Week 8 Discussion: Reflection on Learning and Practice Readiness

Week 8 Discussion: Reflection on Learning and Practice Readiness

Week 8 Discussion: Reflection on Learning and Practice Readiness

Purpose

The purpose of this discussion is to reflect on your readiness to practice as a DNP-prepared nurse and consider what you learned in this course and how this knowledge will impact your practice.

Instructions

Each week, you have been reminded that reflective inquiry allows for expansion of self-awareness, identification of knowledge gaps, and assessment of learning goals. As you reflect on your own readiness to practice as a DNP-prepared nurse, it is important to consider what you learned in this course.

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As you review the course outcomes and your experience in this course, address the following:

Analyze and evaluate how your€¯thinking€¯was challenged in this course related to project management and financial management competencies.

Considering this new knowledge, examine how this learning prepares you to practice as a DNP-prepared nurse.

Week 8Lesson 1

Strategic Planning

Introduction

Healthcare organizations must assess the future in terms of their ability to meet the expectations of a more well-informed public and a more active group of purchasers of care and services. Also, the fact that the government is assigning itself a more prominent role in controlling the system’s growth calls for constant monitoring by providers. Finally, the relationship between hospitals and physicians is changing as well. Physicians now perceive that their role as the primary customer of hospitals and the healthcare system’s driving force is eroding through the growing influence of managed care. The authority of physicians to direct the care of their patients within the system is decreasing.

Reflection

Reflect on how factors such as a more well-informed public, greater government involvement, and a changing relationship between physicians and healthcare organizations affected your healthcare organization.

The convergences of these factors and other changes in the healthcare environment have caused healthcare organizations to understand their environment in which they must deliver their services. The forces of the environment are causing the system to change rather than allowing the system to assess and change itself.

Without an awareness of how their organization affects other organizations and other forces in the environment, healthcare managers risk developing ineffective plans. It is essential that managers understand their organization’s system terms. As they do, they will begin to measure each decision they make in terms of its ramifications in and on the environment. This is the basis of strategic thinking.

Several steps are involved in preparing for the strategic planning process.

Strategic Planning Process Image Description

Select the participants

Develop a mission€¯statement

Get to the strategic€¯level€¯

Identify the stakeholders

Define a strategy

Capital Budgets

A capital budget is a plan for the acquisition of long-term investments. For example, a hospital may be planning to purchase new or replacement equipment, undertake a new service, or plan for a renovation or expansion of an existing facility. Fundamental to capital budgeting is that the asset being acquired has a lifetime that extends beyond the year of purchase. Therefore, the asset is only partly used up in one year, and, in any one year, the organization earns only part of the revenues that the capital assets generate over their useful lifetimes (Jones et al., 2019).

The capital budget serves as the basis for setting some of the critical quality and operating targets. Creating a capital budget proposal that quantifies the costs and benefits of the proposed investment is the starting point in the capital budgeting process. The governing board approves capital budgets. There is often a lack of sufficient funds at the organizational level to approve all capital budget requests. Therefore, it is also important to provide a justification for each requested purchase and specify the consequences if funding is not made available.

Forecasting Model

View the following video to learn about forecasting models.

Forecasting Model (2:45)

The forecasting process allows DNP-prepared nurses and organizations to predict into the future based on historical data and quantitative forecasting. Forecasting techniques allow for the prediction of how many patients or patient days the organization or particular unit will treat. If a DNP-prepared nurse attempted to prepare an operating budget for the organization without some prediction of these elements, it will be difficult to determine the number of staff needed. The forecast results are both helpful and essential when preparing a budget or when making financial decisions. Forecasting is an essential part of the budgeting process. Most forecasting is based on theories of probability. Probability is the likelihood of an occurrence and is based on historical data. The forecasting process consists of collecting data, graphing the data, analyzing the graphed data, and preparing prediction formulas. Analysis of the graph data helps the manager determine whether an item to be forecasted has been exhibiting seasonal or trending behavior, both, or neither. Computer programs are available to assist the DNP-prepared nurse in forecasting and allow for greater accuracy of results. A formalized forecasting process consists of several steps: collecting historical data, graphing the data, analyzing the data to reveal trends and seasonal patterns, and utilizing formulas to project the item being forecasted into the future. Data patterns generally fall into one of the following four categories. Random fluctuations occur due to unpredictable events. Seasonal fluctuations occurs cyclically every calendar year and are common in the healthcare industry. Trends occur related to the passage of time, either upward, downward, or constant, and may be random. Seasonal fluctuations and trends occur at the same time. One of the most common approaches in forecasting future trends is called regression analysis. It consists of a scattered diagram, which uses variables to plot points on the graph. Each point on the graph is represented by an independent variable and a dependent variable. The independent variable is the variable that causes changes in the dependent variable. Seasonality and trend pose a more complex problem, yet this is likely to be a common occurrence in healthcare. There are two steps involved in this forecasting approach. The first step is to use regression analysis to predict a trend line for the coming year. The second step is to extend the trend backward for the last five years and then calculate how much the actual value was above or below the line for the last five years. Those amounts are converted into percentages.

Section: Break-Even Analysis

The break-even analysis is used to determine at what point a new program or service will break even and then start to make money or be profitable.

Click through the following interactive to view the break-even analysis formula.

Break-Even Analysis Interactive Transcript

Please select a tile to learn more.
Q: Q is the break-even number, or quantity. 

FC: FC is the total fixed cost. 

P: P is the price. 

VC: VC is the variable cost per patient.

There would be a loss at a quantity lower than Q; at a quantity higher than Q, there would be a profit. P, or price, is assumed to be the average amount collected per patient or the average revenue the organization ultimately receives per patient. The basis for the formula is the underlying relationship between revenues and expenses. If total revenues are greater than expenses, there is a profit. If total revenues are less than expenses, there is a loss. If revenues are just equal to expenses, there is neither a profit nor a loss, and the service is said to break even (Jones et al., 2019).

When there are different types of patients, the break-even analysis becomes more complicated. If there are different types of patients with different prices, it is necessary to find the weighted average contribution margin.

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Click the following tabs to view examples.

Example 1

Example 2

The following is an example of a break-even analysis for a home health agency with different types of patients with different prices.

Type of Patient Price Variable Cost Contributing Margin
Complex $100 $30 = $70
Moderate $75 $30 = $45
Simple $50 $30 = $20

The crucial piece of information for calculating the breakeven point is the relative proportion of each type of visit. Let’s say that 20% of all visits are complex, 50% are moderate, and 30% simple. This information can be used to calculate the weighted average contribution margin. This requires multiplying each type of contributing margin by the percentage of patients that type of visit makes up, and then adding the sum of those results to attain the total weighted average contribution margin.

Type of Patient % of Visits Contributing Margin Weighted Average Contribution Margin
20% 20% $70 = $14.00
Moderate $50 $45 = $22.50
Simple $30 $20 = $6.00
Total Weighted Average Contribution Margin = $42.50

The $42.50 represents the average contribution margin for all types of visits. It can be used to calculate the break-even quantity. Assume that fixed costs are at $10,000 What is the total number of home visits that the agency would need to make to break even?

$10,000$42.50=236 Visits

The answer is 235.29 visits. Because there is a decimal, we round the number up to the next whole digit because it is not possible to have a .3 patient visit. The total visit number is 236.

47 would be expected to be complex care visits (20%),

118 moderate care visits (50%), and

70 simple care visits (30%).

The same weighted average approach could be used to find the break-even volume when there are more than three different types of patients.

Pro Forma Financial Statement and Business Planning

An effective business plan has to include Pro Forma financial statements. Pro Forma financial statements are used to facilitate comparisons of historic data and projections of future performance. These statements are used to forecast future revenues, expenses, and profits and/or losses resulting from the program’s operations. Pro Forma statements are based on three main accounting statements:
Profit or loss income statement

Balance sheet

Cash flow statement

A business plan is a detailed proposed program, project, or service. The plan is an important step in managing all businesses and it assists the DNP-prepared nurse in identifying customers, market and competition, projected revenues and expense, and time frame for achieving a break-even position. The depth and complexity of the business plan will vary by the project and for projects with large operating expenses or capital investments, a thorough business plan is crucial (Jones et al., 2019).

Week 8 Lesson 2

Financial Contributions of the Nurse Practitioner

Financial Contribution of the Nurse Practitioner to a Practice

Advanced practice registered nurses (APRNs) have become increasingly more important in the delivery of healthcare in the United States. APRNs include nurse practitioners (NP), clinical nurse specialists (CNS), nurse anesthetists, and nurse midwives, and all play an important role in delivering essential care services.

Nurse practitioners have been delivering primary care services since 1965 and currently represent the largest and most visible group of APRNs. However, many are “hidden providers” whose financial contribution to healthcare is often difficult to assess.

A business skill important for nurse practitioners is calculating their financial contributions to the practice (Waxman & Knighten, 2023). Nurse practitioners should be skilled in calculating how much revenue they generate and how this compares with their salary.

View the following graphic to become familiar with the steps to determine the financial contribution of a nurse practitioner to the practice.

Financial Contribution Interactive Transcript

Track services provided over a representative period

Track number of patients seen per day

Identify CPT codes used to bill for services

Determine the billing rate for these services

Determine the collection rate

Calculate the amount of revenue generated per week

Determine cost of practice expenses

Determine overhead costs

Identify the amount of revenue to supervising physician (if applicable)

Identify the practice profit amount

Identify how revenue is generated and spent
Determine whether billing is done in NP’s name or physician provider

Examine billing patterns

Examine workflow

Understand policies regarding reimbursement

Determine the amount of revenue you generate before entering into negotiations

Salary and benefits

Type of contract

Services to be provided

Salary structure

Click on the following hourglass and take a moment to reflect.

Time to Pause Interactive Transcript

As you prepare for your first Project & Practicum course, take a moment to consider the following:

What personal or professional barriers could impede your progress in the next four courses?

What can you do to mitigate the risk of these barriers to ensure your success in the implementation of your project?