Week Four Replies To Discussion Posts



You have provided a clear and precise definition of strategic management by using definition by Finkler & McHugh (2008) and Jasper and Crossan (2012). Based on the two definitions you have provided it is clear that strategic management is a process that allows managers to choose strategies set for the organization that will enable it to achieve better performance.  Strategic management is all about planning for both unfeasible and predictable contingencies. Strategic management applies to both large and small organizations since smallest organization also face stiff competition, and through the formulation as well as the implementation of appropriate strategies, they can achieve sustainable competitive advantage (Jasper &Crossan, 2012).

Strategic management entails creating a mission and vision for an organization. It is all about dealing with strategic initiatives and activities to make them conform to the organizational objectives and goals. Strategic management largely involves a detailed understanding of demographic, political, and cultural changes that affect the functions of an organization. It would have been important in your definition to include the component of a typical strategic management process and specified that it is a continuous process (Speziale, 2015). The four components include analysis and assessment, strategy formulation, strategy execution, and evaluation. You have well noted that there are benefits and shortcomings of strategic management. Other benefits of strategic management to healthcare organization include allowing the organization to be agile. An excellent strategic management framework enables the healthcare organization to have pivot ability, that is with constant changes being experienced in the field of healthcare, strategic management enables organization to look back and review existing strategic initiatives for relevancy and impact. In addition, strategic management encourages continuous dialogue on strategy by allowing managers to shift to yearly process that needs constant scanning and reflections of the industry as well as a performance review.



I like the way you have approached the definition of strategic management by just looking at its primary purpose which is to generate accurate information. Having accurate information will ultimately influence the decision-making process. However, strategic management goes beyond just generating precise information; it is a more active process which allows strategic plans to evolve as well as grow with constant changes in the environment. Strategic management is a continual analysis, monitoring, and planning needed to meet objectives and goals (Speziale, 2015) successfully.

It is true that strategic management can help streamline the budgeting process of a healthcare organization.  It is also worth noting that, a healthcare organization can exploit the available opportunities that provide clear purpose, resource, commitment, and support and overcome the hurdles and challenges to maintain smooth organizational operations(Speziale, 2015). Other benefits that you could have stated include, setting priorities, improved decision making, resource availability, focus energy, motivation, and encouraging healthcare staff to take an active role. In addition, strategic management can help the healthcare organization create new goals, directions or objectives to bring in required changes to conform to the external regulatory requirements as well as maintain patient satisfaction at maximum (Pascuci et al., 2017).  You have in detail elaborated one challenge associated with the implementation of strategic management. You have stated that difficulty gaining and maintaining support from others is a major challenge. This challenge can fall in the major challenge, which is a lack of clear definition as well as an understanding of the strategic management goals.  Active debate makes sure that all stakeholders understand the strategic management goals and they support them(Pascuci et al., 2017). With little or no debates, goals are not defined clearly, and every manager might just work towards achieving a personal mission, which does not conform to the goals of the organization. In such situations, the performance of the organization will be adversely affected, and there will be a lack of support from others.


Discussion 2


It is true that the budget implications can only be fully understood by the nurse first recognizing budget variances and other key factors.  However, you did not define variances, which is the difference between the actual performance and budgeted target. Favorable budget variance is ananticipated difference between actual and budgeted amounts. Actual expenses that are less than or similar to the budgeted and revenue greater than or similar to the budget show a favorable variance(Rundio & Sigma Theta Tau International, 2016). On the other hand, unfavorable budget variance is an unexpected difference between actual and budgeted values. That is the actual expenses that higher than budgeted and actual revenues that are less than budgeted (Baker et al., 2018).

While you have identified staffing and supply costs as two sources of an unfavorable variance, these are not only the sources. Others include unanticipated repair of hospital equipment and are among the most commonly encountered budget variances(Finkler et al., 2007). Most organizations that heavily depends on machinery and equipment schedule regular maintenance to achieve optimal operational effectiveness; but there is often a likelihood that a mechanical deficiency may go unnoticed leading to a catastrophic failure. Another cause of unfavorable variance may include natural disasters as well as other unpredictable events beyond our control sphere. The two factors you have identified are well explained and are in detail.



This is a well-explained response. Financial language is not only important to the healthcare leaders it is also important to any staff within the healthcare organization. Understand various financial terms is indeed key to establishing a successful business with a proper budget. Variance analysis can be described as a budgeting aspect where budgeted expectations are compared with the actual results. Nurse leaders have expected or planned and actual results that lead to variance in the budget (Walsh, 2017).  The budget implementation does imply that everything will go as per the plan. One expense outcome with budget expectations is the projected patient’s volume. Using historical data to predict, nurse leaders can prepare for a projected number of patient in the following year. But variances takes place when the anticipated volume is over or underestimated for each department as well as the entire organization.

Recognizing daily, weekly, and seasonal patterns in patients’ volume can create an excellent opportunity for reduction of cost. Other expense outcomes with budget prediction are scheduling and staff. Healthcare facilities specific number of personnelto go on smoothly with their daily operations. Nurse to patient rations determines the quality and safety of the treatment. The variance normally takes place when the projected levels of staff either are under or overestimated (Finkler et al., 2007). Forecasting can expect the acuity levels of patient and busy seasons, but it is not an accurate science. Staffing, as well as scheduling, can vary due to decreased or increase occupied beds. The variance can cause nurses to be called off or in duty leading to overtime or nurses being placed on call, leading to using sick hours or vacations to maintaining full-time status.

Discussion 3


You have clearly identified the major causes of budgeting variances in healthcare and noted that nurse managers need to consider some factors in order to identify the causes of budget variance within the hospital.  Important aspects of budget development are analyzing variances, monitoring budget, as well as applying strategies to improve the budget. All are essential in the budget process to make sure the hospital unit meets the financial objectives of the healthcare facility while maintaining high-quality patient care. The field of healthcare is unpredictable, and organization should be in a position to effectively adapt these changes without over budgeting (Rundio & Sigma Theta Tau International, 2016). This can be achieved by understanding all the concepts associated with the process of budgeting and apply strategies that balance quality care and costs.

It is also essential to have a clear understanding of the various types of variance, which include:

Profit variances, which is the difference between projected profit and actual profit (or for nonprofit hospitals net surplus or net income). Three class of budget variance result in profit variance affecting either the revenue or the expense side.  The first one being volume variance, which is the difference between budgeted and actual service units—normally, in long-term care setup, measured using days of patients as the “service unit”, with actual days of patients below or above budget signifying volume variance (Baker et al., 2018). Volume variance sources are usually external and hard to control such as third-party reimbursement policies, demographics that limits the length of stay. An example of internal volume variance source, which can be controlled, is negotiating contracts for skilled nursing care referrals with the hospitals. Utilization variance, which is the difference between the number of budgeted and actual services, provided. Reimbursement limitation of insurers for ancillary services for example physical therapy is an example of an uncontrollable external source of utilization variance (Baker et al., 2018).  An example of internal cause is quality management and clinical guidelines implementation, and this can reduce the length of stay as well as related rates of complications.  The third variance is enrollment variance, which is the unanticipated changes in the enrolment in healthcare plans of managed care.



A well explained and precise definition of budget variance and well-analyzed case.  Comparisons of budgeted to actual results enable individual to consider if corrective action is required. In fact, the variance is the difference between the budgeted and actual results. Variance is either favorable (when actual results are higher than the expected results) or unfavorable when the actual results are worse than the projected (Baker et al., 2018). Unfavorable variance needs corrective action to allow future results to be the same as the budget. It is interesting to see how you have identified the possible causes of budget variances and given a detailed solution to how to avoid such variance. I have come to note that nurse turnover and use of contract labor can cause the budget difference.  However, you failed to explain how nurse turnover and use of contract labor is a blow to the hospital budget. Besides, you have also not explained how nurse retention will help improve the budget variance to favorable one. It is good that you have highlighted that that nurse retention is important to any hospital, especially highly skilled nurses. This will, in turn, maintain or increase the volume of patients resulting in favorable profit variance.  Another thing that is worth noting is that variances are at times artificially created for instance if the accounting software automatically lines item costs over twelve months and yet the actual expenditure just occurs once annually (Baker et al., 2018). This will lead to favourable variance in certain months and unfavorable in other months.


Baker, J. J., Baker, R. W., & Dworkin, N. R. (2018). Health care finance: Basic tools for nonfinancial managers.

Finkler, S. A., Ward, D. M., & Baker, J. J. (2007). Essentials of cost accounting for health care organizations. Sudbury, Mass: Jones and Bartlett Publishers.

Jasper, M. and Crossan, F. (2012). What is strategic management?. Journal of Nursing Management, 20(7), pp.838-846.

Pascuci, L., Meyer Júnior, V. and Crubellate, J. (2017). Strategic Management in Hospitals: Tensions between the Managerial and Institutional Lens. BAR – Brazilian Administration Review, 14(2).

Rundio, A., & Sigma Theta Tau International, (2016). The nurse manager’s guide to budgeting & finance.            Indianapolis, IN Sigma Theta Tau International,

Speziale, G. (2015). Strategic management of a healthcare organization: engagement, behavioural indicators, and clinical performance. European Heart Journal Supplements, 17(suppl A), pp.A3-A7.

Walsh K. (2016). Managing a Budget in Healthcare Professional Education. Annals of medical and health sciences research, 6(2), 71-3.

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