Question 1

Physicians in a small rural hospital are reluctant to discharge older adult patients because many of the patients live more than an hour's drive from the hospital.Also,many of the patients lack the resources to travel these long distances for follow-up care.The hospital administration pressures the physicians to discharge patients sooner and to be more consistent with the number of hospitalization days specified within the diagnosis-related groups.Which of the following would most likely prompt the action of administrators?

Accepted Answer

Length of stay is the most important predictor of health care costs,and extra days are a cost to the organization in terms of both the extra days and decreased patient volume.The situation,as outlined,does not indicate that there is a bed shortage; therefore,there is no evidence that other patients are being denied access to services or that patient volume is being reduced.The hospital would be concerned about the effect on its income because of the additional,uncompensated care costs incurred for patients who exceed the usual length of stay explicitly calculated under the CMGs and the allocated RIW.

Question 2

The primary reason for calculating productive hours paid instead of simply calculating work paid per year is that productive hours enable the manager to

Accepted Answer

Total hours are critical for determining the total number of hours that need to be paid for the year.Productive hours are needed to determine what hours are actually available for patient care.The number of FTEs required is determined by dividing the total required number of patient care hours by the number of productive hours.

Question 3

Of the following,which is the most effective strategy that a nurse manager could employ to reduce unnecessary costs in specific health care settings?

Accepted Answer

Reducing overtime hours needs to be carefully assessed against the reasons for overtime (e.g.,staff overload,recent illnesses,increased numbers of acutely ill patients)in terms of whether the reasons reflect an ongoing or temporary situation and,therefore,whether an expense is necessary.Reducing staff may or may not be effective,depending on the services being provided.Making decisions for the patient misses an important opportunity to invite the patient into discussion about the patient's priorities and needs and the relative costs of options,which may lead to improved adherence to regimens and less waste of resources.An effective approach to cost containment is ensuring that supplies are accurately accounted for and charged in a timely manner.

Question 4

A nurse manager gives approval for two staff nurses to attend a national conference.When reviewing the budget,the nurse manager looks at which line item?

Accepted Answer

The operating budget includes a personnel budget,which takes into account productive and nonproductive paid work hours.Education hours are covered under nonproductive paid work hours in the operating budget.

Question 5

The standard of care in a certain labour and delivery unit is 14 hours per patient day (HPPD),and on an average day,three patients are in labour.Analysis of the past month indicates the unit was averaging 38 hours of care.What is the productivity rating for the this situation?

Accepted Answer

Many hospitals use HPPD as one measure of productivity.For this example,the standard of care is 14 HPPD; therefore,42 hours of care are required for three patients for 1 day.When 38 hours of care are provided for 1 day,the productivity rating is 111% (42/38 = 1.11),meaning either that productivity was increased or that needed care was not delivered.The quality component must be considered in any productivity model related to care.

Question 6

Mr.and Mrs.Amin,an older adult couple with limited means and are considering options after the hospitalization of Mrs.Amin with a fractured hip.Mrs.Amin is stable but requires assistance with bathing,transfer,and mobility,and this will present stress for Mr.Amin,who was hospitalized with a mild myocardial infarction last year.Considering their means and health concerns,which of the following might be the best option?

Accepted Answer

Of the options presented,home care is the best alternative.Because Mrs.Amin's condition is stable and is not terminal,she does not require hospital or hospice care.Custodial nursing care is not a provincially funded service,and the financial burden of this option may therefore cause further stress for the couple.The assistance provided through home care is covered under the province/territories health care services and is cost effective for the health care system.

Question 7

Choosing and purchasing new eye glasses,Mr.Jones sends the receipt in to his private health insurance provider for which of the following?

Accepted Answer

He has purchased the glasses,thus a retrospective,cost-based reimbursement payment method is being used.If a desire for profit were indicated,then the answer would be "charges." It occurred prior to purchase,it would be prospective.

Question 8

The chief nursing office continues to seek ways to improve health care services to patients and to save the hospital money.However,with most physicians paid on a fee-for-service contract,the chief nursing office faces a challenge.Fee-for-service can provide incentive for

Accepted Answer

Payment for physicians is largely through fee-for-service arrangements,which can provide incentive for a physician to do more,rather than less,work.Most physicians are connected to the system not as employees but as independent contractors,who drive the use of services such as diagnostic tests,procedures,and in-hospital bed days.Physicians are not directly accountable for the costs borne by a health region/hospital network or community care environment.

Question 9

A staff nurse regularly works two 12-hour shifts each week and one 8-hour shift every other week.How many full-time equivalents (FTEs)is this position?

Accepted Answer

In general,one FTE can be equated to working 37.5 hours per week,52 weeks per year,for a total of 1957.5 hours of work paid per year.Half of an FTE (0.5 FTE)equals 18.75 hours per week.The nurse works 24 hours ´ 52 weeks plus 8 hours ´ 26 weeks; the total,1456,is divided by 1957.5,which equals 0.74,which represents a 0.7 FTE.

Question 10

After reviewing her monthly budget report,the nurse manager sees that she has a negative variance,which prompts her to change the staffing schedule.A negative or unfavourable variance in a monthly expense report may result from

Accepted Answer

Variance reflects the difference between what was projected (including inflationary costs)and the actual performance in a budget.When the variance is negative or unfavourable,the amount spent is more than what was budgeted (expenses exceed revenue); this may be a result of higher numbers of acutely ill patients as opposed to overestimation of inflation (which would have resulted in a higher initial cost projection and might have resulted in a positive variance).

Question 11

Because of the complexity of reimbursement systems and its implications for the services available to patients,the nurse has a key role in which of the following?

Accepted Answer

The specific strategies employed by organizations and nurses to contain costs and increase revenues depend on the reimbursement system or systems within which the organization operates and,therefore,on whether the volume of services is increased or decreased.Greater emphasis is placed on efficacy in each visit and on reducing the number of return visits.Nurses still advocate for patients in important ways while also working within the cost and contractual constraints.Moreover,when nurses understand the funding practices,they can help patients maximize the resources available to them.

Question 12

The chief nursing officer works with her nurse managers by helping them understand how to develop and implement a budget.How would a nurse manager best describe a budget?

Accepted Answer

The budget is an overall financial plan.An organizational budget is a formal plan that is stated in terms of dollars and includes proposed revenues and expenditures.

Question 13

The chief nursing office of a Magnet™ hospital has conducted a study of ways to improve health care services.Health care services that add value for patients

Accepted Answer

Models of reimbursement affect which services and approaches (e.g.,decreasing the number of services used)might be financially viable and add value for patients.Nurses need to become aware of business models in health care organizations and of fundamental concepts of economics; such models and concepts serve as general guidelines for minimizing costs,regardless of the model of reimbursement in use.

Question 14

In preparing a budget,the nurse manager needs to anticipate the cost of benefits (e.g.,health,life insurance,pension,and retirement plans).On the basis of the usual cost of benefits,how much should a nurse manager include for a total full-time salary cost of $312,000?

Accepted Answer

Benefits often cost an additional 23% to 27% of a full-time employee's salary.In this example,the correct response is obtained by multiplying the total full-time salary cost by .23 and .27.

Question 15

Within a health care environment,where the gap between revenues and costs can mean the difference between sustainability and nonsustainability of an organization or services,it is critical for nurse managers to

Accepted Answer

To achieve and maintain financial viability,nurse managers must be able to think strategically in terms of both finance and nursing care.Cutting costs by deleting programs and bringing in additional revenue through new programs and services are not in themselves strategic unless the decisions made lead to quality care,have positive outcomes,and are efficient in terms of cost.

Question 16

Which of the following factors is not implicated in rising health care costs?

Accepted Answer

Method of health care funding,socioeconomic conditions (for example,poverty and violence),and the rising expectations of consumers with regard to what should be done to manage health concerns all contribute to rising health care costs.The costs of health care insurance are not considered in the text in relation to rising costs of health care.

Question 17

In preparing her budget,a nurse manager determines that she needs to budget for six FTE registered nurse (RN)positions in the upcoming year.On the basis of a 40-hour week,this means that the nurse manager has determined that the budget will provide for _____ hours.

Accepted Answer

From the information given,it is not possible to determine how many nonproductive hours (vacation,holiday,sick time,education)the nurse manager has accounted for in her budget calculations and therefore,whether the total number of hours (40 hours ´ 52 weeks ´ 6 staff = 12,480 paid hours)is productive (paid time that is worked)or nonproductive hours.The number 12,480 accurately reflects the total number of hours of work paid per year.

Question 18

In a nurse managers' meeting,the chief nursing officer encourages the managers to brainstorm ways to reduce costs.Nurse managers have the greatest effect on reducing costs by managing

Accepted Answer

Because staffing constitutes the largest portion of any health care budget,managing the mix and numbers of staff required for patient care to meet identified outcomes will have the largest effect on budgets.

Question 19

A nurse manager determines that RN 1 has 5 weeks of vacation time and 3 days of education and has averaged 3 sick days a year.RN 2 has 6 weeks of vacation time,has asked to attend a 3-day conference and a 2-day workshop,and has no history of sick time.RN 3 is new,and you anticipate 3 weeks of orientation,as well as 4 weeks of vacation time.RN 4 has 6 weeks of vacation and has an ongoing health condition,so you anticipate 2 weeks of sick time,as well as 3 days for education.RN 5 has 5 weeks of vacation,has no education plans,and averages 5 sick days per year.RN 6 has 6 weeks of vacation,has no education plans,and has been off ill for 4 weeks.How many hours of productive paid time can be anticipated for the budget?

Accepted Answer

According to the information given for the six RNs,there are 32 weeks of vacation (40 hours ´ 32 weeks = 1280 hours),11 days of education (11 days ´ 8 hours = 88 hours),15 days of orientation (15 days ´ 8 hours = 120 hours),and 18 days of sick time anticipated (18 days ´ 8 hours = 144),or 1280 + 88 + 120 + 144 = 1632 hours of nonproductive time.This will leave 10,848 hours of productive time available,which is based on the information available and the fact that the manager is not anticipating sick time for RN 6 in the upcoming budget year.

Question 20

Which of the following is an example of an initiative that may reduce total health care costs?

Accepted Answer

Total health care costs are a function of prices that are established for various services and the volume or quantity of services used.Utilization of highly technologic diagnostic services and lowering of copayments have been implicated in increasing total health care costs.Educating older adults about the relative costs of prescriptions may not reduce the volume of or quantity of services used.Nurse practitioner clinics may offer a lower cost service and reduce the volume of demand for visits for non-emergency conditions,such as ear infections,thus reducing total health care costs.

Quiz 13: Managing Costs and Budgets