The capital budget, unlike the operating budget, is a plan for major purchases, and it covers the acquisition of land, buildings, and long-term equipment among others (Roussel et al., 2015; Dunham-Taylor & Pinczuk, 2009). Comprehension of the capital budgeting process is essential for nurse managers. Such an understanding assists nurse administrators to make decisions that are not only sound in a business sense but those that will allow the most efficient utilization of resources for the delivery of care (Dunham-Taylor, 2009).
As the cost of medical services increase, healthcare resources are becoming scarce (Zismer et al., 2011). This necessitates a strategic capital budgeting that enables nurse leaders to allocate resources effectively. To achieve optimal capital allocation, nursing managers must understand the effects of regulatory limitations, market competition, legislative restrictions, and inadequate finances (Roussel et al., 2015; Himmelstein et al., 2014). An understanding of the capital budgeting process is helpful in creating capital expenditure proposals that will appeal to financial decision-makers.
The emergency operating room at Maryland medical center is need of a new anesthesia machine. The current equipment is outdated, and it keeps breaking down. After looking at a wide variety of anesthesia machines from different manufacturers, I recommend the purchase of Ventura CS2 from DRE. The device has advanced ventilation parameters, and a touch-screen display. It incorporates adult, pediatric, and neonatal modes, as well as an ergonomic design. The apparatus price is $ 51,000 with a two years warranty. DRE offers free bi-annual maintenance for the warranty period. The company also offers servicing and maintenance packages at subsided rates after the warranty period. Compared to other models Ventura CS2 is the best fit for our OR.
Capital budgeting and planning requires a strategic approach. As a nurse manager, it is crucial to convince decision-makers that your proposal ranks high on the priority list. In this case, my strategic approach will be to present a cost evaluation report for several anesthesia machines. It is critical to provide accurate and complete cost analyses to give a realistic and correct picture to the hospital executives.
Secondly, I will then align the hospital’s service and financial goals to my proposal. This acquisition will improve efficiency and quality of surgical services. Thus, it will be helpful to meet the organization’s vision of providing safe and quality services and making the patient the priority. A combination of these two strategies will raise the competitiveness of my proposal above the other capital requests.
A nurse manager should utilize financial data and emotional appeal in her or his endeavor of getting approval for a capital acquisition request. This approach makes decision-making easier for executives, and it reduces the chances of rejection. In this scenario, I will give the cost information of purchasing a new apparatus in comparison with the expenses associated with the repair and errors of the old machine. I would also provide a comparison of features and prices of Ventura CS2 to other anesthesia equipment.
References
Dunham-Taylor, J. & Pinczuk, J. (2009). Financial Management for nurse managers: Merging the heart with the dollar. Burlington, MA: Jones & Bartlett Learning.
Himmelstein, D. U., Jun, M., Busse, R., Chevreul, K., Geissler, A., Jeurissen, P., Thomson, S., Vinet, M. A., & Woolhandler, S. (2014). A comparison of hospital administrative costs in eight nations: U.S. costs exceed all others by far. Health Affairs, 33(9):1586–94.
Roussel, L. A., Harris, J. L. & Thomas, T. (2015). Management and leadership for nurse administrators. Burlington, MA: Jones & Bartlett Learning.
Zismer, D. K., Sterns, J. B., & Claus, B. (2011, July). Capital efficiency and integrated health system designs. Healthcare Financial Management.
