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).
Budgetary Forecasting
Again, forecasting is dependent...
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