Preparing and Managing a Capital Budget
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Preparing and Managing a Capital Budget
Under a rapidly diminishing payment system, healthcare institutions are undergoing extreme changes in healthcare provision, raising the need to enhance quality, lower expenses, and boost revenue. The unit manager should discuss the rationale for having to acquire new equipment or undertake structural upgrades to the unit, as well as locate available financial sources and present incentives connected with the acquisition and overhaul in order to properly develop and manage a capital budget. A 50-bed step-down unit that has had a high nurse turnover rate in the last three years, affecting healthcare delivery, staff satisfaction, and creating an unpleasant workplace. With good coordination with the management, finance department, and personnel, the unit manager of the step-down unit will suggest a quality improvement development plan to rebuild the nursing staff’s lounge and nurse stations.
Capital Acquisition
A capital acquisition is a multi-stage process that involves determining requirements, available financing, acquisition strategy, and rewards. The unit manager will work with the management, financial department, and employees to develop best practices and budgetary choices for the suggested construction project (Stroudt, 2013). To get leadership buy-in on a project proposal, the unit manager needs to involve leadership, establish achievable targets, measure performance, share information efficiently, and remain on top of scheduled deadlines (Rice, Ward, & Burnett, 2015). The unit manager must also examine any potential capital needs for the unit that may be required as a result of the suggested project (Arduino, 2014). The project will next be established by the unit manager, who will outline the project’s purpose, aims, and aspirations, as well as establish renovation segment completion budgetary constraints and a timeline for full implementation (Stroudt, 2013). Renovations to the step-down unit are expected to enhance the working environment and personnel satisfaction leading to enhanced healthcare delivery.
Justification for Capital Acquisition
Through merging or acquiring a corporation, capital acquisitions are designed to boost present financial processes. The justification for the planned capital purchase for the remodeling of the nurses’ lounge and workspaces is that it would increase staff satisfaction and motivation. The benefits of capital acquisitions include the potential final outcome of a united and better unit that will function at peak capacity, leading to enhanced quality care (Jasuta, 2016). Providing funds, actual acquisition cost, and contradictory viewpoints of proposed acquisition are among the disadvantages of capital acquisition. Alternative ideologies include proposing a wage raise for employees and improving nursing workspaces.
Capital Budget
Capital planning necessitates a high level of accuracy and adherence to budgetary constraints (Arduino, 2014). The unit manager will engage with the chief executive financial manager to discuss the financial budget for the next year, as well as any potential needs for fresh appliances or upgrades. Gathering pertinent information, organizing services and operations, executing the project, reviewing the budget, and taking remedial steps as needed are all part of the budget development process (Rundio, 2016). Uncertainties include the incapacity to predict unanticipated renovation expenditures in advance. Extra information that might enhance the strategy necessitates considerable preparedness with details that the managing director may seek, as well as the ability to bargain ideal costs.
Blueprint for Lounge Renovation
Following a review of the lounge renovation requirements, it is considered that nurses want a pleasant setting that includes the following features:
5 attendants $6000 each
6 comfortable sofas $5800 each
8 computers and 3 television sets $2500 and $16000 each
Small library $2000
Internet access facility $200
• It is assumed that the total investment will be $650000 with all of the above investments.
• The facility’s equity, which stands at $390,000, will cover 60% of the cost.
• A bank loan for 40% of the remaining funds will be obtained at a rate of 7.49 percent interest. A total of $260,000 will be collected from the financial institution.
The following is the assumed capital budget overview:
Nursing Lounge Renovation Budget
Price Range Quantity Total Amount
Architect and
Engineering Fees $ 200,000
Renovation Cost $50,000
Interior Designing $250