Financial Management Skills for Nurse Managers

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Only their arms and hands are visible as they point to sections of a graphic. " class="landscape-image"> </div> <div class="blog-content-container"> <div class="blog-content-wrapper"> <aside class="content-links-container"> <h3 class="links-title">In This Post</h3> <ul class="links-list tocLinks"> <li class="links-item"> <a href="#Importance" class="link active">The Importance of Budgeting in Nursing</a> </li> <li class="links-item"> <a href="#Drains" class="link">Identifying Budget Drains</a> </li> <li class="links-item"> <a href="#Communicating" class="link">Communicating Financial Expectations and Limitations</a> </li> <li class="links-item"> <a href="#Feedback" class="link">Providing Feedback on Budget Utilization</a> </li> <li class="links-item"> <a href="#Emerging" class="link">Understanding Emerging Issues in Financial Reimbursement</a> </li> <li class="links-item"> <a href="#Courses" class="link">Taking Financial Education Courses</a> </li> </ul> </aside> <div class="info-wrapper"> <div class="blog-content"> <div class="top-buttons-wrapper"> <a href="/content-hub/" class="top-button"> <svg xmlns="http://www.w3.org/2000/svg" width="16" height="16" fill="currentColor" class="bi bi-chevron-left" viewBox="0 0 16 16"> <path fill-rule="evenodd" d="M11.354 1.646a.5.5 0 0 1 0 .708L5.707 8l5.647 5.646a.5.5 0 0 1-.708.708l-6-6a.5.5 0 0 1 0-.708l6-6a.5.5 0 0 1 .708 0z"/> </svg> <span class="top-button-text">Content Hub</span> </a> <div class="sharethis-inline-share-buttons" data-url="https://www.nursingworld.org/content-hub/resources/nursing-leadership/nursing-financial-management/" data-title="Financial Management Skills for Nurse Managers"></div> </div> <h1 class="blog-title-main blog-title animate-text"> Financial Management Skills for Nurse Managers </h1> <p class="read-info blog-text"> 4 min read<text> • </text>September, 12 2023 </p> <p class="text-main">Nurse managers develop schedules, boost employee morale, and ensure patient satisfaction while aligning their units with big-picture goals. Due to rising healthcare costs, today's nurse leaders must also hone their nursing management skills in financial literacy. Learning to balance compassionate, cost-conscious, and responsible care empowers nurse managers to advocate for staff and patient needs while supporting their organization's financial goals and vision.</p> <h3 id="Importance" class="blog-title-third">The Importance of Budgeting in Nursing</h3> <p class="text-main">Nurse managers are often responsible for designing, implementing, and monitoring the budget for their department. Usually, budgets are developed annually (though the fiscal year start date may vary) and formally reviewed each quarter. Financial planning for nurses typically involves collaborating with their organization's financial department for budget considerations, approval, monitoring, and adjustments.</p> <p class="text-main">Although the specifics vary, healthcare budgets typically include operating and capital costs.</p> <h4 class="text-subtitle">Operating Budget</h4> <p class="text-main">The operating budget includes salaries and associated expenses like overtime and benefits, and new hire recruiting, onboarding, and training. These elements account for most of a department's operating budget, sometimes called a "labor budget." Daily expenses like patient care supplies also get rolled into the operating budget.</p> <p class="text-main">To correctly estimate the operating budget, the nurse manager should:</p> <ul> <li>Review budgets from past years</li> <li>Analyze ongoing trends</li> <li>Consider current needs</li> </ul> <p class="text-main">For instance, a hospital facing high turnover rates should account for increased contingent staff costs. Trends to analyze over the past few years can include patient admission levels, average length of stay, and nursing hours of care per patient day.</p> <p class="text-main">Once the nurse leader establishes a budget, they continuously monitor costs against the estimated and actual revenue to ensure their unit remains within the costs forecasted.</p> <h4 class="text-subtitle">Capital Budget</h4> <p class="text-main">Large purchases and durable goods fall under the capital budget category in nursing finance and may include high-cost medical equipment, building infrastructure changes, or technology investments. Nurse managers primarily collaborate with their finance department for capital budgeting needs. Due to the costly nature of these purchases, they may get spread out across several fiscal years' worth of budgets and involve additional approval steps.</p> <h4 class="text-subtitle">Revenue</h4> <p class="text-main">Within a hospital setting, revenue typically refers to income generated from patient care services, such as hospital admissions and outpatient visits, diagnostic tests, and surgical procedures. While nursing managers can’t control the precise overall revenue generated, they're responsible for adhering to their unit's allocated amount to ensure accuracy and alignment on the organization’s financial goals.</p> <h3 id="Drains" class="blog-title-third">Identifying Budget Drains</h3> <p class="text-main">Hospitals are evolving ecosystems. As patient care transforms, so do staff and clinical needs. Nurse leaders can identify problem areas that arise from preventable medical errors, <a href="/content-hub/resources/nursing-leadership/safety-in-nursing/">costly accidents</a>, gaps in training and professional development, <a href="/content-hub/resources/nursing-leadership/why-nurses-quit/">high staff turnover</a>, or dated technology impeding communication and <a href="/content-hub/resources/workplace/nurse-schedules-12-hour-shifts/">scheduling</a>. They can also use their <a href="/content-hub/resources/nursing-leadership/leadership-in-nursing/">leadership position</a> to propose alternative solutions to hospital executives. Advocating for these improvements can save the organization money and alleviate added pressure on staff.</p> <h3 id="Communicating" class="blog-title-third">Communicating Financial Expectations and Limitations</h3> <p class="text-main">Nurse managers often communicate the implications of budgetary changes to the team as the liaison between executives, administrators, and their staff. Throughout the fiscal year, they must clearly articulate the rationale behind any changes to the budget and its impact on outcomes for the unit.</p> <h3 id="Feedback" class="blog-title-third">Providing Feedback on Budget Utilization</h3> <p class="text-main">Nurse managers communicate directives from hospital executives to their teams. They can also use their <a href="/content-hub/resources/nursing-leadership/leadership-in-nursing/">leadership position</a> to advocate for their staff by bringing their unit's needs to the attention of executives. For example, let’s say the allocated budget for nurses is causing the nurse-to-patient staffing ratio to be consistently off-target. In that case, the nurse manager can open conversations regarding resource needs and allocation with quantifiable information and statistics.</p> <p class="text-main"><img src="/globalassets/content-hub/uat/hub-resources/financial-management-skills-for-nurse-managers/2-for-101n-financial_gettyimages-1269902345-copy_featured_thumbnail.jpg" alt="A female nurse manager is standing at the front of a conference room, and pointing to trend data on a white board which is set up behind her. Other people are seated at a conference table and listening to the presentation." width="800" height="533" /></p> <h3 id="Emerging" class="blog-title-third">Understanding Emerging Issues in Financial Reimbursement</h3> <p class="text-main">ANA is working to improve reimbursement of nursing care by fostering ongoing conversations about the nursing profession in the health care financing systems. One way to improve reimbursement is to reimagine payment and billing models and encourage the use of <a href="/news/news-releases/2023/anaenterprise-leads-rn-value-reimbursement/">National Provider Identifiers (NPIs)</a>.</p> <p class="text-main"><strong>Learn more about Direct-Reimbursement Nursing Model pilots <a href="/foundation/rninitiative/direct-reimbursement-nursing-model/">here</a></strong>.</p> <h3 id="Courses" class="blog-title-third">Taking Financial Education Courses</h3> <p class="text-main">The nursing profession is dynamic, with plenty of avenues for career growth. Taking on the responsibility of nursing finance management provides career opportunities for managers. Some nurse managers may have completed financial leadership or management courses. Others may find that their on-the-job training needs improvement to make informed, effective budgetary decisions. <a href="/continuing-education/">Continuing education</a> is an excellent starting point for registered nurses who don't have prior experience with or understanding of healthcare finance. Nurse managers may also request that hospital administrators offer additional staff education resources and tools, such as digital training courses and skill development workshops.</p> <p class="text-main">Nurse leaders with financial management and budgeting skills are better equipped to deal with cost challenges, allocate resources, and manage teams effectively. These abilities contribute to the overall well-being of their staff and patients, and the organization's financial stability.</p> <p class="text-main"> </p> <p>Images sourced from Getty Images</p> <div><div class="block c-container-block"><div class="grid-constraint"><div class="grid"><div class="c-container-block__content"><div class="block hubfeaturedproductblock"> <div class="block containerblock containerblock--heading containerblock--featured hub-featured-products"> <section class="c-container-block c-container-block--featured c-container-block--heading"> <div class="title-wrapper grid grid--center"> <div class="title-line"></div> <div clss="c-container-block__heading c-container-block__heading--lines"> <h3 class="like-title c-container-block__heading"> <span><span id="trending"> You May Also Like</span></span> </h3> </div> </div> <div class="c-container-block__content c-container-block__content--margin grid grid--flex grid--center"> <div class="like-container"> <div 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Financial Management Skills for Nurse Managers | ANA