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Financial Management in Nursing

Financial management in nursing.

Nurses need to be knowledgeable in a variety of areas. Nurse managers, leaders and administrators, however, need expertise beyond clinical care. As revenues grow more dependent on value and quality measures, nursing administrators must foster a deeper understanding of how healthcare facilities manage their finances. Nurses enrolled in the Master of Science in Nursing Administration (MSN) program at the University of Texas at Arlington will explore the fundamentals of financial management.

Finance Basics

While many nurses may understand healthcare finance in a general sense, managing the nuances of a facility’s finances has typically been a job for top executives and board members. However, as revenues have increasingly started to depend on patient satisfaction and quality scores, nurse leaders are finding that they must explore this topic as well.

In addition to clinical practice, nurse administrators must also manage staffing, employee and patient satisfaction, safety, quality and budgeting. The bulk of this knowledge once came simply through on-the-job training following a promotion into leadership. However, online MSN in Nursing Administration programs have started to incorporate financial management coursework to ensure that nurses entering leadership positons have the skills they need beforehand.

Managing Budgets

Nurse administrators may be responsible for an annual operating budget for their units and making adjustments throughout the year. They may have to determine the revenue their unit generates, the cost of the supplies and medication it uses, and its staffing expenses. Properly identifying such costs can be helpful in calculating the cost per patient, which, in turn, can improve future resource allocation.

Preparing for Fluctuation

Market share and payer mix are two additional metrics that can influence revenues and expenses. Market share refers to the number of admissions — or perhaps the number of specific procedures completed — compared to competitors in the same area. Payer mix evaluates the percentages and types of insurance that provide reimbursements for patient care. Since reimbursements vary per payer contract, revenues may fluctuate substantially. Nurse managers monitor this data to predict fluctuations, and they take measures to prepare for shortfalls.

Staffing and Quality

Operating budgets and associated metrics play integral roles in forecasting staffing needs. Upon review of significant budget variances, such as an increase in unit admissions, nurse administrators may need to make staffing adjustments. This can ensure that staffing meets patient needs, ideally improving patient satisfaction and quality scores — and, ultimately, leading to higher revenues.

Quality and Value Payments

As more payers move to value-based reimbursements, quality metrics become increasingly important to organizational revenues. Medicare, one the largest healthcare services payers in the United States, with more than 55 million enrollees, anticipates that 90 percent of Medicare payments will depend on quality or value by the end of 2018. In order to maximize reimbursements, nurse leaders must provide the highest quality of services while using the most cost-effective resource allocation. Incorporating the concepts of financial management can simplify that process.

Fostering Financial Management

Although finance was once the purview of hospital committees and top executives, nurse managers are now finding that financial knowledge is essential. They must align their units’ responsibilities and resources with the goals and financial resources of the organization. As a result, some online MSN in Nursing Administration programs address the fundamentals of financial management to equip nurses with the knowledge they need to transition into nursing leadership roles.

Learn more about the UTA online MSN in Nursing Administration program.


Sources:

Better, Smarter, Healthier: In historic announcement, HHS sets clear goals and timeline for shifting Medicare reimbursements from volume to value. (2015, January 26). Archive-It

Muller, R., & Karsten, M. (2012, March). Do you speak finance? Nursing Management: The Journal of Excellence in Nursing Leadership

On its 50th anniversary, more than 55 million Americans covered by Medicare. (2015, July 28). The Centers for Medicare & Medicaid Services


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