Capital Budget Proposal

Capital Budget Proposal

Initiating a Congestive Heart Failure Clinic

Congestive Heart Failure (CHF) affects between 2 to 3 million people each year. Heart failure is directly responsible for the death of 39,000 Americans every year, and is a contributing factor in the death of an additional 225,000 Americans (National Institutes of Health, 2004). As more people continue to live longer, the incidence of heart failure will become more common. Caring healthcare facilities have the responsibility to assist these patients to improve their quality of life, and help them to help themselves.

In addition to the altruistic aspects of helping our clients, a fiscal feature comes into play. The majority of patients at the studied hospital have Medicare as their primary source of reimbursement. Medicare reimbursement is generally very low for the average admission, especially on subsequent admissions. The Department of Health and Human Services Centers for Medicare and Medicaid Services (2005) readily agrees that Medicare reimburses some cases less than the cost of treatment. Prevention of readmission for our clients with CHF, while initially appearing to be a capital expenditure, will ultimately result in a capital savings for the facility.

These writers propose the initiation of a clinic to advise congestive heart failure clients and assist them to improve their quality of life. The clinic will assist clients in managing their disease without the need for inpatient admissions. The writers will discuss justification of the project, demographics, estimated costs of equipment and staffing as well as methods of recouping costs and alternative funding. In addition, examination of the consequences of what not instituting the clinic will have on the outcome of clients.

Justification

Congestive Heart Failure and Shock or DRG 127 is our facility's second highest admitting DRG as well as our second highest readmission rate. In 2006, our facility had 148 readmissions for this DRG when looking at both primary and secondary diagnoses. The largest population in our community is above the age of 60. Therefore, 69% of our admissions are Medicare patients.

Under Medicare regulations, if the patient is readmitted to the facility within 31 days following discharge for the same condition, Medicare may not pay for the subsequent admissions resulting in substantial loss to the facility (Centers for Medicare and Medicaid, 2005).

The CHF clinic will decrease the number of readmissions to the facility, thereby avoiding the loss of funds. The CHF clinic is an area that can make a significant decrease in the amount of admissions and readmissions previously seen for DRG 127. Due to the decreased reimbursement our facility is receiving from Medicare, addressing this DRG is of utmost importance to our community.

Demographics

The hospital is located in Robeson County, North Carolina, a county with an estimated population of 57,212. Approximately 13.8% of the population is over 65 years of age. The median household income is just over $34,000 per year. 10% of the population lives below the poverty level (U.S. Census Bureau, 2005).

According to the American Heart Association (2005), 34% of all deaths in North Carolina are the direct result of heart disease. The relatively high percentage of senior citizens and a 10% poverty rate makes this area a prime area for heart disease. Congestive heart disease will continue to increase in this area, just as it will throughout the country, as the "baby-boom" generation enters their retirement years.

Item Description and Quantity

This is a proposal for the equipment needs for the initiation of a CHF clinic. The CHF clinic requires one central monitoring station with the capability of monitoring four patients. Additionally, the clinic requires one room with two recliner chairs and one room with a bed (the facility has a bed available). For non-invasive blood pressure monitoring, the clinic requires an Accutorr Plus. In order to monitor patients' weights and vital signs, one upright scale and one thermoscan thermometer is required. This is the minimum equipment necessary to open the clinic. Much of the smaller items such as charting materials, linens, thermometer covers, and blood pressure cuffs are readily available in the facility. A proposed budget for the first year to cover supplies, staffing, education, and equipment is estimated at $75,000.

Suggested Vendors and Purchase Prices

The facility chose to obtain quotes for the telemetry station from more than one vendor. Since this equipment would be the largest of our capital expenditures, it necessitated multiple quotes. Additional equipment quotes were also obtained in order to provide a comprehensive cost analysis. Datascope provided a quote for the telemetry central station and four telemetry portable packs. Total cost for this equipment came to $29,000. This was the lowest quote received. Datascope also provided a quote for an Accutorr Plus (noninvasive blood pressure monitoring); cost for this piece of equipment will be $2283.75. Phillips provided our second quote for the telemetry station. Total price for the telemetry central station and four telemetry portable packs is $30,750. Hill-Rom quote for two recliner chairs amounted to $645 each or two $1290.

Estimated Costs

Training Costs

Initially, staffing of the CHF clinic will entail hiring one registered nurse three days a week. The nurse will work 10-hour shifts at the pay rate of $20/hr with an annual salary of $31,200. Add an additional 15% to the payroll for the employer portion of FICA, Medicare, and Insurance. The budget for the CHF clinic includes $1000 for education of the nurse and educational seminars. Before opening the clinic, the nurse will attend educational seminars on how to network with other facilities. Due to the use of the same equipment throughout the hospital, cost of training for the equipment is unnecessary, provided the nurse is experienced in telemetry heart monitoring.

Depreciation

Each piece of equipment purchased for the CHF clinic has a capital asset that enables the facility to determine how long the equipment will last. Once the asset of the equipment is determined, the facility can determine what the amount of monthly and yearly deterioration is for the equipment (Arges, 2005). In addition, by determining the equipment asset, the facility can project a timetable when the purchase of new equipment will be needed for inclusion in budget.

* The cost of a Datascope central

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