NR533 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 fulltime 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 scenariobased 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:
 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.
 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.
 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. 2^{nd}. Ed., Indianapolis, IN: Sigma Theta Tau International.
 Section One: Staffing Budget and FTEs
 Calculations of fulltime equivalents (FTEs)
 Project FTE needs related to census changes
 Section Two: Variance Analysis
 Calculating variance
 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 – NR533 Week 4 Staffing Budgets, FTEs, Variance Analysis
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.
 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.
 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
ACD formula: Total number of days/total census numbers (Griffiths et al, 2020)
% occupancy formula: Average daily census /number of beds x 100 (Welch & Smith 2020)
Average Daily Census/Occupancy Rate  
Unit  ADC  Occupancy (%) 
A  31(941/30)  89 
B  14(424/30)  93 
C  12(372/30)  92 
D  28 (841/30)  88 
E  3(97/30)  50 
The Unit with an 88% occupancy rate is __UNIT D___.
 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  35  941  110  9 (941/110) 
C  13  372  96  4 (372/96) 
D  32  841  85  10 (84/185) 
What is the ALOS for the unit you identified earlier at an 88% occupancy rate? _10 DAYS____
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.
Additional information includes
 the budgeted hours of care per patient day (HPPDbudgeted) is 8.0
 each employee receives 300 paid nonproductive hours/year.
 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.
FTE= total number of hours worked per year/the number of hours one FTE works per year (2080)
Total hours of care expected to be delivered=total days spent with the patients per year x Hours of care per patient days (Hunt, 2018).
As per Unit D:
Total patient days for a year = 841 x12 months = 10092
Budgeted hours of care per patient day=6.5
10092 x 6.5=65,598
Total hours of care to be delivered=65,598/2080=36 FTEs
 Calculate the TOTAL FTEs needed accounting for nonproductive time. Include the reference used for your calculations at the beginning of your work.
Total benefit hours=2080=productive hours worked
One FTE=2080 yearly productive hours = 1780
65,598/1780 hours (Tawfik et al, 2020) = 36 FTEs
 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?
An increase of total patient days by 20% represents an increase from 10092 to 12110. If you consider the number into the same formula, then the number of FTEs rise from 32 to 44 (Griffiths et al, 2020 NR533 Week 4 Staffing Budgets, FTEs, Variance Analysis).
 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.
10092 x 0.2= 12110 total patient days considering the 20% increase
12110 x 6.5 (HPPD budget) =78,715 hours of care
78,715/1780 (number of productive hours spent working) = 44 FTEs (Welch & Smith, 2020)
 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.
Operating underbudget is usually a rare case in healthcare. On the same note, it is a financial norm that if you fail to fully utilize your budget in the previous year, then your next year’s budget will be cut under the assumption that you don’t need additional budget. For instance, Sharon had only used 41 out of the 44 FTEs she had and therefore the financial department will assume that she only needs 41 FTEs.
_______________________________________________________________________________
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  475  565  90 
Nursing Care Hours  2250  2912  662 
HPPD  7.0  7.6  
Average Hourly Pay  $35.00  $45.00  $10.00 
Total Payroll Costs  $78,750  $131,040  $52,290 
(Table adapted from: Rundio, A. (2016). The nurse manager’s guide to budgeting and finance, 2nd. Ed, Indianapolis, IN: Sigma Theta Tau International)
 Complete the monthly personnel report for the surgical unit.
 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.
 Volume (efficiency) variance: 11,865
Volume variance+ Total extra nursing care hours x the hourly wage in the budget: 339 x 35= 11,865.
Total extra hours of nursing care=Average extra hours of nursing care x Actual patient days: 0.6 x 565=339
Average extra hours of nursing care=actual HPPD – budgeted HPPD= 7.67.0=0.6
 Quantity (volume) variance: $22,050
Quantity variance = extra number of care hours provided x hourly pay rate as per the budget: $630×35=$22,050
Extra hours of nursing care provided= extra patient days x Budgeted HPPD:90 x 7.0= 630
Extra patient days = actual patient daysbudgeted patient days: 565475= 90 (Hunt, 2018)
 Cost (price) variance: $29,120
Cost variance = actual hours worked x cost variance
2912 x 10= $29,120
Cost difference = actual average hourly rate paid budgeted average hourly rate paid: 4535= $10 (Tawfik et al, 2020)
 What is the total variance in personnel budget for this month?
 Total variance= Cost variance+ quantity variance+ volume variance
 29,120+$22,050+$11,865 = $63,035 (Hunt, 2018)
 Analyze all the factors that made the differences and why the variances occurred. How can this variance be justified?
The cost variance area presented with the largest variance. This is attributable to the large difference in the hourly rate between the actual rate and the budgeted rate. Such variances may occur as a result of many reasons. for instance, the facility might have hired more experienced staff who require a higher pay rate; or staff working overtime as a result of higher population.
 In what ways might these variances inform the current or future budgets?
If the variance was caused by overtime hours it may be useful in the future to ask for more FTEs or a higher rate because there are several staff working overtime and the additional staff or hours is needed.
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. 
Grading Rubric
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. NR533 Week 4 Staffing Budgets, FTEs, Variance Analysis  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.  
ADC and Occupancy Rate

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 timecurrent)  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. NR533 Week 4 Staffing Budgets, FTEs, Variance Analysis  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  
NR533 Week 4 Staffing Budgets, FTEs, Variance Analysis References
Griffiths, P., Saville, C., Ball, J., Jones, J., Pattison, N., Monks, T., & Safer Nursing Care Study Group.
(2020). Nursing workload, nurse staffing methodologies and tools: A systematic scoping review and discussion. International Journal of Nursing Studies, 103, 103487. https://doi.org/10.1016/j.ijnurstu.2019.103487
Hunt, P. S. (2018). Developing a staffing plan to meet inpatient unit needs. Nursing management, 49(5),
2431. doi: 10.1097/01.NUMA.0000532326.62369.9b
Tawfik, D. S., Profit, J., Lake, E. T., Liu, J. B., Sanders, L. M., & Phibbs, C. S. (2020). Development and use
of an adjusted nurse staffing metric in the neonatal intensive care unit. Health services research, 55(2), 190200. https://doi.org/10.1111/14756773.13249
Welch, T. D., & Smith, T. (2020). Understanding FTEs and Nursing Hours Per Patient Day. Nurse Leader,
18(2), 157162. https://doi.org/10.1016/j.mnl.2019.10.003