NUR5113 Module 4 capital request and business case example

Six Rooms That Need a Person in the Doorway: A Capital Request to Make the Older Wing of a Behavioral Health Unit Ligature-Resistant, With Payback and Net Present Value

Student Name

American College of Education

NUR5113: Management of Financial Resources in Nursing

Module 4 Assignment

Instructor Name

May 25, 2027

The Need

The behavioral health unit analyzed in the earlier modules, a 20-bed composite for adults, has two wings. The newer wing's 14 beds were renovated five years ago with ligature-resistant fixtures: doors with sensors that alarm when weight is placed on them, sloped tops on cabinets, recessed lighting and bathroom fixtures that cannot bear weight. The older wing's six beds, in three double rooms and their bathrooms, still have standard door hinges, lever handles, towel bars and exposed plumbing. When a patient at high risk of suicide must be placed in the older wing because the newer wing is full, the unit orders one-to-one observation for environmental reasons alone, and a mental health technician sits at the door until a bed opens in the safe wing.

That practice is safe but expensive, and it hides a regulatory exposure. The Joint Commission expects psychiatric hospitals and psychiatric units in general hospitals to provide an environment that minimizes ligature risk, and it allows staffing measures such as observation only as temporary mitigation while such risks are corrected (The Joint Commission, 2019). The older wing has been under temporary mitigation for five years.

Why the Risk Is Real

Inpatient suicide is rare, but when it happens it most often involves the physical environment. Williams et al. (2018) estimated that between 48.5 and 64.9 suicides occur in United States hospitals each year, most of them among psychiatric inpatients, and that hanging was the method in about 70% of cases in both of the national databases they examined. The fixtures in the older wing are exactly the kind of anchor points that make hanging possible.

Environmental correction works. After the Veterans Health Administration required its inpatient mental health units to use a standardized environment of care checklist and to remove the hazards it identified, the rate of suicide on those units fell from 4.2 to 0.74 per 100,000 admissions, and the reduction held for the seven years studied (Watts et al., 2017). An earlier analysis of the same program had found the reduction held when the rate was measured per bed day of care as well as per admission (Watts et al., 2012). Observation places a person between the patient and the hazard; the retrofit removes the hazard, and it does not take a break, change shift or look away.

The Investment and the Alternatives

The hospital's facilities department and a vendor specializing in behavioral health renovations estimate the cost at $486,000, including three weight-sensing door systems, replacement of all bathroom fixtures and hardware, new ceilings and lighting, and the temporary closure of the six beds for eight weeks during construction. The lost revenue from that closure, about 290 patient days at the unit's blended rate, is included in the estimate.

Three alternatives were considered. Continuing the current practice costs nothing in capital but carries the observation cost indefinitely and leaves the regulatory gap open. Closing the older wing permanently would remove the risk but cut the unit's capacity by 30% at a time when the emergency department is boarding psychiatric patients. A partial retrofit replacing only bathroom fixtures, at about $190,000, would leave the doors and hinges, which are among the most common anchor points, unchanged, so observation for environmental reasons would still be required.

The Return

The main financial return is the observation hours the retrofit would no longer require. The unit's observation log shows that 2,100 of last year's 9,860 observation hours were ordered only because a high-risk patient was placed in the older wing. Because most of those hours were filled through overtime, their average cost, including benefits and the overtime premium, was $33.60 an hour. Eliminating them would save about $70,560 a year.

At that saving, the simple payback period is 6.9 years: $486,000 divided by $70,560. A net present value calculation accounts for the fact that savings received in later years are worth less than money spent today. Using the hospital's required discount rate of 5% and a ten-year life for the fixtures, the present value of ten annual savings of $70,560 is about $544,800. Taking away the $486,000 spent at the start leaves roughly $58,800 in today's dollars. The project therefore returns slightly more than it costs over its life on observation savings alone.

The result is sensitive to the savings estimate. If the retrofit saved only 1,400 hours a year, for example because the newer wing fills less often than last year, annual savings would fall to $47,040 and the net present value would become negative, about minus $122,800. The case therefore does not rest on the financial return alone.

Benefits That Cannot Be Priced

Several benefits sit outside the calculation. The retrofit closes a regulatory gap that could produce a finding at the next accreditation survey. It frees mental health technicians from observation posts for therapeutic work with patients, the kind of engagement that the Safewards model links with less conflict on psychiatric wards. It allows the unit to place any patient in any bed, which shortens the time high-risk patients wait in the emergency department. And it reduces the probability of an event that no hospital wants to price: a patient's death by hanging on a unit designed to keep patients safe.

Carrying Out the Work Safely

A renovation on a locked psychiatric unit carries its own risks, and the plan addresses them before approval rather than after. Construction will take place behind a solid temporary wall with a separate entrance for workers, so that no patient can reach tools, cords or debris. Every contractor will be escorted and will account for tools at the start and end of each day, and the unit's charge nurse will walk the corridor side of the barrier each shift. The six beds will close together rather than one room at a time, which lengthens the closure but avoids the far greater risk of patients living beside an active worksite. Before the rooms reopen, a team including a nurse, a psychiatrist, a facilities engineer and a patient safety specialist will inspect them with a structured environmental risk checklist of the kind the Veterans Health Administration program used, and any remaining hazard will be corrected before the first patient is admitted. The unit will repeat that inspection every year for the whole unit, not only the renovated wing, because ligature risks reappear as furniture, equipment and habits change. The cost of the annual inspection is staff time only and is already part of the unit's safety program.

The Request

The nursing director requests $486,000 from next year's capital budget to retrofit the older wing, with construction scheduled for the lowest-census months of the year. After completion, the unit will report observation hours ordered for environmental reasons, which should fall to zero, and total observation hours against the budget each month, so the capital committee can see whether the savings on which the case rests have appeared.

References

The Joint Commission. (2019). R3 report: National patient safety goal for suicide prevention (Issue 18). https://www.jointcommission.org/standards/r3-report/r3-report-issue-18-national-patient-safety-goal-for-suicide-prevention/

Watts, B. V., Shiner, B., Young-Xu, Y., & Mills, P. D. (2017). Sustained effectiveness of the mental health environment of care checklist to decrease inpatient suicide. Psychiatric Services, 68(4), 405-407. https://doi.org/10.1176/appi.ps.201600080

Watts, B. V., Young-Xu, Y., Mills, P. D., DeRosier, J. M., Kemp, J., Shiner, B., & Duncan, W. E. (2012). Examination of the effectiveness of the mental health environment of care checklist in reducing suicide on inpatient mental health units. Archives of General Psychiatry, 69(6), 588-592. https://doi.org/10.1001/archgenpsychiatry.2011.1514

Williams, S. C., Schmaltz, S. P., Castro, G. M., & Baker, D. W. (2018). Incidence and method of suicide in hospitals in the United States. The Joint Commission Journal on Quality and Patient Safety, 44(11), 643-650. https://doi.org/10.1016/j.jcjq.2018.08.002