The phrase “budget development time” often elicits moans and groans. During this process, leadership usually asks the nurse leader if he or she has any requests of items to include in the budget. Often, the nurse leader makes a list of wants and needs, hoping to receive them in the new fiscal year. However, many are disappointed when, once the new budget arrives, it includes none of the requested items. Feeling this process is a waste of time, some nurse leaders halfheartedly develop various versions of this list year after year with the same result—but it doesn’t have to be this way. This article will guide the nurse leader on developing a business case that provides fiscal leaders in home health agencies with necessary information regarding requests. By encouraging thought and discussion, the nurse leader can more effectively promote inclusion of the requested item or solution in the upcoming year’s budget.
Why Develop a Business Case?
One drafts a business case because he or she has identified a need or opportunity for improvement and the cost of the solution to make the improvement exceeds the current budget for expenditures.
When the nurse leader wants the next annual budget to include an expense, there are two categories of expenditures. The first category includes capital expense purchases, a type of expense considered a long-term investment. These include high-cost items such as equipment, furniture, or computers. Fiscal managers of the organization weigh many variables when allotting money for capital expenses to purchase in the upcoming fiscal year. The second category is any operational expense that is over budget. For example, if the nurse leader would like to request additional staff, the cost of doing so may exceed monies allotted to these areas. The budget request is the opportunity to provide further explanation to persuade fiscal leaders that the additional expense is necessary.
The nurse leader is the expert regarding the clinical needs of the organization; no one knows its needs better. Generally, organization leaders reviewing requests look at monetary cost first. However, there may be other factors to consider as well, such as the cost of not purchasing the item. It is the nurse leader’s responsibility to relay both the cost and the justification for the item, helping decision-makers to see the whole picture before making a decision.
When Should a Nurse Leader Develop a Business Case?
A business case is an in-depth review that can be time-consuming to develop correctly. Therefore, not every item on the wish list merits creating a business case. Instead, develop business cases for those items that are necessary for the nursing department to function and those that most impact patient care. For instance, a nurse leader who wants to buy a bladder scanner may make a budget request because the cost will exceed the current budget. While a request that simply seeks additional funds may be denied, a request that presents a business case is more persuasive. The nurse leader may have evidence that the product they wish to buy will make it easier for staff to meet the bowel and bladder needs of patients. A business case that relays this information in a precise and easy to understand manner can show that although the change may appear to cost more money, it may ultimately save the agency money and provide the patients with better care. A business case showing the benefits of a bladder scanner can demonstrate how the expense both improves patient care and contributes to cost savings in other areas.
Some other expenses that often need a business case to justify the budget request include lengthening orientation, additional staffing, or implementing a new clinical program. The nurse leader may wish to develop a business case when a solution is over budget but the expense will result in at least one of the following:
- Increase in productivity and/or efficiency
- Reduction in risk of harm to patient and/or staff
- Improvement in quality-of-care outcomes
- Improvement in staff retention
- Improvement in staff competency
- Reduction in risk of noncompliance
Steps to Develop a Business Case
When developing a business case, there are four steps the nurse leader can follow to ensure a complete review.
Step 1 – Identify solutions that solve a problem or improve clinical operations. Choose carefully the item for the business case. Again, limit business case creation to those items necessary for the agency to function or those that impact patient care. Focus the business case on problem-solving.
Step 2 – Calculate the cost of the item. State everything that the cost includes, such as delivery and maintenance. Identify extra items that may be necessary for the item to work correctly. For example, equipment may incur additional costs such as maintenance fees or accessories. Include all additional costs so there are no surprises.
Step 3 – Explain why the item is necessary. Include information such as:
- How will the item solve problems or eliminate gaps? For example, if the nurse leader requests a longer orientation for new staff, the change may decrease nursing assistant turnover in the first 90 days.
- Provide data that shows the urgency of the problem. If requesting a new electronic health record (EHR) system, the nurse leader may include the number of hours it may save staff with documentation.
- Identify what areas the lack of the item affects and the impact of the gap.
- Reference relevant industry standards or requirements. Do not limit this to federal or state requirements. Cite other industry standards as well, such as recommendations from the Centers for Disease Control and Prevention (CDC), National Pressure Injury Advisory Panel (NPIAP), or other reputable standards.
- Outline potential risks if the item is not purchased. Articulate for decision-makers the hidden costs of denying the request. If not purchasing the item will lead to adverse outcomes, more workers’ compensation claims, increased turnover, or poor customer satisfaction, include that information.
Step 4 – Identify the return on investment if the item is purchased. This step expresses the benefits of the purchase. Include both financial and social benefits the agency can expect if it purchases the item. For instance, if the nurse leader is requesting a new EHR software that is easier to use, a likely financial benefit may include less overtime pay for staff due to documentation. If the current EHR is cumbersome or sometimes doesn’t work and incurs a fee when a technician must come repair it, purchasing a new software that comes with a maintenance contract may also have financial benefits. Social benefits of a new EHR software might include better outcomes for patients due to better communication between staff.
When the nurse leader prepares a business case, it does not guarantee that the agency will purchase the requested item. However, when he or she relays pertinent information in a persuasive manner promoting the cost and benefit of the new item to the decision-makers, it can increase approval chances. By creating a business case, the nurse leader can be an advocate for improving staff working conditions and workload, as well as providing the best patient care. For more assistance developing a business case, see AAPACN’s Home Health Business Case Template.
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