# Full-Time Equivalents for Nursing Units Essay

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Updated: May 14th, 2021

## Calculation of Full-Time Equivalents

The case under consideration implies a new person on a position of the assistant administrator for the department of nursing. St. Joseph Hospital where the new administrator is employed faces current financial and personnel problems, partially due to many new staff members in management. One of the major tasks of managers is to develop cost centers’ personnel budgets, which can be supported by data from the calculation of full-time equivalents (FTEs) for nursing units.

To make calculations, patient data, staff data, skill mix, and average salary per employee category are necessary (Mason, Leavitt, & Chaffe, 2014). Careful calculations are important to provide high-quality care because the unit is customer-service oriented. Moreover, data about FTEs is needed to plan staff growth, which is demand due to a trend to an increase in patient population services by the unit (Penner, 2013).

The calculations for FTE are as follows:

To calculate hours per-patient-day (HPPD), it is necessary to estimate the total-care-hours required for the year:

The HPPD is given: Average HPPD = 8.8

as Total Care Hours: Total Care Hours = 96,360

Total Care Hours = 96,360

Productive hours/employee/year is given: Productive hours/employee/year = 1,780

Total Hours/employee/year is given: Total Hours/employee/year = 2,080

Analogously 1,780 = 85,6% of 2,080; 40 hours per week X 52 weeks per year = 2,080; less vacation, sick, education time

96,360 / 1,780 = 54.13 FTEs = 54 FTEs

### Staff Requirements

96,360 / 365 = 264 hours of care per day

Assuming employees work 12 hour shifts:

264 / 12 = 22 shifts per 24-hours period

Staff Requirements

### Assign staff by type

RNs

80%

LVNs

10%

Nurse aides 10%

80 X 22 = 17.6 RN shifts → 18 RN shifts

10 X 22 = 2.2 LVN shifts → 2 LVN shifts

10 X 22 = 2.2 aide shifts → 2 aide shifts

22 22

### Assign staff by shift

Day Shift Night Shift Total

Day Shift Night Shift Total

50% 50%

RNs 8.8 → 9 8.8 → 9 17.6 → 18

LVNs 1.1 → 1 1.1 → 1 2.2 → 2

Aides 1.1 → 1 1.1 → 1 2.2 → 2

22 → 22

Divide total FTEs required by the 22 daily staff shifts:

54.13 / 22 = 2.46

Each person-shift calls for employing 2.45 FTEs. An adequate number of FTEs are needed to provide coverage for the other 3–4 days out of the week, vacation, sick time, and education time.

Multiply 2.46 by the staff type needed per shift.

RNs days = 2.46 X 9 = 22.14

RNs nights = 2.46 X 9 = 22.14 (44 RNs)

LVNs days = 2.46 X 1 = 2.46

LVNs nights = 2.46 X 1 = 2.46 (5 LVNs)

Aides days = 2.46 X 1 = 2.46

Aides nights = 2.46 X 1 = 2.46 (5 aides)

22.14 + 22.14 + 2.46 + 2.46 + 2.46 + 2.46 = 54.12

54.12 FTEs = 54 FTEs

## Variance Analysis

The case under analysis is dedicated to the problem of unfavorable variance, which is a concern of the director of an outpatient surgery clinic.

BPi = budgeted price—\$40.00 per-hour budgeted nursing rate

BQi 5.0 hours per care per patient

BQo = 340 visits

APi = \$45.00

AQi = 5.6 hours per care per patient

AQo = 400 visits

Actual Budget Variance

Nursing Labor \$100,800 \$68,000 \$32,800 U

BPi X BQi X BQo

\$40 X 5.0 X 340

\$68,000

### Flexible Budget

BPi X BQi X AQo

\$40 X 5.0 X 400

\$80,000

Flexible Budget Original Budget

BPi X BQi X AQo BPi X BQi X BQo

\$40 X 5.0 X 400 \$40 X 5.0 X 340

\$80,000 \$68,000

### Volume Variance

\$12,000 U

Actual Budget Flexible Budget

APi X AQi X AQo BPi X BQi X AQo

\$45 X 5.6 X 400 \$40 X 5.0 X 400

\$100,800 \$80,000

### Flexible Budget

Variance

\$20,800 U

Actual Budget Flexible Budget Original Budget

APi X AQi X AQo BPi X BQi X AQo BPi X BQi X BQo

\$45 X 5.6 X 400 \$40 X 5.0 X 400 \$40 X 5.0 X 340

\$100,800 \$80,000 \$68,000

Flexible Budget Volume

Variance Variance

\$20,800 U \$12,000 U

### Total Variance

\$32,800 U

Subcategory Flexible Budget

BPi X AQi X AQo BPi X BQi X AQo

\$40 X 5.6 X 400 \$40 X 5.0 X 400

\$89,600 \$80,000

### Quantity Variance

\$9,600

Actual Budget Subcategory

APi X AQi X AQo BPi X AQi X AQo

\$45 X 5.6 X 400 \$40 X 5.6 X 400

\$100,800 \$89,600

### Price Variance

\$11,200

Actual Budget Subcategory Flexible Budget

APi X AQi X AQo BPi X AQi X AQo BPi X BQi X AQo

\$45 X 5.6 X 400 \$40 X 5.6 X 400 \$40 X 5.0 X 400

\$100,800 \$89,600 \$80,000

Price Variance Quantity Variance

\$11,200 \$9,600

### Flexible Budget

#### Variance

\$20,800 U

Actual Subcategory Flexible Budget Original Budget

APi X AQi X AQo BPi X AQi X AQo BPi X BQi X AQo BPi X BQi X BQo

\$45 X 5.6 X 400 \$40 X 5.6 X 400 \$40 X 5.0 X 400 \$40 X 5.0 X 340

\$100,800 \$89,600 \$80,000 \$68,000

Price Variance Quantity Variance

\$11,200 \$9,600

Flexible Budget Variance Volume Variance

\$20,800 U \$12,000 U

#### Total Variance

\$32,800 U

The budget variances can result from its ineffectiveness (Cleverley, & Cleverley, 2018). The budget variances experienced by the clinic can have some reasons. First of all, they can be caused by labor factor, which includes labor costs. The cost of materials utilized in the clinic can also lead to the budget variance, mainly due to waste of materials. Also, ineffective flexible budget can result in budget variance while a well-developed one is expected to eliminate variances. Finally, cost and efficiency should be considered as possible factors for budget variance.

## References

Cleverley, W., & Cleverley, J. (2018). Essentials of health care finance (8th ed.). Burlington, MA: John & Barret Learning.

Mason, D. J., Leavitt, J. K., & Chaffe, M. W. (2014). Policy & politics in nursing and health care (6th ed.). St. Louis, MR: Elsevier.

Penner, S. (2013). Economics and financial management for nurses and nurse leaders (2nd ed.). New York, NY: Springer.

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