# Staffing Budgets/FTE’s/Variance Analysis

Week 4: Staffing Budgets/FTEs/ Variance Analysis
Assignment Guidelines with Scoring Rubric
PURPOSE
This assignment provides learners with the opportunity to apply budgeting knowledge and skills by calculating full-time equivalents for a nursing unit, projecting FTE needs related to census changes, and analyzing a variance scenario.
DUE DATE: Sunday 11:59 p.m. MT at the end of Week 4
TOTAL POINTS POSSIBLE: 150
REQUIREMENTS
Description of the Assignment
This assignment is in two scenario-based sections each related to staffing budgets. In the first, the student will perform multistep calculations of FTEs and projection of future FTE needs for a selected nursing unit. The second section involves calculation of budget variance and its analysis. Each section requires supported written interpretation of findings.
Criteria for Content
Answer the questions and complete the calculations required for the two sections of the assignment.
Key points related to Calculations:
1. When performing calculations, standard rounding rules apply. If the number to the right of the decimal is less than 5, round down to the nearest whole number, e.g., 33.4 = 33 If the number to the right of the decimal is 5 or greater, round up to the nearest whole number, e.g. 33.5 =34.
2. Read the question carefully. Pay close attention to the units be asked and keep them consistent. For example, hours vs FTEs; days vs months vs years.
3. Provide ALL formulas with references. Designate which formula associates with which source. It is not sufficient to simply list the source at the beginning of the section. Write out the formula used BEFORE filling in the numbers.
Example: Efficiency Variance + Volume Variance + Cost Variance = Total Variance
Rundio, A. (2016). The nurse manager’s guide to budgeting and finance. 2nd. Ed., Indianapolis, IN: Sigma Theta Tau International.
• Section One: Staffing Budget and FTEs
o Calculations of full-time equivalents (FTEs)
o Project FTE needs related to census changes
• Section Two: Variance Analysis
o Calculating variance
o Variance analysis with explanation
Download the Assignment Word Document and submit your answers directly onto the form. When completed, upload into the assignment portal in your course. For the questions requiring a written response, please adhere to proper grammar and syntax, and provide references. For the questions requiring calculations, show all your work including the formula used. Include the references for formula chosen.

PREPARING THE ASSIGNMENT
Section One—Staffing Budget and FTEs
Personnel Budget Case Study
Sandra Chambers has recently accepted the position of assistant administrator for the department of nursing at Potter Regional Medical Center where she will oversee the operations of five medical units. As she evaluates the budgets for the different cost centers, she finds that all are being used at near or full capacity. The activity in four of the five has remained steady over the past 2 years. A fifth unit has realized a steady increase in patient volume during that time and is currently at 88% capacity. It has been projected that within the next 12 months the volume of patients moving through that unit will increase by 20%. Sandra needs to determine if the current FTEs for the unit will be sufficient to ensure quality and safe care continues to be provided, and if not, what is the number of FTEs that will be needed to cover a 20% increase in volume.
1. Suggest all the information Sandra needs to collect in order to project the FTEs needed for the next fiscal year accounting for the projected increased capacity. Remember, she is new to her position so be sure to include background data on the unit itself as it relates to previous budgets, nursing staff, and the organization. In other words, summarize your approach to this Case Study.

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2. Sandra has collected the following census information on all five units for the last month, in
addition to what was asked in question number one. Calculate the ADC and Occupancy Rate for each unit using the Daily Census/Occupancy Rate table to determine which unit is currently at 88% occupancy rate and projected to increase over the next year.

Unit
Beds 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Total Patient Days
A 35 31 30 31 30 29 30 31 30 31 29 29 32 31 33 31 31 33 34 34 34 34 32 30 32 31 30 30 33 31 34 0 941
B 15 15 14 11 9 7 12 12 15 13 13 16 15 15 15 16 16 15 14 15 16 15 13 13 17 16 15 16 16 14 15 0 424
C 13 10 12 11 11 11 13 13 13 12 13 12 12 12 13 13 13 13 13 13 13 13 13 13 12 12 12 12 13 13 13 0 372
D 32 30 27 27 24 26 23 27 29 28 28 25 27 30 26 31 31 30 30 30 32 32 32 26 25 25 25 23 31 31 30 0 841
E 6 6 3 3 3 3 5 5 5 2 2 2 2 4 4 3 3 0 0 0 6 5 5 3 3 3 2 5 4 3 3 0 97
(adapted from…..Healthcare Financial Management Association (2012). Managing fiscal resources: A budget and productivity case study. Retrieved from hfmamd.org

Average Daily Census/Occupancy Rate
A
B
C
D
E

The Unit with an 88% occupancy rate is _____.
3. Using data contained in the first questions, complete the table below and determine the Average Length of Stay (ALOS) for the following three units. Show your work.
Unit # Beds Patient Days # Discharges Average Length of Stay (ALOS)
A 110
C 96
D 85

What is the ALOS for the unit you identified earlier at an 88% occupancy rate? _____

You have determined the Unit for which Sandra must make FTE projections. For the remaining questions in this section, refer to the figures used and or obtained related to the Unit identified in Question 1.
• the budgeted hours of care per patient day (HPPD-budgeted) is 7.5; and
• each employee receives 300 paid non-productive hours/year.

4. Calculate the number of FTEs needed for the Unit. Show the formulas used and all calculations. Include the reference used for your calculations at the beginning of your work.
5. Calculate the TOTAL FTEs needed accounting for nonproductive time. Include the reference used for your calculations at the beginning of your work.
6. Sharon now knows how many total FTEs are currently needed on the unit to provide safe, quality care to the patients on the unit. However, with a 20% projected increase in occupancy rate and average length of stay remaining steady on the unit, how will the required FTEs be affected?
7. Calculate the TOTAL FTEs required to reflect an increased patient volume of 20% (don’t forget to account for nonproductive time). Include the reference used for your calculations at the beginning of your work.
8. When Sharon calculated the number of FTEs budgeted currently in this unit and compared it to the number of actual FTEs being paid for, she found she was under budget by three FTEs. Explain how that could have happened and how this information affects her FTE budget request for the next year.

_______________________________________________________________________________
Section Two—Variance Analysis
Variance Analysis Case Study
During the month of February, an outpatient surgery clinic has incurred a significant unfavorable variance. The director of the clinic is quite concerned, as this has never occurred before. The director gathers information on total nursing care hours, average hourly rate of the employees, and total patient visits to determine what caused the variance. In addition, the director receives the patient acuity levels for the month of February.
Budget Actual Budget Variance
Patient Days 450 520
Nursing Care Hours
HPPD 5.0 5.6
Average Hourly Pay \$35.00 \$45.00 \$10.00
Total Payroll Costs
(Table adapted from: Rundio, A. (2016). The nurse manager’s guide to budgeting and finance, 2nd. Ed, Indianapolis, IN: Sigma Theta Tau International)
1. Complete the monthly personnel report for the surgical unit.
2. Calculate each of the following. Include the formulas used with reference. Remember, as this monthly report deals with payroll, the variances should be in dollars.

a. Volume (efficiency) variance:

b. Quantity (volume) variance:

c. Cost (price) variance:

3. What is the total variance in personnel budget for this month?

4. Analyze all the factors that made the differences and why the variances occurred. How can this variance be justified?

5. In what ways might these variances inform the current or future budgets?

DIRECTIONS AND ASSIGNMENT CRITERIA

Category Points % Description
Section One: Staffing Budget and FTEs
Background Information 10 10% Approach to Personnel Case Study is clearly articulated and contains the elements needed to address the situation presented in the scenario.
ADC and Occupancy Rate 10 10% ADC/Occupancy Rate table completed with reference for formulas included, formulas and work shown, correct unit calculations, correct unit identified.
Average LOS 10 10% ALOS table completed with reference for formulas, formula and work shown, correct calculations, ALOS of identified unit correct.
Current FTE 15 15% Current FTEs of identified unit calculated correctly and includes reference for formulas used, formula and work shown, calculations correct.
Total FTE (Current) 15 15% Total FTEs (accounts for nonproductive time) of identified unit calculated correctly and includes reference for formulas used, formula and work shown, calculations correct.
Effect of Volume Increase on FTE 10 10% Describes effect of increase of patient volume on FTEs over the next year. Describes what effect an increased length of stay would have on FTEs.
Total FTE (Projected) 15 15% Total FTEs (accounts for nonproductive time) for projected volume increase of identified unit calculated correctly and includes reference for formulas used, formula and work shown, calculations correct.
FTE Difference Explanation 10 10% Explains potential causes for being under budget and explicitly describes its effect on the budget request for next year. Uses data from given and calculated elements to support explanations.
Section Two: Variance Analysis
Calculation of Total Variance 35 35% Calculations that lead to the total variance of the unit are present and include volume efficiency, volume (quantity), and cost variances. References for formulas used, formulas and all work are shown, calculations are correct.
Analysis of Variances 15 15% All elements of variances explained, variance justification present and supported with evidence, effect on current and future budges explicit and clearly articulated.
Writing conventions, format, and reference citations 5 5% Writing is clear and concise without grammatical and spelling errors. All references are correctly cited (if applicable) and written.
150 150% A quality assignment will meet or exceed all of the above requirements.

Assignment Criteria Exceptional
(100%)
Outstanding or highest level of performance Exceeds
(88%)
Very good or high level of performance Meets
(80%)
Competent or satisfactory level of performance Needs Improvement
(38%)
Poor or failing level of performance Developing
(0)
Unsatisfactory level of performance
Content
Possible Points = 150 Points

Section One: Staffing Budget and FTEs
Background Information 10 Points 8 Points 6 Points 0 Points
Approach to Personnel Case Study is clearly articulated and contains all the elements needed to address the situation presented in the scenario. Approach to Personnel Case Study is generally described and contains nearly all elements needed to address the situation presented in the scenario. Approach to Personnel Case Study is minimally described, generally stated and missing key elements needed to address the situation presented in the scenario. Approach to Personnel Case Study is absent or does not contain adequate elements to all the elements needed to address the situation presented in the scenario.
10 Points 8 Points 3 Points 0 Points
Table completed with formulas referenced and shown, work shown with correct calculations, and correct unit identified. All but one element are present and correct. All but two elements are present and correct. No elements are present or they are present and incorrect.
Average Length of Stay (ALOS) 10 Points 8 Points 3 Points 0 Points
ALOS table completed with formulas referenced and shown, work shown with correct calculations, ALOS of identified unit correct. All but one element are present and correct. All but two elements are present and correct. No elements are present or they are present and incorrect.
Current FTE
15 Points 10 Points 5 Points 0 Points
Current FTEs of identified unit calculated correctly and includes reference for formulas used, formula and work shown, calculations correct. All but one element are present and correct. All but two elements are present and correct. No elements are present or they are present and incorrect.
Total FTE (Accounts for nonproductive time-current) 15 Points 10 Points 5 Points 0 Points
Total FTEs (accounts for nonproductive time) of identified unit calculated correctly and includes reference for formulas used, formula and work shown, calculations correct. All but one element are present and correct. All but two elements are present and correct. No elements are present or they are present and incorrect.
Effect of Volume Increase on FTE
10 Points 5 Points 0 Points
Describes effect of increase of patient volume on FTEs over the next year. Describes what effect an increased length of stay would have on FTEs. Only one element present or is answered correctly. Both elements are missing or no elements are answered correctly.
Total FTE (Projected) 15 Points 10 Points 5 Points 0 Points
Total FTEs (accounts for nonproductive time) for projected volume increase of identified unit calculated correctly and includes reference for formulas used, formula and work shown, calculations correct. All but one element are present and correct. All but two elements are present and correct. No elements are present or they are present and incorrect.
FTE Difference Explanation 10 Points 8 Points 3 Points 0 Points
Explains potential causes for being under budget and explicitly describes its effect on the budget request for next year. Uses data from given and calculated elements to support explanations. All but one element are present and correct. All but two elements are present and correct. No elements are present or they are present and incorrect.
Section 2: Variance Analysis
Personnel Budget table 5 Points 0 Points
Table completed with correct calculations. Table incomplete or complete with incorrect calculations.
Volume (Efficiency) Variance Calculated 10 Points 8 Points 3 Points 0 Points
Calculated correctly and includes reference for formulas used, formula and work shown, calculations correct. All but one element are present and correct. All but two elements are present and correct. No elements are present or they are present and incorrect.
Volume Quantity Variance Calculated 15 Points 10 Points 5 Points 0 Points
Calculated correctly and includes reference for formulas used, formula and work shown, calculations correct.
All but one element are present and correct. All but two elements are present and correct. No elements are present or they are present and incorrect.
Cost (price) Variance calculated 15 Points 10 Points 5 Points 0 Points
Calculated correctly and includes reference for formulas used, formula and work shown, calculations correct. All but one element are present and correct. All but two elements are present and correct. No elements are present or they are present and incorrect.
Calculation of Total Variance 5 Points 0 Points
Calculation of Total Variance is correct. Calculation of Total Variance is incorrect.
Analysis of Variances 15 Points 10 Points 5 Points 0 Points
Analysis of Variances thoroughly explained; variance justification with evidence included; effects on current and future budges explicit and clearly articulated. Analysis of Variances generally explained; or variance justification is missing or lacks support from evidence; or effects on current and future budges is missing or generally addressed. Analysis of Variances contains only one of the required elements: thorough explanation; variance justification with evidence included; effects on current and future budges explicit and clearly articulated. Analysis of variances is missing or is inaccurate.

Writing Conventions, format, and reference citations 5 Points 3 Points 1 Point 0 Points
No errors in any of the three elements of writing conventions, format, and reference citations. One error in any of the three elements of writing conventions, format, and reference citations. Two errors in any of the three elements of writing conventions, format, and reference citations. More than three errors in any of the three elements of writing conventions, format, and reference citations.
Total Points _____of points

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