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.

Week 5 Discussion

According to Waxman (2018), Doctor of Nursing Practice (DNP) leaders must be able to interpret and analyze the financial statements of healthcare organizations (Waxman, 2018). Financial statements provide insight into the business health of an organization. Therefore, nurses in executive leadership roles are expected to have an in-depth knowledge of the economics behind healthcare.

The discussion for this week’s assignment involves variances that can occur in the financial setting of an organization. Waxman defines variance as the difference between what has been projected for the budget and the actual performance. Furthermore, the author emphasizes that the terms positive and negative are used to describe a variance. Why is it essential for the nurse leader to understand variance in a financial report? The nurse leader must be able to explain those variances in detail and develop action plans to manage those variances.

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 following variances are positive and which ones are negative? What does the director need to report to senior leadership as to what has happened and why, and what she is doing to make adjustments?

 

	Budget	Actual	Variance
Volume (patients)	1,000	1,200	200
Overtime hours (staffing)	50	75	25
Supplies	5,000	5,100	100

 

 

Volume: positive variance (shows an increase of 200 patients above what was budgeted).

Overtime hours (staffing): negative variance; overtime is 25 over what was budgeted. Therefore, more staffing was needed, and more money was used for salaries than was budgeted.

Supplies: negative variance (100 over what was budgeted).

 

The data presented in this scenario shows an increase in patients, which signifies an increase in revenue. The nurse leader would need to analyze the variances. The analysis should include a review and an adjustment of staffing based on the volume of patients and the overtime numbers. An adjustment may need to be made with more staffing on the average weekday where more patients are scheduled for procedures.

 

What does the director need to report to senior leadership as to what has happened and why, and what she is doing to make adjustments?

Patients increased 20% as expected. Overtime increased by 50, which was high. Had the Director known about the new equipment and the plan to schedule more patients for procedures,  she could have staffed appropriately and not have to pay overtime. Supplies only increased by 2%. Although this shows a negative variance, it could have been construed as a positive based on the increase in the number of patients, which increased the facility’s revenue.

 

2. Table 7.2 Income Statement (Profit & Loss)

 

1. 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?

 

Growth in the Net Revenue from the patient is one of the main contributing factors. Additionally, by keeping operating expenses low at 22%, this factor also contributed to a more robust bottom-line from the previous year. Overall the increased revenue, minimal operating cost, and the net margin increase are the key factors driving this improved performance.

 

1. 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?

 

• Revenue is generally, if not always, at the top of the income statement, thus making all revenue a priority. The executive director’s focus should be identifying why Routine Services revenue is much lower than the other patient revenues and finding a solution. Additionally, it’s critical—for the executive director to focus on branding and quality, which may identify why routine services revenue is low and sustain long-term financial growth. 

1. Is your impression of the reported financial performance generally favorable or unfavorable? Why?

 

• The reported financial performance is found to be favorable. Revenue overall is up and trending up over the last year, thus resulting in a net income or profit.

 

References

Waxman, K. (2018). Financial and business management for the doctor of nursing practice. New York: Springer Publishing.

 

 

Discussion Board Responses Rubric

Discussion Board Responses Rubric
Criteria	Ratings	Pts
This criterion is linked to a Learning OutcomeNumber of Responses Students are expected to respond to at least 2 of their peers.	30 pts Exemplary 28-30 points. The responses exceed the requirement for the activity. 27 pts Satisfactory 23-27 points. The responses fulfill the minimum required number for the discussion activity. 0 pts Unsatisfactory 0-22 points. The responses do not meet the number required for the activity.	30 pts
This criterion is linked to a Learning OutcomeSubstance of Responses	45 pts Exemplary 42-45 points. The responses offer either an extension on the original posting or a clearly alternate point of view that fosters further thinking, reflection, or response on the discussion topic. 41 pts Satisfactory 34-41 points. The responses generally offer some insight by either extending the point of the original or offering an alternate point of view, but they may not encourage further thought or reflection on the discussion topic as much as they possibly could. 0 pts Unsatisfactory 0-33 points. The responses do not offer any new or very limited insight by either extending the position of the original post or providing an alternate point of view.	45 pts
This criterion is linked to a Learning OutcomeGrammar, Punctuation & APA	25 pts Exemplary 23-25 points. The postings have less than 3 errors in grammar, punctuation, and/or APA. 22 pts Satisfactory 19-22 points. The postings have 3-5 errors in grammar, punctuation, and/or APA. 0 pts Unsatisfactory 0-18 points. The postings have more than 5 errors in grammar, punctuation, and/or APA.	25 pts
Total Points: 100

Response to Discussion: Income Statement

Doctor of Nursing Practice (DNP) graduates manage finances in their organizations by directing the implementation of activities that generate revenue and by eliminating unnecessary expenditures. Therefore, it is imperative that they understand financial management principles that they can apply to promote financial growth in their organizations (Waxman, 2018). For example, an important financial management principle that DNP-prepared nurse leaders should possess is the ability to detect, evaluate, correct, and report financial outcomes that deviate from the actual budget (Penner, 2017; Waxman, 2018). This competency and role are clearly presented in your discussion where you have been able to identify positive and negative variances including a description of why they occurred, what the director needs to report to senior leadership, and the actions that are being taken to make adjustments.

Positive and negative variances affect the financial performance of an organization differently. For instance, any deviation in the budget that generates unplanned revenue for the organization is a positive variance. Patients’ volume is indeed a positive variance because the organization received extra 200 patients after purchasing the new piece of equipment. On the other hand, any deviation that causes unplanned expenses is negative variance. Examples are overtime hours that increased from 50 to 75 and supplies which increased from 5,000 to 5,100. When reporting these deviations to senior leadership, the director should clearly state that the newly purchased equipment enabled the organization to attract more patients than initially expected. Due to the increased volume, the facility had to purchase additional supplies and assigned some of the nurses to work overtime. By applying financial management principles, the director should propose a plan to hire additional nurses and request additional funding for supplies (Meinert et al., 2019). Thereafter, the nurse leader should constantly monitor and evaluate financial data to keep track of possible deviations.

 

 

References

Penner, S. J. (2017). Economics and financial management for nurses and nurse leaders (3rd ed.). New York, NY: Springer Publishing. ISBN-13: 9780826160010.

Meinert, E., Alturkistani, A., Foley, K. A., Brindley, D., & Car, J. (2019). Examining cost measurements in production and delivery of three case studies using e-learning for applied health sciences: Cross-case synthesis. Journal of Medical Internet Research, 21(6), e13574. https://doi.org/10.2196/13574

Waxman, K. T. (2018). Financial and business management for the Doctor of Nursing Practice. 2^nd ed. Springer Publishing Company.