Health Care Finance: Assignment Week 4Case Study: Chapters 9 to 12.Objective: The students will complete a Case study assignments that give the opportunity to synthesize and apply the thoughts learn

Part III: Tools to Analyze Financial Operations CHAPTER 9: STAFFING: THE MANAGER’S RESPONSIBILITY Staffing Requirements • In Health Care, many positions must be filled, or covered, 7 days a week, 24 hours a day. Productive and Non - Productive Time • Why annualize? • Employees are paid for more hours than the hours they are on duty (vacation days, etc.), so • Annualizing allows the full cost of the position to be computed through a “burden” approach. Productive and Non - Productive Time • Productive Time — Represents the employee’s net hours on duty when performing the functions in his/her job description • Non -Productive Time — Represents the paid - for time when the employee is not on duty and not performing his/her job description functions – Includes paid -for vacation days, holidays, personal leave days and/or sick days Productive and Non - Productive Time • Exhibit 9 -1 illustrates: • Productive Time — (net days when on duty) • Non -Productive Time — (additional days paid for but not worked) • FTE Definition for purposes of understanding annualizing positions: • The equivalent of one full -time employee paid for one year, including both productive and non -productive time. • Two employees working half -time for one year would be the same as one FTE. FTEs for Annualizing Staff Positions FTEs for Annualizing Staff Positions • The calculations to annualize staff positions is a two -step process: 1. Compute the net days worked.

2. Convert the net paid days worked to a factor.

• See Exhibit 9 -2 as an example. Number of Employees Required to Fill a Position • Why calculate by position?

– Computing by position is used in controlling, planning and decision -making. • The scheduled position method is often used when forecasting new programs and services. • You will also find scheduling software using this method. Number of Employees Required to Fill a Position • FTE definition for purposes of filling a scheduled position: • A factor expressing the number of employees required measured against, or the equivalent of, one full -time employee’s standard work week. Number of Employees Required to Fill a Position • The calculation to fill scheduled positions is as follows: • Compute the number of hours for a full -time position filled for one year. This measure is the baseline. • Compute a factor representing the position to be filled for the required number of days (a required seven -day week to cover, for example, versus a five - day work week equals a factor of 1.4). • See the cast room example in the text. Tying Cost to Staffing • In the case of the annualizing method the cost of nonproductive days is already in the formula. • So, multiply the factor times the base hourly rate to compute cost. • Study the example in the chapter. Tying Cost to Staffing • In the case of the scheduled position method the base rate must be increased, or burdened, by the nonproductive time. • First, increase the hourly base rate by a percent or factor that represents the nonproductive time. Then multiply the burdened based rate by the factor to compute the cost. • Then, multiply the factor times the base hourly rate to compute the cost. • Examine the examples in the chapter. Tying Cost to Staffing • The actual cost is attached to staffing in the books and records • Using a subsidiary journal and • A basic transaction record • Both of which are more fully described in another chapter Tying Cost to Staffing • An example of a subsidiary journal is the Payroll Register illustrated in Exhibit 9 -5 Tying Cost to Staffing • An example of a basic transaction record is the time card illustrated in Exhibit 9 -6 • (Of course this time card format will probably be computerized.) • In summary, hours worked and pay rates are essential ingredients of staffing plans, budgets and forecasts • And appropriate staffing is the responsibility of the manager Tying Cost to Staffing Exhibit 9 – 3 Master Staffing Plan for Nursing Unit Calculation for Annualizing Master Staffing Plan Example Total Days in Business Year Less two days off per Week Number of Paid Days per Year RN 364 104 260 LPN 364 104 260 NA 364 104 260 Less Paid Days Not Worked: Holidays Sick Days Vacation Days Education Days Net Paid Days Worked 9 7 15 3 226 9 7 15 2 227 9 7 15 1 226 Step 1: Compute Net Paid Days Worked Calculation for Annualizing Master Staffing Plan: Example Step 2: Converting Net Paid Days Worked to a Factor RN LPN NA 364 226 = 1.6106192 364 227 364 228 = = 1.6035242 1.5964912 FTEs to Annualize Staffing: Assignment Exercise 9 - 1 Compute Net Paid Days Worked Laboratory Medical Records Total Days in Business Year Less Two Days off Per Week Number of Paid Days Per Year _________ _________ _________ ________ ________ ________ Less Paid days Not Worked Holidays Sick Days Education Days Vacation Days Personal Leave Days _________ _________ _________ _________ _________ ________ ________ ________ ________ ________ Net Paid Days Worked ________ ________ _______ _______ Covert Net Paid Days Worked to a Factor: For the Lab. Total days in business year divided by net paid days worked = factor _______________ For Medical Records Total days in business year divided by net paid days worked = factor _______________ Compute Net Paid Days Worked Laboratory Medical Records Total Days in Business Year Less Two Days off Per Week Number of Paid Days Per Year 364 104 260 364 104 260 Less Paid days Not Worked Holidays Sick Days Education Days Vacation Days Personal Leave Days 9 7 3 15 0 9 0 0 0 21 Net Paid Days Worked 34 226 30 230 Covert Net Paid Days Worked to a Factor: For the Lab. Total days in business year divided by net paid days worked = factor 364/226 = 1.610619 For Medical Records Total days in business year divided by net paid days worked = factor 364/230 = 1.582609 FTEs to Fill Position Example (Exhibit 8 - 4): 8 Hour Emergency Department Scheduling for Eight -Hour Shifts: Shift One Day Shift Two Evening Shift Three Night = 24 -Hour Scheduling Total Position:

Emergency Room Intake 1 1 1 = Three Eight - Hour Shifts Staff needed to cover position 7/24 1.4 1.4 1.4 = 4.2 FTEs One full time employee works 40 hours per week. One eight -hour shift per day times seven days per week equals 56 hours on duty. Therefore, to cover seven days or 56 hours requires 1.4 times a 40 hour employee. FTEs to Fill a Position: Practice Exercise 9 - II: 8 Hour Scheduling for Eight -Hour Shifts: Shift One Day Shift Two Evening Shift Three Night = 24 -Hour Scheduling Total Position: Admissions Officer 2 1 1 = Four Eight Hour Shifts FTEs to cover position equals 2.8 1.4 1.4 = 5.6 Position Clerical 1 0 0 = One Eight Hour Shift FTEs to cover position equals 1.4 0 0 = 1.4 Scheduling for Eight -Hour Shifts: Shift One Day Shift Two Evening Shift Three Night = 24 -Hour Scheduling Total Position: Admissions Officer = Four Eight Hour Shifts FTEs to cover position equals = Position Clerical = One Eight Hour Shift FTEs to cover position equals = Health Care Finance by Judith J. Baker and R.W . Baker. Copyright © 2011 by Jones and Bartlett Publishers, LLC FTEs to Fill a Position: Assignment Exercise 9 - 2: 8 Hour Scheduling for Eight -Hour Shifts: Shift One Day Shift Two Evening Shift Three Night = FTEs Seven Day Week Position:

Nursing Supervisor Technician Nurses Clerical Aides 2.8 2.8 4.2 1.4 1.4 1.4 2.8 2.8 0 0 1.4 1.4 2.8 0 0 = 5.6 7.0 9.8 1.4 1.4 Total FTEs needed to cover all shifts 25.2 FTEs to Fill a Position: Example 12 Hour Emergency Department Scheduling for Twelve -Hour Shifts: 36 Hour Week Shift One Shift Two = 24 -Hour Scheduling Total Position:

Emergency Room Intake 1 1 = Two Twelve Hour Shifts Staff needed to cover position 7/24 2.33 2.33 = 4.66 FTEs One full time employee works 36 hours per week. One twelve -hour shift per day times seven days per week equals 84 hours on duty. Therefore, to cover seven days or 84 hours requires 2.33 times a 36 hour employee. FTEs to Fill a Position: Assignment 12 Hour Scheduling for Twelve -Hour Shifts: 36 Hour Week Shift One Shift Two = FTEs Seven Day Week Position:

Nursing Supervisor Technician Nurses Clerical Aides 4.66 2.66 7 1.4 2.33 2.33 4.66 4.66 0 0 = 7 9.33 11.66 1.4 2.33 Total FTEs needed to cover all shifts 31.75 FTEs to Fill a Position: Example 12 Hour Emergency Department Scheduling for Twelve -Hour Shifts: 48 Hour Week Shift One Shift Two = 24 -Hour Scheduling Total Position:

Emergency Room Intake 1 1 = Two Twelve Hour Shifts Staff needed to cover position 7/24 1.75 1.75 = 3.5 FTEs One full time employee works 48 hours per week. One twelve -hour shift per day times seven days per week equals 84 hours on duty. Therefore, to cover seven days or 84 hours requires 1.75 times a 48 hour employee. Health Care Finance by Judith J. Baker and R.W . Baker. Copyright © 2011 by Jones and Bartlett Publishers, LLC FTEs to Fill a Position: Assignment 12 Hour Scheduling for Twelve -Hour Shifts: 36 Hour Week Shift One Shift Two = FTEs Seven Day Week Position:

Nursing Supervisor Technician Nurses Clerical Aides 3.50 3.50 5.25 1.4 2.33 1.75 3.50 3.50 0 0 = 5.25 7 8.75 1.4 2.33 Total FTEs needed to cover all shifts 24.73