Understanding the calculation for a full-time equivalent will help you know how many staff are required to meet the needs of your department.
This article first appeared in HCPro's Nurse Leader Insider, a sibling publication of HealthLeaders.
Developing and monitoring the staffing budget is one of the most, if not the most, difficult responsibilities of the nurse leader. Labor consumes the majority of the financial resources of the organization. Therefore, everyone must act responsibly in order to ensure the financial health of the organization. But how do you know how many staff you need on your position control in order to meet the needs of the department (not too many, and not too few)? That is a $100,000 question!
As a nurse leader, you are expected to know what your average daily census is for your department and staff. Flexing your staffing levels to the volume that you have is key to your department being productive. You may be asking yourself, where does patient safety and quality care come into consideration, instead of just dollars? There are also several evidence-based leadership studies that prove the higher the RN ratio to patient, the lower the adverse outcomes for the patients. The successful nurse leader learns to find the right balance between quality, safety, staff satisfaction, and fiscal responsibility in providing the most effective staffing plan.
What's a Full-Time Equivalent?
The first step to understanding the staffing budget is to understand the calculation for an FTE. An FTE is an employee, or a combination of employees, who work full time, which would be 80 hours per 14-day pay period or for a total of 2,080 hours per year. You can calculate how much any one person consumes of your budgeted FTE allocation by using the following equation:
Hours per day the employee works × Days per pay period the employee works / 80 hours (number of hours an FTE works in a 14-day pay period)
Example:
8 hours per day × 6 days per pay period = 48 hours per pay period divided by 80 hours/FTE = 0.6 FTE
12 hours/day × 6 days/pay period = 72 hours/pay period divided by 80 hours/FTE = 0.9 FTE
Editor's note: This is a book excerpt adapted from The Nurse Leader's Guide to Business Skills: Strategies for Optimizing Financial Performance by Pamela Hunt, BS, MSN, RN, and Deborah Laughon, RN, BSN, MS, DBA, CCRN.
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