describe the process for calculating costs in the operating budget.
Criterion 8
Explain ongoing management of the operating budget.
Distinguished
Explains ongoing management of the operating budget. Includes details and references that support the process. <7c4eb9ad-4abd-4fc4-af26-93c46c745ba0>
Proficient
Explains ongoing management of the operating budget. <165da9d7-0d4e-4f9b-bb61-37dc5edae6c8>
Basic
Provides an incomplete or partially inaccurate explanation of ongoing management of the operating budget. <21f09dde-2cae-445f-abba-bdcd6953a861>
Non Performance
Does not explain ongoing management of the operating budget. <658d86ad-c857-454b-afcc-18b0e3274857>
Criterion 9
Integrate relevant and credible sources of evidence to support budget data and information, correctly formatting citations and references using APA style.
Distinguished
Integrates relevant, credible, and convincing sources of evidence to support budget data and information. Sources are current, and citations and references are error-free. <6b0f086f-fb0f-43d2-8176-3ab7c6eb4177>
Proficient
Integrates relevant and credible sources of evidence to support budget data and information, correctly formatting citations and references using APA style. <1706451b-d595-46e6-bf59-14c79b3204ff>
Basic
Sources lack relevance or credibility, are poorly integrated, or are incorrectly formatted. <2eb65c98-d55f-48ad-9e81-8d5eb23bea0d>
Non Performance
Does not integrate relevant and credible sources of evidence to support budget data and information, correctly formatting citations and references using APA style. <2a8ccb58-dc2e-48dc-b608-86ceb63b5b63>