Question

Type of care provided

Care in this capacity can range from a short-term to long-termbased upon the changing needs of the patient. Patient age can rangefrom pediatric to elderly. Care can be provided in the patient’sprivate home, group home, or assisted living setting. Medical homesfall into this category and are a new focus of Accountable CareOrganizations through the Affordable Care Act of 2010.

Scenario

In home care, a patient is visited at home by a nurse or nursingassistants with activities of daily living (ADL), wound care, IVtherapy, etc. These organizations can be nonprofit or for-profit. Aphysician super- vises the care with the assistance of RNs or LPNsand certified nursing assistants (CNAs).

You are a new administrator for a home health agency that is anational nonprofit organization that serves the surrounding Phoenixcommunity. The agency has been recognized for the delivery ofon-time qual- ity services for a number of years. It is known toemploy only the top staff within the community, but in recentmonths staffing numbers have dropped dramatically and you, as theagency’s administrator, have found yourself in a position whereyour facility is short staffed. You are unable to admit anyadditional patients unless you are able to have your staff workover time.

Question 1

Review your current budget. Taking this information intoaccount, what are some strategies you would use to identifyresources to focus on improving efficiency and meeting customerexpectations during this time?

Question 2

What do you see as the biggest financial issues of yourorganization? Hint: You are a nonprofit organiza- tion—so look atyour means of funding and the relationship this has on your abilityto treat patients and hire new staff. How will you address thisfinancial issue?

Budget Considerations

Operational Budget – This budget focuses on a broader view ofthe total operations of the organization in which all departmentsare reviewed for both their income potential and the costsassociated with the work activities used to generate projectedrevenues. Each department will have its own budget for the managersto follow and on which to base the activities of the department inorder to meet its contribution to the total revenues and the asso-ciated costs of the organization.

Dietary Services – This is a departmental budget focused on thecosts and potential reimbursement for the organization. Theoperation is overseen by a dietitian or nutritionist who isresponsible for supplying the nutritional needs of the patientswithin their care. This department may utilize the services ofseveral consultants or contract this service to an outsideorganization.

Medical Supplies – This budget is focused specifically on therequirement-based services being delivered by the hospitalprofessional, which are often referred to as nondurable disposableitems. This budget includes specific items for the surgeon orprofessional performing the services. These may include such thingsas oxygen supplies, diabetic supplies, ostomy supplies, bandages,and related supportive items. These items are generally manu-factured for one-time use. They are not reused due the inability tosterilize them. The items that are reusable are classified undercapital assets and have a use-time identified with the specificpiece of equipment.

Human Resources – This budget indicates the finances needed tosupport the organization’s objectives, from a personnelperspective. Full-time equivalent (FTE) calculations are used toproject the personnel budget. These individuals could includenonskilled labors to professional licensed physicians and variousjob descriptions within the categories. In addition to listing theFTEs, the associated benefits of the FTEs would be projected withinthis department for each FTE within the organization. This willgenerally include line items for consultants and tempo- rarypositions based on the needs of the organization.

Maintenance/Facility Operations – This departmental budgetfocuses on the overall upkeep of the building and the relatedequipment and machines to provide a safe and comfortableenvironment for both the patients and workers. This budget includesall FTEs and may also include line items for consultants andoutside sources based on needs of the facility.

Vendor/External Suppliers – Health service organizations havespecial needs and may require certain exter- nal items and/orservices. Most organizations have projected budgets to include thepurchase of supplies and services for outside contractors (vendors)who specialize in installation, monitoring, and the repair ofspecialized equipment or technology being utilized by the specifichealth care delivery system.

Departmental Costs – This budget focuses on the specificdepartment and its overall needs, costs, and po- tential revenue inrelation to the overall goals of the organization’s strategic plan.The manager’s primary responsi- bility is to monitor theoperational efficiency of the department, including all areas thatdirectly impact and support the generating of revenue for theorganization. Managers may be required to present an analysis ofthe weekly or monthly operational analysis to the Chief FinancialOfficer of the organization or a lead manager.

Budget Spreadsheet

Revenue	2011	2012	2013
Donations	50,000	55,000	75,200
Grants and Foundations	100,000	80,500	125,780
Government Grants	947,280	878,000	695,120
Interest Expense	6,050	8,000	10,000
Total	1,103,330	1,021,500	906,100
Expenses	2011	2012	2013
Health Center	2,482,845	2,558,265	2,668,951
Administrative Staff	100,000	110,000	125,000
Professional Staff	80,000	100,000	150,000
Family/Youth Services	214,888	210,987	230,985
General Management/Administration	140,000	152,000	159,000
Total	3,017,733	3,131,252	3,333,936