Section I of the Capital Project Essay Sample

Section I of the Capital Project Pages
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The capital purchase project is for a request that proposes the purchasing of continuous bedside pulse oximeters for the New England Baptist Hospital (NEBH). Pulse oximeters are a specialized piece of equipment that non-invasively measure the oxygen saturation in patients. The management goal that supports this expenditure is based upon the quality assurance that the organization is providing the best evidence-based care to the patients. The management team does demonstrate that this capital purchase will enhance the economic environment of the organization. The organizational goals are identified and do support the need for this purchase. The organizational need to acquire these bedside pulse oximeters is explicitly stated. This acquisition process is explored and does indicate that the management goals are achieved by getting the approval for this capital purchase.

Capital Purchase
The New England Baptist Hospital is a specialty referral hospital that focuses on orthopedic surgery and the care of musculoskeletal disorders. The hospital performs a minimum of thirty inpatient surgeries each day. The total number of inpatients bed are one hundred and twenty.The organization operates annually with a two million dollar budget allowance for capital purchase. This budget is reviewed and adjusted every three to five years. This multi-year capital budget is coming up for review for the fiscal year 2015. The finance director is in the planning phase for this budget review as it is scheduled for the first week in February. In order for a line item to be considered a capital purchase, the item has to cost two thousand dollars or more. The policy at NEBH states,” that a capital equipment expenditure shall be considered as one in which a depreciable asset is acquired”. This statement can be found in the policy and procedure manual viewable through the organizational intranet.

The policy goes on to state, “that a depreciable asset has to have an estimated life of three or more years and a historical cost of at least $2,000 for a single item”. The director of the finance department categorizes the capital budget into three groups. The first group is for informational technology, and the second group is for facilities, and the third group is for clinical equipment. The purchasing of continuous pulse oximeters falls in the group of clinical equipment. The director identifies the major projected projects when establishing the capital budget. This is part of the strategic plan for the organization. Sometimes, the priorities change and projects may get deferred. Each manager has to complete a Capital Request Prioritization Form. This form requires a description of the equipment requested. The form also requires the approximate unit cost, the number of units requested, the total request in dollars, is it a replacement, upgrade or new technology item, the equipment age if a replacement, and the priority. The manager must score each priority for each of the requests as the number one is low, two is medium and three is a high priority.

The priority questions addressed are; quality or a safety requirement, does this item supports ongoing clinical operation, is this for programmatic growth requirement/revenue enhancement, is it for cost reduction, is this a regulatory or compliance requirement, is this for patient satisfaction, is this for employee satisfaction? Then a weighted average is calculated, and the prioritization form is reviewed by the Finance department. The finance director and her team review the capital request prioritization form. In terms of priority, the director pays special attention to the weighted score for the quality or safety requirement and the regulatory or compliance requirement. For instance, the pulse oximeters ranked fifteen percent for quality or safety requirement and twenty percent for regulatory or compliance requirement. This weighted average equals one hundred percent; therefore the other areas comprise the total percent. Regulatory compliance is so important for NEBH to meet in terms their reimbursements.

The Center for Medicare and Medicaid Services (CMS) has regulations that are established by the government. There are clinical quality measures, or CQMs, which are tools that help to measure and track the quality of the health care services that re provided by healthcare centers (, n.d.). The data is collected on; health outcomes, patient safety, clinical processes, efficient use of health care resources, population and public health adherence to clinical guidelines, care coordination and patient engagements (, n.d.).

Management Goals
Capital purchases are acquired with the goal that the equipment purchased will be used by the hospital far beyond the year in which the equipment was purchased (Finkler, Kovner, & Jones, 2007). The manager is responsible for making smart choices when making capital request. The managers have to operate within their projected budget efficiently to ensure the solidity of the organization. The financial goals have to remain consistent and be clearly communicated. The managers have to be sure that the patients are provided he best possible care. The equipment has to be safe, in good working condition, up to date with the technology and assure that there are enough units available for all patients. The inpatient census has grown steadily over the past three years. This past year NEBH performed two hundred and fifty more inpatient surgeries than the previous year. The projection for this year is that NEBH will perform three hundred and fifty more than last year. The management is responsible for assuring that patients will remain safe during their hospitalization.

The management team must be sure that all regulatory compliance is achieved. A management goal is for patients to be free from sentinel events, and by providing continuous bedside pulse oximetry for our patients this goal may be met. The present number of pulse oximeters that are available for patient use is twelve. These monitors are over ten years old, and they can no longer be repaired. They are considered to be at end of life. The number of how many new bedside pulse oximeters that NEBH needs to have on hand has to be determined. Initially, the manager is going to ask to purchase fifteen new bedside pulse oximeters. This amount will be re-evaluated over the next few months. The education department will be involved with not only the education of the staff, but will also help management determine how many more oximeters are needed.

Organizational Needs
Any organization or hospital wants to provide the best possible care to their patients. The care provided has to meet standards, and must follow the National Patient Safety Goals (NPSG) established by the Joint Commission for Accreditation of Hospitals in 2003. The NPSG address those problematic areas in healthcare by using evidence- and expert-based solutions (Castro, 2009). The NPSG of 2009 included goal 16, which is to improve recognition and response to changes in a patient’s condition (Castro, 2009). In 2014 the Joint Commission added to the list, goal 06.01.01, which is to reduce the harm associated with the clinical alarm system (“The Joint Commission announces 2014 National Patient Safety Goal ,” 2013). These two safety goals are relevant to the discussion on the organizational need for the use of continuous pulse oximetry for all patients. With goal 16, it is important for nurses to recognize when a patient has a compromised respiratory system that developed as a result of opioid use.

Nurse need to be educated on the Rapidly Evolving Clinical Cascade (RECC) of patterns of respiratory dysfunction (Curry & Jungquis, 2014). Knowledgeable nurses can provide optimal safe patient care. When the nurses on the general nursing units understand RECC of patterns of respiratory dysfunction and correctly use the bedside pulse oximetry, then there is a lesser chance of an adverse occurrence. Many patients have undiagnosed sleep apnea; therefore it is important for all patients to have bedside pulse oximeters. Sleep apnea is a condition in which one has a period of apnea (pause in breathing) during their sleep cycle. The Association of Perianesthesia Nursing (ASPAN) is extremely active in promoting education to their members about caring for patients with Obstructive Sleep Apnea (OSA). ASPAN has established standards of care for all patients and has made evidence-based practice recommendations for patients with sleep apnea. (“The ASPAN obstructive sleep apnea in the adult patient evidence-based practice recommendation,” 2012) states, “Patients with untreated OSA are in higher numbers in surgical patients, and they have increased intensive care admissions and hospital costs “(p.309).

In addition to the information provided by ASPAN, the Dartmouth-Hitchcock Medical Center conducted a study on patients that utilized bedside pulse oximetry during their hospitalization. (Curry & Jungquis, 2014). This study began in 2007 and as a result, in 2010 at the Dartmouth- Hitchcock Medical Center, all patients on the general nursing units are to be monitored continuously with bedside pulse oximeters (Curry & Jungquis, 2014). This is not the current practice at the NEBH; however it could be in the near future. The information from this study has been shared with the education department NEBH. As a result, a committee was formed to discuss the best practice for monitoring patients post-operatively. If this committee determines that all patients will need bedside pulse oximetry, then the organization will have to purchase many more oximeters. In addition to the Joint Commission, the ECRI has issued a list of safety concerns. ECRI is a non-profit institute that began forty-five years ago in order to bring together disciplines to improve patient care (“Ecri Institute”, n.d.).

By becoming a member of ECRI , which includes more than 5,000 healthcare organizations worldwide, an organization can “deliver safer and more cost-effective patient care because they rely on ECRI Institute’s independent, evidence-based research and informed judgment” (“Ecri Institute”, n.d.). The NEBH is a member of ECRI. The ECRI Institute did release their top 10 patient safety concerns in 2014, and number nine in this list states, inadequate monitoring for respiratory depression in patients taking opioids ( ECRI Institute, 2014). This list can be presented to the hospital administrators as a means of advocating for more patient safety resources (ECRI Institute, 2014). This can help in proving the need for acquiring more bedside pulse oximeters.

In addition to acquiring the bedside pulse oximeters, the staff must be properly educated on the proper usage of this piece of equipment. It is important that each nurse checks the alarms, to assure the accuracy for each patient. NPSG 6 addresses the issues with monitor fatigue. Nurses must be aware of unreliable detection, staff desensitization, improper disabling of alarms, alarm overload, and the inability to personalize alarm settings. It is known that patients that have sleep apnea, experience longer periods of apnea with opioid use, for this reason with the help of bedside pulse oximeters these patients can be cared for appropriately.

Justification for the Expense

A persuasive justification for the expense to purchase bedside pulse oximetry is one that supports clinical data. The clinical data should be fully researched before the process is initiated. The pertinent documentation on the best evidenced based practices is reviewed as part of the decision-making process. This documentation has to be clear and precise when presented to the financial administrators. Finkler, Kovner, & Jones, (2007) states,” Careful analysis of the steps involved in the planning and implementation of such projects will lead to smoother implementation.” NEBH has a formalized process for approval of a capital expenditure. This approval process is initiated by a department or manager through the completion of a capital expenditure approval form (Cleverly, 2001). The capital equipment purchase form is then initiated. This form consists of the date of the request, the requesting department, and the type of equipment and the estimated costs.

This form then is submitted to the requesting department manager, the supporting department manager, the Vice-President/Director and then to the Chief Finance Officer (CFO) for final approval. Another important step is to receive approval from the Clinical Practice Committee that supports the use of bedside pulse oximetry. After obtaining approval from this committee, the next step is to present the proposal to the Value Analysis Committee. The presentation should include the organizational need as well as the proposed quantity that should be purchased. This information will help the Committee to understand the amount of money that is being requested from the capital budget. Once the Value Analysis Committee agrees that this is necessary equipment that must be purchased, and then a trial will begin. These committee members, also turn to ECRI for justification about a specific piece of equipment. ECRI did submit helpful product information that was useful.

It was determined that two staff members would be responsible for supervising the trial. One staff member is a nurse from the education department, and the other is a respiratory therapist. These staff members did conduct research on the companies that sell pulse oximeters. The oximeters that NEBH presently use are manufactured by Nellcor. A second company was requested to come and explain the benefits of their product. This company was Masimo. Both company’s ran trial and the one that was picked was Masimo. The product was better, the technology was more advanced and overall the support they offered NEBH was significantly better than Nellcor. The committee felt that Nellcor portrayed their position as the main and (only) manufacturer for producing oximeters.

The Masimo product appeared to be much better during the trial. The staff members involved in the trial did complete a literature search and the studies conducted by Masimo with the committee members. One of the studies was conducted on Masimo’s new generation oximeters as it compares to Nellcor oximeters that measure the performance during motion and low perfusion. The results indicated that Masimo’s oximeter had higher sensitivity and specificity than Nellcor. The decision was made to go with Masimo, and now the next step is to work on the pricing. Massimo does offer a one-year warranty on each of the oximeters. After the one year is completed, Massimo does offer a service contract that NEBH could purchase. This is the vendor that the organization has chosen.

Economic Environment
The current bedside Nellcor oximeters are at end of life. These monitors can no longer be repaired, and there is a need for bedside pulse oximetry. NEBH received a quote and forwarded it off to ECRI for analysis. ECRI did suggest that NEBH could do a little better. NEBH then got back in touch with Masimo, and then Masimo re-quoted with our Group Purchasing Organization (GPO) pricing. Then NEBH agreed with Masimo and the order was placed. NEBH paid for fifteen units ($2,085.00/each). This is a significantly discounted rate. Then NEBH also orders fifteen docking stations, and this was included in the price.

The total for this expenditure is $31,275.00. Masimo was very easy to deal with during the negotiations. The director of the finance department did validate the quantity of oximeters that needed to be ordered. There has been some discussion that NEBH will need to order fifteen more in the fiscal year 2015. It is the responsibility of the finance department to re-evaluate the quantity needed on a yearly basis. This is why it is an important strategy for the director to have some money in reserve, when planning the multi-year capital budget. If the census continues to flourish, then the amount of oximeters needed will increase as well.

The patients will ultimately benefit from this new technology and the availability of these bedside pulse oximeters. This will be a change in
practice for the nurses on the general nursing units. The hope is that a change in patient status will be recognized and treated sooner. This will in turn save the hospital money because adverse events should be avoided. Presently, when a patient is seen urgently by the hospitalist, the patient is treated and then transferred to a monitored bed or the ICU. This lengthens the patient’s stay, and additional charges occur. Some of these additional charges include diagnostic testing such s radiology procedures, lab work, electrocardiograms and the need for additional consultations. This is monitored by CMS. There is a “bundling for payment” in which healthcare organization gets a specified amount of money for episodes of care. In other words, this is like a package deal that relates to a health care situation.

According to (n.d.), “The charges can be extremely significant; therefore it is important to recognize the change in patient’s status earlier. Under the Bundled Payments for Care Improvement initiative, organizations will enter into payment arrangements that include financial and performance accountability for episodes of care. These models may lead to higher quality, more coordinated care at a lower cost to Medicare. This is an important reason that healthcare organization recognize changes in patient’s conditions and respond before the situation gets out of control. The critical care committee meets once a month.

At this meeting, the team discusses the number of rapid responses (pages to the team for immediate patient assessment) and the codes called over the previous month. There has been one full month since the increase in the use of bedside pulse oximetry, and the amount of pages has decreased by twenty-five percent. Although I do not know the dollar amount, one can estimate that the organization has saved money and overall the patient’s outcomes have improved.

The NEBH has benefitted as a result of the purchasing of new bedside pulse oximeters. By using the bedside oximeters, the managers can assure that the care provided to their patients is of the highest quality. The staff has successfully been educated on the effects that opioid administration has on compromised patients. The initial data indicates that NEBH is saving money because their patients have fewer OSA adverse events. Because of this capital project, a committee has been formed to improve the practice of caring for patients with OSA. The economic environment has improved, and the organization is not spending money on additional unnecessary testing. With many insurance companies “bundling for payments, the NEBH is saving because there has been a reduction in the transferring of patients to the critical care unit. Therefore the expense to purchase bedside pulse oximeters has been justified, and, as a result, the organization has befitted tremendously.


Castro, G. (2009). National patient safety goals (NPSG). In R. Mullner (Ed.), Encyclopedia of health services research. (pp. 841-843). Thousand Oaks, CA: SAGE Publications, Inc. doi: Cleverly, W. O., Song, P. H., & Cleverly, J. O. (2011). Essentials of health care finance (7th ed.). Retrieved from The University of Phoenix eBook Collection database. (n.d.). Bundled payments for care improvement (BPCI) initiative: General information. Retrieved from (n.d.). Clinical quality measures basics. Retrieved from Curry, J. P., & Jungquis, C. R. (2014, June). A critical assessment of monitoring practices, patient deterioration, and alarm fatigue on inpatient wards: a review. Patient Safety In Surgery, 28(29), 2-20. doi:10.1186/1754-9493-8-29 ECRI Institute. (n.d.). Retrieved from

ECRI institute releases top 10 patient safety concerns in 2014. (2014). Patient Safety Monitor Journal, 15(7), 4-7. Retrieved from Finkler, S. A., Kovner, C. T., & Jones, C. B. (2007). Financial management for nurse managers and executives (3rd Ed.). Retrieved from The University of Phoenix eBook Collection database. Joint Commission announces clinical alarms NPSG. (2013). Briefings on the Joint Commission, 24(8), 1-1,3. Retrieved from The ASPAN obstructive sleep apnea in the adult patient evidence-based practice
recommendation. (2012, October). Journal of Perianesthesia Nursing, 27(5), 309-315. Retrieved from The Joint Commission announces 2014 National Patient Safety Goal. (2013, July). Joint

Commission Perspectives, 33(7), 1-4. Retrieved from

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