Posted: March 18th, 2023
Financial Management for Nurses
The modern healthcare industry is extremely labor intensive. To be effective, a modern nurse manager must balance patient care vs. staffing, procedures vs. patient load, and fiscal budgets in line with appropriate levels of care. Nurses are expected not only to understand the organization’s fiscal concerns, but to manage them as well. While fiscal dollars spent on human resource management are the larger portion of the health care organization’s budget, the use of a cogent and powerful budgetary management tool can help save thousands on an aggregate basis.
The Budgeting Process Cycle
Any budget is essentially a planning process that focuses on expenses and activities of the organization over a given period of time. The budget is designed to help plan for resource allocation and to control expenses when possible, to schedule adjustments or larger capital purchases, and to be used as an operational plan from which to work. To adequately organize a budget, the organization must have clear lines of authority as to responsibility. Managerial support is crucial, as is nursing input. The budget processing cycle is dependent upon the organization and the breadth of responsibility the nurse has. A floor charge nurse might receive a sum from the Head of Nursing, while the Hospital’s Oncology Department might sublet some of their budget to a Nurse Manager (Finkler, 2007).
In general, the standard for budgeting for nurses is known as Hours Per Patient Day, or HPPD. Being a relatively general measurement, HPPD can be broken down further into the micro (e.g. minutes in a post-operative care unit) or as needed based on the typical patient care unit. Variances do, of course occur within any organization: human resource issues (illnesses, absences, partial-performance due to injury; administrative time and meetings; core patient populations, specific trauma or emergency needs, or other non-foreseeable, but regular issues that impact time) (Redman, 2003). HPPD is calculated through input from the finance or business department. The nurse manager needs to know the number of productive hours given to their department, with the breakdown of hours charged for vacation, sick time, and other utilized, but non-medically productive, hours. Additionally, the Average Daily Census (ADC) is used, which is the number of patients (usually at midnight) multiplied by the budget standard, equally the number of care hours budgeted per day. HPPD is thus calculated by taking the productive hours of the time frame divided by the average daily census for the same time frame. In this manner, the HPPD may be calculated for any time, making it a better comparative average when dealing with departments with disparate types of patient care. So, we have:
(Productive Hours For X Time)/(Average Daily Census For X Time) = HPPD (Hall, ed. 2005, pp. 28-9).
Productive and Non-Productive Time
Productivity is measured differently depending on the job classification. Some healthcare jobs, lab technicians, for instance, might have a more quantitative format of tests/hour or tests/shift. An accounting manager might have x number of files or billables/payables per shift. For the nurse, though, most experts say the best way to increase their productivity is to increase the amount of time they spend interacting and caring for patients. Patients do better clinically when more nursing hours are devoted to them, and now that we know greater nursing hours per patient day are statistically linked with lower rates of pneumonia, blood-stream infections, and other complications, it makes sense to understand the nurse’s productive role in relation to patient care (Anderson, 2007). For the nurse manager, hours worked and available for patient care are categorized as productive time, while benefit time like vacation, sick leave, and education is considered non-productive time. Direct care is part of productive time as well, that is hands-on care with or for the patient. Indirect care is time spent on activities that are patient related but not done directly to or with the patient (charting, documentation, consulting, following up on issues, etc.) (Kelly, p. 215).
Again, forecasting is dependent upon the scope of the budget, but does have some commonalities regardless of the size of the unit or project. Forecasting budgets requires information: past data, productivity ratios, amount of funding, amount of staff, projected growth or reduction of processes, and actual skill sets of staff. For example, if a unit has a shortage of nurses and has a high budgetary expense for overtime or per diem nurses, then the average cost can be brought down by hiring and eliminating overtime. Forecasting formulas are typically based on historical information, though, with projections based on percentage change. Forecasting is both qualitative and quantitative. If trends are observed, for instance, then that trend should be projected into the future. We must also remember that forecasting is not an exact science in any field, there are too many variables that cannot always be predicted (staff turnover, major environmental accidents, equipment malfunctions, etc.). However, it is typically safe to say that the demographics of contemporary America show that the aging population is trending towards more health care need, more nursing advocacy and care, and greater stakeholder expectations of that care (Finkler, et.al., 2007, Chapter 21).
Variance analysis can be statistically complex, but in general it is a way to look at data and analyze the effectiveness of budgets, schedules, and productivity. Variance, in this case, are issues that are unpredictable and unplanned that have an effect on the outcome of productivity. For instance, variance analysis would look at the hours of care per patient day by acuity level and then look at the difference between actual and budgeted caregiving hours. If the actual caregiving hours are less than the budged amount, there is a favorable variance; if less, then a negative variance. Variance analysis helps the nurse manager understand the impact of rate, volume and efficiency in the health care process. One suggested formula for finding the efficiency variance is the following: EV = (AH-BH) x BR x AV.
This illustrates also the importance of budgeting and forecasting so the efficiency model will be more accurate (Brown, ed., 1992, p. 20).
Productivity should not simply be defined in fiscal terms for healthcare. As noted, there are short-term and long-term costs and benefits. In the short-term (say the weekly budget), x nurses might spend more than the budgeted time with a particularly sensitive patient issue. However, in the long-term, that patient’s stay, quality of service, and indeed likelihood of quality care and advocacy, increases — which decreases costs later. Comparisons help nurse managers understand productivity by comparing budget forecasts to reality and then planning accordingly. Productivity is also established by maintaining a culture of accountability — variance is part of the life in healthcare, but open and honest communication is important to mitigate negative results. Looking at expenses appropriate helps productivity; why waste time analyzing the use of 15 copies that an employee used for a personal project rather than managing waste of expensive supplies or materials within patient care? However, regular monitoring of budgets, not micromanaging, but regular and fair monitoring can call attention to issues prior to any significant problems (Clark, 2005).
Everyone in the healthcare industry is affected by rising costs and rising expectations from stakeholders regarding care. Budgeting for productivity does not have to be complicated, nor does it have to be extremely detailed. The more complex it is the more time it takes away from patient care. Realistic productivity management takes into account monitoring and realistic benchmarks; not mandates of 5 minutes per patient. Managers must be accountable so that waste does not occur, but by the same token, coming in onto budget while continuing to provide excellent care is a more balanced approach that should be rewarded. In addition, consider the dimensions of quality (cycle time through tests, x-rays, etc.) clinical effectiveness (recidivism, falls, infections), and patient satisfaction. Working together, a more proactive and congenial model can work wonders in a hospital unit, it simply takes cooperation from all sides (Productivity Measures, 2008).
Productivity Measures in Need of an Image Overhaul. (July-August 2008). The Business of Caring. 4 (7): 1-15.
Anderson, S. (2007). Deadly Consequences: The Hidden Impact of Nursing Shortages. National Foundation for American Policy. Retrieved from: http://www.nfap.com/pdf/0709deadlyconsequences.pdf
Brown, M., ed. (1992). Nursing Management: Issues and Ideas. Gaithersburg, MD: Aspen Publishers.
Clark, J. (2005). Improving hospital budgeting and accountability: A best practice approach. Healthcare Finance Management. 59 (7): 78-83.
Finkler, S., et al. (2007). Financial Management for Nurse Managers and Executives. St. Louis, MO: Elsevier.
Hall, L., ed. (2005). Quality Work Environments for Nurse and Patient Safety. Sudbury, MA: Jones and Bartlett.
Kelly, P. (2010). Essentials of Nursing Leadership and Management. Clifton Park, NY: Delmar Publications.
Where: AR — Actual average caregiving rate per hour is found by diving the actual caregiving hours into the total actual wages paid. BR — Budged average caregiving rate per hour is found by diving the budgeted caregiving hours into the total budged wages. AV — Actual volume of patient days; BV — Budgeted volume is budged patient days; AH actual hours of caregiving, and BH — Budgeted caregiving hours.
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.
Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.
While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.
Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.
In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.
Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.
We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!
We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.
Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.
We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.
Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.
There is a very low likelihood that you won’t like the paper.
Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.
We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.
You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.
We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.
PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!
Place an order in 3 easy steps. Takes less than 5 mins.