NR 533 Week 6 Capital Request Write-Up Example

Capital Request Write-Up: Two Low-Air-Loss Mattresses at $6,200 Each, Why They Count as Capital, What Owning Them Costs Every Year After the Purchase, and a Payback of About Fourteen Months Against Rentals

Student Name

College of Nursing, Chamberlain University

NR 533: Financial Management in Healthcare Organizations

Instructor Name

Month Day, Year

Capital Request Write-Up: Two Low-Air-Loss Mattresses at $6,200 Each, Why They Count as Capital, What Owning Them Costs Every Year After the Purchase, and a Payback of About Fourteen Months Against Rentals

The Request

This write-up asks for two low-air-loss mattresses to be bought with integrated pumps for the inpatient palliative care unit, at a quoted price of $6,200 each, or $12,400 in total, including delivery and in-service training. The request is submitted to the hospital's minor capital pool, which reviews items under $25,000 each quarter, for the next review on January 15. The purchase would replace most of the unit's specialty mattress rentals, which cost $14,000 this year.

Why This Is a Capital Purchase

The hospital's capital policy defines a capital item as equipment costing $5,000 or more per unit with a useful life of more than one year. Both tests matter. Each mattress costs $6,200, above the threshold, and the manufacturer states a useful life of six years with routine maintenance, well beyond one year. The purchase therefore belongs in the capital budget, not the operating budget, and its cost will be spread across its life through depreciation rather than charged to the unit's supply line in the month of purchase.

The distinction changes how the request is read. Rentals are an operating expense that appears on the unit's statement every month. A purchase appears once in the capital budget and then as depreciation of about $2,067 a year for each of six years, which the finance office charges to the unit. A request that compared the full purchase price with one year of rentals would make the purchase look almost as expensive as renting. Comparing annual costs on a like basis shows the actual difference.

The Need

The unit rents a low-air-loss mattress whenever a patient arrives with a pressure injury or at very high risk and the unit's standard foam mattresses are judged inadequate. This year the unit rented mattresses for 280 patient days, at $50 a day, for a total of $14,000. Rentals are ordered through a vendor who delivers within four to eight hours, during which the patient lies on a standard mattress. On three occasions this year, delivery took longer than twelve hours because of vendor shortages, including once for a dying patient whose family had asked for the mattress to make turning less painful.

The clinical case needs to be stated honestly. A Cochrane review of 59 trials found that higher-specification foam mattresses reduce pressure ulcers compared with standard hospital foam in people at risk, but that the relative merits of alternating-pressure and constant low-pressure surfaces are unclear (McInnes et al., 2015). This request does not claim that owned low-air-loss mattresses will prevent more pressure injuries than rented ones; they are the same product. The case is financial and practical: owning is cheaper and the mattress is available when the patient arrives. For palliative patients, current international guidance also emphasizes comfort and the patient's goals when choosing a support surface (European Pressure Ulcer Advisory Panel et al., 2019), which favors having the surface on the unit rather than eight hours away. Nurses on the unit also point to a practical benefit that does not show in any cost figure: a dying patient does not have to be moved from one mattress to another hours after arrival, often the hardest transfer of the stay for the patient and the family watching it. With two owned mattresses, the nurse can place a high-risk patient on the right surface at admission.

The Cost of Owning

Most capital requests stop at the purchase price. Owning equipment also creates costs every year for as long as it is kept. Table 1 compares the annual cost of renting with the annual cost of owning two mattresses.

Table 1

Annual Cost of Renting Versus Owning

Reading the Comparison

On an annual basis, owning two mattresses saves about $8,300 a year, including depreciation. The overflow estimate comes from this year's rental log: on 40 of the 280 rental days, three or more patients needed a specialty surface at the same time, so the unit would still rent on those days. Maintenance is a manufacturer contract that covers pump inspection and repair. Replacement covers are needed about every two years because cleaning between patients wears them.

The cash payback, comparing the $12,400 purchase with the cash saved each year, excluding depreciation because it is not a cash cost, is about 14 months: rentals, maintenance and covers fall from $14,000 to $3,650 a year, a cash saving of about $10,350. Over the six-year life, the cumulative cash saving is about $62,100 against a $12,400 purchase.

Two costs are absorbed without new spending, and neither was left out of the comparison by accident. Cleaning between patients is done by environmental services under existing procedures, and the mattresses will be stored in the clean utility room, which has space since the unit reorganized it last year.

Risks

If the unit's need for specialty surfaces fell sharply, the mattresses could sit unused while depreciation continued. That is unlikely: a third of the unit's patients arrive with pressure injuries or high risk, and volume is rising. If a pump fails, the maintenance contract provides a loaner within 24 hours. If the unit expands to 14 beds as proposed separately, the overflow estimate would rise, but so would the savings, because more patients would use owned rather than rented mattresses.

Fit With the Fiscal Cycle

The request is timed to the minor capital pool's quarterly review so that the mattresses arrive before next fiscal year, when the unit's operating budget no longer includes a rental line. If the request is not approved, the operating budget will need about $14,000 restored for rentals. Financial management texts for nurse managers recommend that capital requests show the effect on the operating budget as well as the capital budget, since the two are decided by different committees (Finkler et al., 2013). This request shows both: $12,400 from the capital pool, and an operating budget that is about $10,350 a year lower in cash terms as a result. If the committee prefers to wait for the annual capital cycle in October, the unit will need to carry rentals for another nine months, costing about $10,500, most of the purchase price.

References

European Pressure Ulcer Advisory Panel, National Pressure Injury Advisory Panel, & Pan Pacific Pressure Injury Alliance. (2019). Prevention and treatment of pressure ulcers/injuries: Clinical practice guideline (3rd ed.). EPUAP/NPIAP/PPPIA.

Finkler, S. A., Jones, C. B., & Kovner, C. T. (2013). Financial management for nurse managers and executives (4th ed.). Elsevier.

McInnes, E., Jammali-Blasi, A., Bell-Syer, S. E. M., Dumville, J. C., Middleton, V., & Cullum, N. (2015). Support surfaces for pressure ulcer prevention. Cochrane Database of Systematic Reviews, 2015(9), Article CD001735. https://doi.org/10.1002/14651858.CD001735.pub5