Discussion essay paper

PFCH Email Record From: Davis Geach <davis.geach@pfch.net> To: Zachary Hardie Subject: Increase in nursing staff Zach: Caterina has been insisting for some time that we need to hire more nurses. I’ve arranged for her to give a presentation to the Board next month to plead her case. I know that following her presentation, they will want me to advise them of any Discussion alternatives. Caterina’s argument is that the nurses are over-worked and that has a negative effect on patient care and also leads to the nurses leaving PFCH for other hospitals. I’m wondering whether giving the nurses a raise might solve the problems. Please put together some numbers to compare hiring more nurses versus giving the nurses a raise. Yeah Discussion

Davis Geach, President/CEO

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PFCH Email Record From: Zachary Hardie <zachary.hardie@pfch.net> To: Caterina Hossack Subject: Re: Increase in nursing staff Hi Caterina. Mr. Geach asked me to prepare some information for the Board of Directors relating to your proposal to add more nurses to the hospital staff. In order to do this, I need to know the current nursing ratio and what nursing ratio you are proposing. Thanks for your helpDiscussion.

Zachary Hardie, Chief Financial Officer

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Discussion

PFCH Email Record From: Caterina Hossack <caterina.hossack@pfch.net> To: Zachary Hardie Subject: Re: Increase in nursing staff The hospital currently maintains a 5 to 1 nursing ratio (5 patients for every nurse). I will suggest to the Board of Directors that we move to a 4 to 1 nursing ratio (4 patients per nurse). Will the information that you are preparing address patient care, worker satisfaction and nursing turnover?

Caterina Hossack, Chief Nursing Officer

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PATTON – FULLER COMMUNITY HOSPITAL From: Zachary Hardie, CFO To: Davis Geach, President/CEO Re: Increase in nursing staff Per your request, I have prepared a financial analysis comparing the increasing of the nursing staff to the granting of an across the board raise to the existing nursing staff. In order to have a common basis for the comparison, it was necessary to take our existing salary and benefit costs for the nursing staff and show how they related to the existing patient/nurse ratio. I have attached as an exhibit a table that presents our current patient statistics. While the hospital has a capacity of 600 beds, we generally have only 60% of the beds occupied. The occupancy of the hospital is also affected by well-established seasonal fluctuations. Using the average occupancy and the expected seasonal fluctuations, we try to anticipate our daily and monthly patient loads and match our staffing needs accordingly. The attached table sets forth that modeling and shows how changes in the daily and monthly patient census affect our patient revenues. Also attached is a second table that deals with our nursing statistics. Using the expected number of patients per day from the first table, it sets out how many nurses would be required to serve the patients ,based on our existing 5 to 1 nursing ratio, and then what the cost of those nurses is based on the existing average salary and benefits of the nurses, expressed as an hourly wage of $30 per hour. Discussion The table then sets forth how the nursing costs would be changed by either giving the nurses a $1 per hour raise or by changing the hospital’s nursing ration to 4 to 1 (4 patients for every nurse). If you need any additonal information, please let me know.

Jan Feb Mar Apr May Jun

Days in the month 31 28 31 30 31 30

Patient Days (60% occ x seasonal x days in month) 13,271 11,983 12,286 10,171 9,092 7,258 Average Census:

Patton Fuller # of beds= 600 Patton Fuller avg occupancy (HFMA) 60%

Patton Fuller Avg Daily Census (ADC) 360

Month as % of Average “Seasonal Adjustment” 119% 119% 110% 94% 81% 67% Patton Fuller Avg Daily Census w/seasonal adj. 428 428 396 339 293 242

Patton Fuller Avg Net Rev/pt day $ 3,500

Average Daily Revenue 1,498,381 1,497,857 1,387,134 1,186,616 1,026,495 846,801

Patton Fuller Avg Net Rev/month (1000’s) $ 46,450 $ 41,940 $ 43,001 $ 35,598 $ 31,821 $ 25,404

Patton – Fuller Community Hospital

Patient Statistics

C:\Documents and Settings\mkriorda\My Documents\Web Development\CIST Server\CIST\VOP Development\Healthcare\PFCH\HosDepts\CFO\2009 Financial Statements\2009PatientStatsPDF.xls

Jul Aug Sep Oct Nov Dec Total

Days in the month 31 31 30 31 30 31 365

Patient Days (60% occ x seasonal x days in month) 7,294 10,723 11,182 11,607 13,419 13,113 131,400 Average Census:

Patton Fuller # of beds= 600 Patton Fuller avg occupancy (HFMA) 60%

Patton Fuller Avg Daily Census (ADC) 360

Month as % of Average “Seasonal Adjustment” 65% 96% 104% 104% 124% 117% 100% Patton Fuller Avg Daily Census w/seasonal adj. 235 346 373 374 447 423

Patton Fuller Avg Net Rev/pt day $ 3,500

Average Daily Revenue 823,560 1,210,686 1,304,520 1,310,523 1,565,592 1,480,451

Patton Fuller Avg Net Rev/month (1000’s) $ 25,530 $ 37,531 $ 39,136 $ 40,626 $ 46,968 $ 45,894 $ 459,900

Patton – Fuller Community Hospital

Patient Statistics

C:\Documents and Settings\mkriorda\My Documents\Web Development\CIST Server\CIST\VOP Development\Healthcare\PFCH\HosDepts\CFO\2009 Financial Statements\2009PatientStatsPDF.xls

Jan Feb Mar Apr May Jun

Number of Patients per day 428 428 396 339 293 242

Cost of nurse per hour w/benefits 30.00$ 30.00$ 30.00$ 30.00$ 30.00$ 30.00$ Cost of nurse per 24hour day 720.00$ 720.00$ 720.00$ 720.00$ 720.00$ 720.00$ Number of nurses per patient based on 5 patients per nurse or a “5 to 1” nursing ratio 0.2 Number of nurses per day 85.6 85.6 79.3 67.8 58.7 48.4 Nursing cost per day 61,648$ 61,626$ 57,071$ 48,821$ 42,233$ 34,840$ Nursing cost per month 1,911,078$ 1,725,532$ 1,769,190$ 1,464,623$ 1,309,221$ 1,045,194$

Simulation: Effect of a $1 per hour raise for all nurses Cost of nurse per hour w/benefits 31.00$ 31.00$ 31.00$ 31.00$ 31.00$ 31.00$

744.00$ 744.00$ 744.00$ 744.00$ 744.00$ 744.00$ Number of nurses per patient based on a ratio of 5 patients per nurse or a “5 to 1” nursing ratio 0.2 Number of nurses per day 85.6 85.6 79.3 67.8 58.7 48.4

Nursing cost per day 63,703$ 63,680$ 58,973$ 50,448$ 43,641$ 36,001$ Nursing cost per month 1,974,781$ 1,783,050$ 1,828,163$ 1,513,444$ 1,352,862$ 1,080,034$

Increase in cost per month due to a $1 raise per nursing hour 63,702.62$ 57,517.73$ 58,973.00$ 48,820.77$ 43,640.71$ 34,839.80$

Simulation: Effect of changing to a “4 to 1” nursing ratio Number of nurses per day 0.25 107.0 107.0 99.1 84.8 73.3 60.5

Nursing cost per day (Nursing ratio of “4 to 1” and an hourly rate of $30 ) 77,060$ 77,033$ 71,338$ 61,026$ 52,791$ 43,550$ Nursing cost per month 2,388,848$ 2,156,915$ 2,211,487$ 1,830,779$ 1,636,527$ 1,306,493$

Increase in cost per month due to a change in nursing ratio

from 5 to 1 down to 4 to 1 477,770$ 431,383$ 442,297$ 366,156$ 327,305$ 261,299$

Nursing Statistics

Patton – Fuller Community Hospital

C:\Documents and Settings\mkriorda\My Documents\Web Development\CIST Server\CIST\VOP Development\Healthcare\PFCH\HosDepts\CFO\2009 Financial Statements\2009NursingStatsPDF.xls

Jul Aug Sep Oct Nov Dec Total

Number of Patients per day 235 346 373 374 447 423

Cost of nurse per hour w/benefits 30.00$ 30.00$ 30.00$ 30.00$ 30.00$ 30.00$ Cost of nurse per 24hour day 720.00$ 720.00$ 720.00$ 720.00$ 720.00$ 720.00$ Number of nurses per patient based on 5 patients per nurse or a “5 to 1” nursing ratio 0.2 Number of nurses per day 47.1 69.2 74.5 74.9 89.5 84.6 Nursing cost per day 33,884 49,811 53,672 53,919 64,413 60,910 Nursing cost per month 1,050,392 1,544,143 1,610,150 1,671,479 1,932,388 1,888,210

Simulation: Effect of a $1 per hour raise for all nurses Cost of nurse per hour w/benefits 31.00$ 31.00$ 31.00$ 31.00$ 31.00$ 31.00$

744.00$ 744.00$ 744.00$ 744.00$ 744.00$ 744.00$ Number of nurses per patient based on a ratio of 5 patients per nurse or a “5 to 1” nursing ratio 0.2 Number of nurses per day 47.1 69.2 74.5 74.9 89.5 84.6

Nursing cost per day 35,013$ 51,471$ 55,461$ 55,716$ 66,560$ 62,940$ Nursing cost per month 1,085,405$ 1,595,615$ 1,663,822$ 1,727,195$ 1,996,801$ 1,951,150$

Increase in cost per month due to a $1 raise per nursing hour 35,013.05$ 51,471.44$ 53,671.66$ 55,715.97$ 64,412.93$ 62,940.33$ $ 630,720.01

Simulation: Effect of changing to a “4 to 1” nursing ratio Number of nurses per day 0.25 58.8 86.5 93.2 93.6 111.8 105.7

Nursing cost per day (Nursing ratio of “4 to 1” and an hourly rate of $30 ) 42,354$ 62,264$ 67,090$ 67,398$ 80,516$ 76,137$ Nursing cost per month 1,312,989$ 1,930,179$ 2,012,687$ 2,089,349$ 2,415,485$ 2,360,262$

Increase in cost per month due to a change in nursing ratio

from 5 to 1 down to 4 to 1 262,598$ 386,036$ 402,537$ 417,870$ 483,097$ 472,052$ 4,730,400$

Patton – Fuller Community Hospital

Nursing Statistics

C:\Documents and Settings\mkriorda\My Documents\Web Development\CIST Server\CIST\VOP Development\Healthcare\PFCH\HosDepts\CFO\2009 Financial Statements\2009NursingStatsPDF.xls