Please read the discussion board post and complete a full 1-page peer review (response). Also, please elaborate on the discussion and follow the grading rubric. ***Please do not use the same words from the original order #121566*** I do not need a title page. I have attached the discussion board post and grading rubric as a file.
1.1. The invasive radiology department has just purchased a piece of equipment that enables them to perform many of their procedures faster. One of the results of this improvement is that they are able to schedule 20% more cases on an average weekday. During the preplanning of this improvement, the director of short stay was not included and was told her staffing needs might increase by 10%. After the first month of the use of the new equipment, the short stay unit had the following variances
Which of the variances are positive?
According to Waxman (2018), variance is the difference between plan cost and actual cost. In this scenario the positive variance is the difference in the increase in the patient volume because the planned volume increase by 200 over the budgeted volume. Seeing more patients can lead to an increase in revenue.
Which of the variances are negative?
The negative variance is the increase in overtime and the increase in needed supplies. These negative variances occur because the increase in patients link the need for overtime and more supplies which was not included in the budget.
What does the director need to report to senior leadership as to what has happened and why, and what she is doing to make appropriate adjustments?
According to Waxman (2018), as DNP and leader it’s important to explain variances and develop action plans to manage the variances. The reporting involves explanation of the variance. The increase in patient flow should be reported along with the increased need for overtime and supplies. A variance analysis should be performed to provide the explanation for the variance in the positive and negative.
- Review the income statement provided in Table 7.2 and address the following questions
From your analysis, you understand that the net margin for the organization has shown strong growth over the past year. What factor/s is/are driving this improved performance?
Improvement in performance resulted in a 97% improvement of the performance of the net margin which occurred because the total net revenue increased by 24% and the total net expenditures went up by a difference of 22%.
What concerns do you have regarding current financial performance of this organization? As an executive leader within this organization, what priority issues should this organization address?
One concern is the increase in operating expenses. The total operating expense is up by 22%, and the total gross revenue is up by only 15%, indicating they are spending more than they are making. Another concern is that routine services can be a big revenue producer but are up only by 5%. This organization must figure out a way to increase revenue from routine services by more than 5%. The next budget will have to adjust more money for operating expenses.
Is your impression of the reported financial performance generally favorable or unfavorable? Why?
Even though this organization still must improve its financial budget, my impression of the financial performance is favorable. The organization’s percentage of net revenue (margin) increased to 3.82% in 2017, from 2.40% in 2016, a 1.42% increase from the previous year. According to Waxman (2018), the organization should identify different administrative and clinical activities that generate value.
Reference:
Waxman, K. T. (Ed.). (2018). Financial and Business Management for the Doctor of Nursing Practice (2nd ed.). New York: Springer
Income Statement: Response to Peers
Nurse leaders make great contributions to effective financial performance in their organizations. Part of their role entails ensuring budgetary compliance by preventing extreme variances that might lead to financial losses (Waxman, 2018). Your discussion provides a detailed analysis of positive and negative variances and how they affect an organization’s budget. It is the responsibility of doctorally-prepared nurses to identify budgetary items that contribute to either positive or negative variances, the causes of such variances, and how best they can be addressed. Besides, the nurse leader must report this information to the senior leadership that can also use it to make appropriate adjustments. Advances in medical technology, demographic shifts, and population growth drive rising healthcare costs in healthcare organizations. Therefore, providing senior leadership with information regarding variances in the budget guides decision-making regarding resource allocation and cost controls (Naranjee et al., 2019). As you have emphasized in your discussion, the reporting involves the explanation of the variance. The nurse leader should report the increase in patient flow along with the increased need for overtime and supplies. A variance analysis should be performed to provide the explanation for the variance in the positive and negative (Waxman, 2018).
Nurse leaders should be able to understand and communicate basic accounting concepts. As Naranjee et al. (2019) explain, through accounting and financial performance communication, nurse leaders help senior leadership to maneuver and foresee the direction that their organizations are likely to take. Therefore, there is a need for doctorally-prepared nurses to acquire financial management skills and knowledge that they can apply to control resource use in their settings (Waxman, 2018). They can acquire some of these skills by constantly analyzing budgets to identify variances, explain their causes, and propose possible solutions.
References
Bai, Y., Gu, C., Chen, Q., Xiao, J., Liu, D., & Tang, S. (2017). The challenges that head nurses confront on financial management today: A qualitative study. International Journal of Nursing Sciences, 4(2), 122–127. https://doi.org/10.1016/j.ijnss.2017.03.007
Naranjee, N., Ngxongo, T., & Sibiya, M. N. (2019). Financial management roles of nurse managers in selected public hospitals in KwaZulu-Natal province, South Africa. African Journal of Primary Health Care & Family Medicine, 11(1), e1–e8. https://doi.org/10.4102/phcfm.v11i1.1981
Waxman, K. T. (Ed.). (2018). Financial and business management for the Doctor of Nursing Practice (2nd ed.). New York: Springer.