Developing Financial Savvy as Nurse Leaders

By Rose O. Sherman, EdD, RN, FAAN

Many of my graduate students tell me that their weakest leadership area is the financial management of their units and departments.  At the same time when I ask executive nurse leaders what they look for in candidates, financial savvy is high on the list.  A critical care director who manages multiple units recently told me that she realized that to gain credibility in her organization, she had to own her budget.  “At first, I just kept saying that budgeting was my weak area…..my CNO stopped me in my tracks one day and said it is a major part of your role so you need to learn it.  Your responsibility is the management of these units and that includes financial management.” 

Step 1 – Understand the Bigger Picture

Payment for health care in the United States is a complex web that includes many different insurance companies, governments and out of pocket payments by consumers.  More than half of healthcare is paid for by private insurers or individuals.  The Federal government is the single biggest payer with involvement in Medicare, Medicaid and the Department of Veterans Affairs Health system.   The recent debates on health care reform have focused on how costs can be reduced.   Historically, providers and hospitals have been paid by the volume of care given. This system changes with the Affordable Care Act.  Payment incentives are quickly moving away from volume toward a greater focus on value of services and health outcomes, including fewer hospitalizations.

As a nurse leader, you should know what the case payer mix of patients are in your healthcare agency and what any changes in reimbursement could mean to your organization can unit.  As an example this year more than 2000 hospitals in the United States are losing Medicare reimbursement dollars because too many of their patients are being readmitted to the hospital within 30 days of discharge.   There are also now certain types of patient situations that are described as “never events”.  These are things that should not happen while a patient is hospitalized, such as a pressure ulcer, patient falls or hospital acquired infections. If these never events happen to a patient, the hospital will no longer be reimbursed for any of the associated care.    Chief Financial Officers are generally happy to arrange sessions with front-line managers to discuss these and other budget issues.  A second good source of information is Hospitals and Health Networks published by Health Forum and the official publication of the American Hospital Association.  Free digital and magazine subscriptions are available for nurse leaders. http://www.hhnmag.com/hhnmag/index.jsp    Finally, FierceHealthcare is a daily newsletter that is a leading source of healthcare management news.  This is an excellent resource for nurse leaders on a wide range of healthcare leadership topics.  Subscriptions are free.http://www.fiercehealthcare.com/