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Why Healthcare Finance Is Important to Nurses

In a 2010 report on the future of nursing, the Institute of Medicine — now known as the National Academy of Medicine — set forth specific goals for the nursing field. A primary goal was to grow the number of nurses with baccalaureate degrees.

An additional focus was on promoting leadership opportunities for nurses, ensuring they are active participants for change within healthcare. For nurses to truly have a seat at the leadership table, however, they must have knowledge and experience in areas not usually considered their domain. Specifically, nurses are being asked to broaden their education surrounding healthcare finance.

Why Are Nurses Reluctant to Embrace Finance Expertise?

Improving nurses' understanding of how and why finance is intertwined with their everyday tasks is necessary, but it's not without challenges. One obstacle is nurses simply not knowing the language of finance. Terms like market share, payor mix, and value-based purchasing are understandably foreign — and expectedly off-putting for some nurses.

Serving as a caregiver and patient advocate versus bringing "business" into the picture may seem at odds for some nurses. After all, they entered the profession because they care about people — not budgets or balance sheets.

While a valid concern, the ability to provide care cannot exist without financial considerations. Nurses play a critical role in the connection between an organization's financial health and patient care quality.

In a widely referenced article on the subject, Taking Action to Close the Nursing-Finance Gap: Learning from Success, Kathy Douglas, MHA, RN, reinforces the care-finance connection. "Nurse leaders control the largest part of a hospital labor budget, in some cases the largest part of the overall budget. The effectiveness of overseeing this responsibility can mean the difference between an organization's financial stability and financial turmoil."

A Collaborative Effort Between Nursing & Finance Departments

Much of the nursing-finance gap is attributed to the nursing profession — and lack of education dedicated to overcoming it. But, the challenge goes both ways. Finance departments may have a limited comprehension of nurses' roles and day-to-day realities. It's important that nurse managers proactively communicate the services and support they need to effectively run their units.

Al Rundio, PhD, DNP, RN, APRN, NEA-BC, FNAP, FIAAN, FAAN, provides the example in his guidebook, The Nurse Manager's Guide to Budgeting & Finance (2nd ed.), of a nurse manager in an emergency department who plans to open a fast-track portion to more efficiently accommodate minor emergencies.

"Nursing is aware of what types of services will be rendered in the next fiscal year. Finance may be aware if it is a large project that the organization has been involved with, but many times finance is not aware of every type of service that will be rendered. This type of new service will require additional staffing. All associated costs, as well as projected volume and revenue, will need to be accounted for in the budget," he explains.

Rundio also emphasizes the nurse manager's role in both defending budgets and recognizing dysfunction within budgets. In order to be able to do that, nurse managers need to fully grasp the intricacies of the budgeting process.

Value-Based Purchasing Serves As a "Platform of Ownership"

The value-based purchasing (VBP) program, part of the Medicare payment system, was initiated to improve the performance of healthcare providers. It shifted reimbursement from a volume model to a quality-of-care model. So, instead of basing payments on how much care a healthcare organization or individual provider dispensed, it assesses how well they did it — manifested by patient outcomes and experiences.

While financial at its core, VBP is a good example of how to bridge the gap between nurses' concepts of care and business. It establishes a sense of ownership in how the caregiver role directly influences financial outcomes. Nurses of all ranks and positions should be encouraged to consider themselves vital players in maximizing VBP outcomes.

Without Nurses' Perspective, Healthcare Organizations Are Shortchanging Themselves

As the Nurses on Boards Coalition states, "Nurses represent the largest segment of the healthcare workforce, are considered the most trustworthy of all professions, and play a huge role on the frontlines of care in our schools, hospitals, community health centers, long-term care facilities, and other places. Their perspective and influence must be felt more at decision-making tables."

Without perspective from nursing, healthcare organizations are literally and figuratively shortchanged. Providing nurses opportunities to expand their knowledge surrounding healthcare finance ensures organizations can optimize both operational and financial outcomes.

Learn more about Mississippi College's online RN to BSN program


Sources:

HealthLeaders: The Future of Nursing Report: Where Are We Now?

Nursing Management: Do You Speak Finance?

Semantic Scholar: Taking Action to Close the Nursing-Finance Gap: Learning From Success

Reflections on Nursing Leadership: Budget Development for Nurse Managers

CMS.gov: Hospital Value-Based Purchasing


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