Financial Management for Nurse Managers
Published: 06 January 2018
Published: 06 January 2018
When you first start nursing, you probably don't consider learning about budgeting and finances to be a priority. Over your career, however, you may find that these skills become increasingly important.
Whilst the benefits of humanistic and commitment-based management are significant, it cannot be denied that having an understanding of finances and budgets is an important healthcare manager skill.
The Department of Education's website, Job Outlook, states that a nurse manager is responsible for overseeing resources such as nurses and finances. A nurse manager's aim is to promote safety, facilitate cost-efficient care, and ‘monitor quality, clinical standards and professional development of nurses' (Job Outlook n.d.).
(Job Outlook n.d.)
Iacocca (2017) claims that there are four forms of efficiency:
On a basic level, efficiency can be interpreted as being achieved when there is less input than output. This can, unfortunately, lead to issues such as insufficient staffing and over-working of nurses. Furthermore, this may lead to skills mix issues in which cheaper staff members are rostered onto shifts to save money instead of putting on more expensive staff members such as registered nurses.
These issues raise concerns that if managers are focused on short-term economics as opposed to long-term vision fulfilment or humanistic management, the organisation may have short-term profits but long-term crises. The suggested crises could involve, for example, the nursing staff feeling burnt-out, multiple staff resigning at once, and/or the fall of accountable cultures leading to dissatisfied stakeholders and limited client business.
Penner (2017) states that health professionals face great challenges regarding the provision of excellent care at reasonable costs.
The literature regarding efficiency makes it clear that the best financial resource a nurse manager can have is a high-quality nurse (Iacocca 2017). Evidently, a competent and productive nurse appears to be more cost-efficient than an incompetent, procrastinating one. Likewise, it can be predicted that a nursing team that works collaboratively may be more efficient than a team that is dysfunctional and non-collaborative.
Furthermore, from the literature in this article, it seems that it would be cost-efficient to recruit nursing graduates and staff members that:
Titzer et al. (2014) highlight the importance of nurse managers also having effective succession planning in place. They convey that succession planning is lacking in nursing, despite there being clear benefits for this practice. Resources (such as financial) must be allocated to develop a pipeline of future nursing leaders and ‘develop internal human capital’. This human capital may decrease management turnover rates and replacement costs, thus improving the financial management of the workplace.
Iacocca (2017) states that in the United States, for example, healthcare is expected to become the key employment sector by 2024. The ageing population and retirement of health professionals can be linked to healthcare industry expectations for growth. As nurses are the key employees of the health sectors in the US (Iacocca 2017) and Australia (AIHW 2017), it is clear to see that nursing is highly influential upon the costs and savings of healthcare. Therefore, this also exemplifies that nurse managers must treat nurses as their most valuable human resource. This can involve applying a humanistic management style to improve the commitment, productivity, quality of care and job satisfaction of nurses.
Continuous professional development can also be considered worthy of resources. This is due to the trade-off that staff nurses may increase their cost-efficiency (e.g. better clinical decision-making, fewer errors, improved collaboration and skill mastery leading to time-efficiency). The AIHW (2017) reports that 305,000 people are employed in nursing or midwifery, working for 33.5 hours per week on average. It can be imagined that further developing the nursing workforce could dramatically increase cost-efficiency.
Cosgrove et al. (2012) report that ‘At Intermountain, an evidence-based approach to labour and delivery resulted in $50 million in savings and a 26-percentage-point drop in inappropriate elective inductions of labour since 2001’. They also state that shared decision-making can improve cost-efficiency via, for example, reducing the length of hospital stays, and improving communication and nursing productivity.
It is also essential to look at the potential trade-off of implementing innovations. In 10 years, the Connected Cardiac Care Program saved $10 million and dropped hospital readmissions for clients with heart failure by 51% (Cosgrove et al. 2012). Finally, Cosgrove et al. (2012) acknowledge that cost-efficiency stems from delivering care that matches the needs of the community, and the individual client.