Module 6 Discussion: Initial Post
Four Requests, One Pool: How I Would Rank Capital Spending Against a Nursing Division's Strategic Priorities
Capital budgeting forces choices that operating budgets can hide, because the pool is fixed and every approval is a refusal of something else. Capital budgets cover long-lived assets, and evaluating them means comparing each item's costs over its life with the benefits it brings, including benefits that are not financial (Finkler et al., 2013). I want to work through a composite example from the hospital I have been using this term, where the capital committee has $1.2 million for the coming year and has received four requests totaling $2.33 million: replacing 32 medical-surgical beds on 4 West for $640,000; a video monitoring system for patients at risk of falls for $310,000; building out space for a heart failure transitional clinic for $280,000; and a CT scanner upgrade for $1.1 million.
I would rank them on four criteria stated before looking at the requests: alignment with the division's strategic objectives, patient and staff safety, financial return, and the consequence of waiting a year. First is the heart failure clinic, at $280,000. It is the only request tied directly to a strategic objective, reducing heart failure readmissions from 23.4 percent to 19.0 percent, and the hospital is losing about $310,000 a year to the readmission penalty. Medicare patients discharged after heart failure from hospitals where more patients had early outpatient follow-up had a lower risk of readmission (Hernandez et al., 2010), and hospitals nationally have shown that targeted readmission rates can fall (Zuckerman et al., 2016). Waiting a year means another penalty year.
Second is the bed replacement, at $640,000. It is a safety request rather than a strategic one: the beds are 14 years old, repair costs have doubled in two years, and two bed exit alarm failures appeared in this year's event reports. I considered phasing it, replacing 16 beds now, but a mixed fleet complicates training and parts, and the vendor's price rises next year. A safety request with documented failures should not have to compete on return.
Third is video monitoring, but as a $150,000 pilot on two units rather than the full $310,000 purchase. The case for it is real: 4 West alone used about 4,480 sitter hours last year at an annual loaded cost near $116,000. But the savings depend on how many patients can safely be monitored by video instead of a sitter, and we have no local data yet. A six-month pilot with falls and sitter hours measured before and after would tell us whether the full purchase belongs in next year's request.
The CT upgrade I would send back, not reject. At $1.1 million it cannot fit beside the others, and radiology has not shown whether a lease or a phased payment would work. That leaves a $130,000 contingency, which matters because capital projects routinely find surprises in walls and wiring. Total: $1,070,000 committed and $130,000 held.
My question for the group: in your organizations, do safety-driven requests like the beds compete in the same pool as strategic ones, or is there a separate safety allocation? I can see arguments both ways, and I suspect the answer shapes what gets replaced before it fails.
References
Finkler, S. A., Jones, C. B., & Kovner, C. T. (2013). Financial management for nurse managers and executives (4th ed.). Elsevier Saunders.
Hernandez, A. F., Greiner, M. A., Fonarow, G. C., Hammill, B. G., Heidenreich, P. A., Yancy, C. W., Peterson, E. D., & Curtis, L. H. (2010). Relationship between early physician follow-up and 30-day readmission among Medicare beneficiaries hospitalized for heart failure. JAMA, 303(17), 1716-1722. https://doi.org/10.1001/jama.2010.533
Zuckerman, R. B., Sheingold, S. H., Orav, E. J., Ruhter, J., & Epstein, A. M. (2016). Readmissions, observation, and the Hospital Readmissions Reduction Program. New England Journal of Medicine, 374(16), 1543-1551. https://doi.org/10.1056/NEJMsa1513024
How this DNP 885 Module 6 example is structured
DNP885 covers capital requests and funding paths alongside operating budgets. Aspen does not publish module deliverables, so check your classroom for the exact prompt. This example states ranking criteria first, applies them to each request with numbers and evidence, uses a pilot where return is uncertain, keeps a contingency and closes with a question for peers.
DNP885 Module 6 questions, answered
What does the DNP885 Module 6 discussion usually ask for?
Discussions in this part of DNP885 often ask how you would prioritize capital requests or investments against the organization's strategic plan and resources. Aspen does not publish module deliverables, so your classroom's instructions govern.
How should capital requests be prioritized?
State criteria first, such as strategic alignment, safety, financial return and the consequence of waiting, then apply them consistently to every request and show the numbers behind each judgment.
What is the difference between a capital budget and an operating budget?
An operating budget covers a year's revenues and expenses for running services; a capital budget covers long-lived assets such as equipment and construction, evaluated over their useful life.
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