Capital Budget for a Major Capital Acquisition
Prepare a 4 page capital budget for a major capital acquisition.
In today's health care environment, the focus on major purchases, as part of the capital budget, has emphasized the need for newer and better technology. Although the need to invest in capital equipment and technology has been ongoing, the nursing workforce must also have a safe and pleasant work environment.
This assessment provides an opportunity for you develop a capital budget for a major facility improvement that will benefit patients, nurses, and the organization.
Most nurse leaders work with operating budgets, but will also have input into capital budgets. A capital budget is typically developed separately from the operating budget and is usually developed to purchase items that are often referred to as big-ticket items that will enhance the capacity or services of an organization. For example, capital budgets may cover land purchase for the future site of a new outpatient surgical center, construction of a new building or build-out for renovation of an already existing building, or replacement of old equipment.
It is important to remember that health care is also a major business. While for health care providers, patient care and safety are priorities, health care institutions must operate from a business model in order to survive financially. As nurse leaders or executives, you often have a role to play in developing a capital budget to improve care at some level. In addition, a rapidly changing health care environment requires nurse leaders who have the financial management and budgeting skills to ensure that large capital expenditures further the mission and goals of the organization.
Preparation
You are the unit manager of a 50-bed, step-down unit, and it is time for you to prepare your annual capital budget. You have seen a significant turnover in your nursing staff in the past three years; a review of exit interviews and patient surveys indicates low nurse satisfaction, poor morale, and complaints of an antiquated and depressing work environment. You have researched the impact of a positive working environment on staff productivity and morale and decided to request a renovation of the nurses' lounge as the main purchase in your capital budget. You will present your request as a quality improvement investment.
As you prepare to complete this assessment, you may want to think about other related issues to deepen your understanding or broaden your viewpoint. You are encouraged to consider the questions below and discuss them with a fellow learner, a work associate, an interested friend, or a member of your professional community. Note that these questions are for your own development and exploration and do not need to be completed or submitted as part of your assessment.
- How would you approach the process of designing a capital budget? For example:
- What steps would you need to take?
- What resources would you access?
- Will you collaborate with other executives or staff?
- How will you tie the vision for the capital expenditure to the organization's mission and goals?
- What challenges do you anticipate in justifying a capital budget to administrative leaders in an organization?
- What criteria might a particular health care organization or service provider apply to evaluate the return on a capital investment?
Prepare and Manage Capital Budget Coursework
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Healthcare organizations focus on significant purchases and technological developments to optimize patient care delivery. However, ensuring the nursing workforce gets a safe and friendly work environment is equally critical. The capital budget proposal seeks to meet the need to renovate the nurse's lounge in a 50-bed step-down hospital unit. The organization will foster nurse motivation, morale, and a positive environment. This paper supports the organizational goals and mission while considering the stimulating effects of a conducive work environment on fiscal health and patient care. The paper will discuss the capital acquisition, justification of capital acquisition need, capital budget preparation, cost calculation costs, budget management plan, and the effects of the renovation on the organization's fiscal health.
Capital acquisition
The renovation of the nurse's lounge in a 50-bed step-down unit is the proposed capital acquisition for the capital budget. The renovation's scope entails an extensive lounge transformation, creating a secure, conducive, and the positive environment for staff members. Consequently, the renovated lounge will prioritize capacity, amenities, comfort, and aesthetics to enhance the positive nursing experience. The renovated nursing lounge will have comfortable and ergonomic furniture like working and dining tables, chairs, and plush seating. Also, it will feature amenities like a fully-stocked refreshment arena with a microwave and refrigerator. The lounge's aesthetics will be improvised with decorative wall art, plants, and fresh paint to create an inviting and calming environment. This capital budget represents an organization's annual budget to organize the following year's activities (Felix & Emmanuel, 2022). Moreover, its capacity will increase to accommodate all the nursing staff and offer ample space for privacy, relaxation, and socialization.
The project's timeline is clearly outlined in the capital budget proposal. It starts on June 1, 2023, and ends on May 31, 2024, during which the nursing lounge will complete all the proposed features. This timeline considers material delivery, contractor availability, and any possible unforeseen disruptions to the daily work on the unit. Effective communication and collaboration of stakeholders will mitigate potential disruptions and ensure the project's timely completion. The renovation's description is accurate and complete since it covers critical aspects of the proposed improvements and lounge changes. Budgets should achieve certain goals, like planning policies for a given period and translating goals into plans (Felix & Emmanuel, 2022). Ultimately, it considers the nursing staff's preferences and needs and seeks to create a space that enhances their satisfaction and well-being.
Justification for the Capital Acquisition Need
The renovated nursing lounge will offer a safe and positive working environment where nurses can relax, recharge, and interact with colleagues. Such a working environment will enhance nurse satisfaction and morale and mitigate turnover rates. The renovation of the nursing lounge aligns with the unit's or organization's mission. The organization's mission is to give optimal patient care and enhance the satisfaction and well-being of nursing staff; thus, allocating funds for a conducive environment helps in the mission. Therefore, capital budgeting is critical in planning, managing, and allocating resources (Muda, 2023). Supportive infrastructure is fundamental in providing quality patient care, and thus nurses play a critical role in attaining the organization's mission.
The organization's executive leaders will likely react positively to the proposed budget. This reaction is due to the alignment of the budget's focus on nurse morale, satisfaction, and the working environment and the organization's goal of maintaining high nursing staff retention rates. The proposed capital acquisition takes a proactive stance in workforce investment and highlights the significance of nurses' well-being in optimizing patient care. It discusses the scope of the lounge renovation, the envisioned lounge, needs for the proposed improvements, evaluates the renovation's benefits to patient care and nursing staff, and aligns with the organization's goals and mission. The investment's evaluation and choice should be long-term, with rewards persisting into that period (Muda, 2023).
Capital Budget
Capital Budget: Renovation of Nurse's Lounge
Period: June 1, 2023 - May 31, 2024
Item
Description
Quantity
Unit Cost ($)
Total Cost ($)
Flooring
New flooring materials
1
6,000
6000
Painting
Paint, labor, and supplies
1
3,500
3500
Furniture
New lounge furniture
1
9,500
9500
Lighting
Improved lighting fixtures
1
2,400
2400
Appliances
Refrigerator and microwave
1
4,500
4500
Decorations
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