Please respond to the three uploaded discussion responses with one peer-reviewed each in APA format.
Budgets serve as a tool to help manage resources in health care settings (Penner, 2017). Budget investigation is a management activity that “examines events, processes, or staff performance that might be reasons for budget concerns and determines whether the budget concern can be controlled” (Penner, 2017, p. 113).
After the monthly review of my unit’s operational budget and finding that the unit is overbudget for medical supplies, I will start by determining if the overage qualifies for investigation per hospital guidelines and check if to see if the overage seems to be out of the ordinary. If either criterion is met, verifying the accuracy of data entry would be my starting point. Once verified, a deeper dive into a finer level of detail is the second step to the review of medical supply budget overage. Examining which type of medical supplies are involved and if there are identified areas of waste, price hikes, or just plain loss of supply charges. Once the specific issue is identified I will work with my team to ensure the issues is prevented for future loss. If waste is identified, reminders will be made to be mindful of only using what is needed. To address an unexpected rise in prices, alternative supplies will be evaluated for to replace the affected supplies. If supplies are missing or “lost”, tracking of supplies will be instituted especially if the supplies concerned are of higher costs. After implementing these measures, continuous monitoring is needed to see if there is improvement in the next monthly review.
Penner, S. J. (2017). Economics and financial management for nurses and nurse leaders (3rd ed.). Springer Publishing Company.
Penner (2017) noted that budget figures denote a performance target that is used to determine if a performance standard is reached in actual practice. Ongoing monitoring of the budget determines undesired, unexpected, or unusual performance which requires an investigation of the source of the problem.
Steps that can be taken to investigate a negative variance include rechecking the reported values and calculations for computational errors and requesting a detailed report of items used. Actions to mitigate this negative variance from occurring include reviewing vendor contracts to determine if the price or shipping cost have increased, determine if supplies are being stolen or borrowed, possible sources of waste and changing policies or procedures requiring an increased use of supplies (Penner, 2017).
Other reasons, this student has experienced that increase the cost of medical surgical supplies include an increase in patient volume that require use of more supplies, nurses taking too many supplies into the rooms leading to unnecessary waste, a one-time purchase of an item or service that fell into the medical surgical category. Actions we took to correct these opportunities include explaining the variance to the senior leaders regarding increase in volume for the month, regarding the nurses being wasteful with supplies; nursing leadership partnered with central supply team to provide training regarding the cost of the items used. Prior to this initiative, the nurses were not aware of the cost of the products used. A single item or purchase should be noted in the month’s operations report to explain the variance.
Penner, S. J. (2017). Economics and monetary management for nurses and nurse leaders (3rd ed.). New York, NY: Springer Publishing. ISBN-13:9780826160010
Budgeting in healthcare organizations is complicated and multifaceted. There are many different areas of a budget in a healthcare organization unit these areas include the capitol budget, the operational budget, and the special purpose budget. The purchases that are placed in these different budgets depends on different factors like the urgency of need for the item, the cost of the item and the frequency that the item must be purchased. “The special purchase budget is prepared for any purpose that has not been otherwise budgeted” (Penner, 2017). The first step I would take is to determine if the equipment requested for purchase has already been budgeted for, the urgency in which it requires to be purchased and if it has not already been placed in the budget what area of the budget it should be purchased. “Although budgeting is a continuous managerial activity, most organizations, establish a budget cycle, including a schedule for budget preparation, negotiation, approval, and implementation” (Penner, 2017). The nest step is to determine where the new equipment purchase lies in the budget plan established on the unit. There are different requirements, policies, and procedures to determine this like the cost of the item. In my organization any supply or equipment costing over five thousand dollars is a purchase that should be incorporated into the capitol budget unless it is a special budget purchase. All purchases over one thousand dollars are required to be submitted to and approved by the unit’s value analysis committee and sometimes the system wide value analysis committee.
The other factor that needs to be accounted for is the importance, urgency, and impact that the purchase makes on patient care on the unit. If the purchase in necessary for safer patient care or regulatory compliance this, then raises the priority of the addition of the purchase into the appropriate area of the budget. This sometimes requires special approval from whichever level of upper leadership in the organization is necessary or that the purchase be made in dollar increments that are compliant with the area of the budget that it is determined that the purchase be made from, typically the operational or special purchase budget if the purchase cannot wait the yeatr it takes to be approved through the capitol budget.
Penner, S. J. (2017). Economics and financial management for nurses and nurse leaders (3rd ed.). New York, NY: Springer Publishing. ISBN-13: 9780826160010
Discussion Response 1- Catherine
I have gone through your post and I would like to point out that I like your approach on the topic. You have clearly defined what a budget is in terms of healthcare and explained the different criteria used to evaluate the urgency of items for purchase in a healthcare organization.
I would like to add that budgeting in healthcare organizations is an important aspect that allows operations to run smoothly. It gives a direction in which funds can be utilized to ensure patients receive the best quality care, for example through purchase of various healthcare appliances that make work easier (Wishnia & Goudge, 2020). Proper budgeting ensures that the organization does not go beyond their expenditure as allocated by the availability of funds to avoid shortages in other areas. As a result, budget approval procedures that are passed by designated committee members should be followed in every purchasing decision within the organization. Budgets are also useful in a healthcare organization in order for them to apply and receive funding from both the government and non-governmental organization for the provision of quality and safe care.
Discussion Response 2 –Aubrey
In your discussion, which was very insightful, you have detailed the steps to be taken in investigating budget use in an organization. I agree that this is an important aspect of an organization budget control because an overbudget can be alarming by pointing to dishonesty within the organizational heads.
Whenever there are disparities between supply and expenditure in an organization’s budget, steps are taken to investigate the source and to gauge whether it should be a cause for concern. Determining if an overbudget is necessary to investigate is important because sometimes budgets can vary due to changes in the market prices of medical supplies, which varies according to demand and availability. If this is the case, the committee will find ways of determining whether it is possible to change suppliers and go for other cheaper and more affordable suppliers (Walsh, 2016). Another way to control budget rises is to ensure proper use of appliances and medical supplies by employees within the organization to avoid damages and unnecessary replacements, which bring additional expenditure for the organization.
Discussion Response 3-Demita
The writer in this discussion has clearly elaborated the reasons for an ongoing budget monitoring which as highlighted are to determine unwanted performance results, which are grounds for investigation. The writer has also explained some of the actions that can be taken to reduce this within an organization.
I concur with my colleague that some of the reasons for an increase in budget beyond the expected values are due to staff misuse of hospital supplies. This can be seen in various ways such as taking too many items from the storage area that is more than enough for single use and not returning the unused items. My colleague has elaborated that one way to stop this wastage is through training of staff on proper use of supplies, this is true (Penner, 2015). However, one other way to reduce misuse of appliances is to ensure that there is close monitoring of items that are taken out of the storage for use, and each person registers whatever they have taken together with the amount (Abdulsalam et al., 2020).
1.Abdulsalam, Y., Alhuwail, D., & Schneller, E. S. (2020). Adopting identification standards in the medical device supply chain. International Journal of Information Systems and Supply Chain Management, 13(1), 1-14. https://doi.org/10.4018/ijisscm.2020010101
- Penner, S. J. (2015). Why hospitals must educate nurses about healthcare costs. Fierce Healthcare. https://www.fiercehealthcare.com/hospitals/why-hospitals-must-educate-nurses-about-healthcare-costs
- Walsh, K. (2016). Managing a budget in healthcare professional education. Annals of Medical and Health Sciences Research, 6(2), 71. https://doi.org/10.4103/2141-9248.181841
- Wishnia, J., & Goudge, J. (2020). Impact of financial management centralisation in a health system under austerity: A qualitative study from South Africa. BMJ Global Health, 5(10), e003524. https://doi.org/10.1136/bmjgh-2020-003524