When you started your nursing career, you were likely focused on learning how to care for patients. Financial management and administrative skills were not part of your training; they were someone else’s job.
As you advance, you will encounter both. Nursing has evolved over the years and it has become critical for nurse managers to gain financial and management skills.
A nurse manager is a senior figure within any healthcare setting, and one of their main responsibilities is allocating resources and making sure patient services are delivered efficiently.
Today’s nurse manager courses routinely include financial management. If you enroll for an online DNP, for example, one of the units you’ll cover is healthcare finance and economics. You will learn about the appropriate allocation of resources within a clinical setting and how to manage funds efficiently while making sure that patients get the best possible care. You will also learn how to create departmental budgets, cost-cutting in healthcare, and financial problems that affect healthcare delivery.
Why financial management for nurses?
Healthcare institutions are like any other business entity. They need resources to meet their mandate of delivering treatment and care to patients. Nurse managers should understand financial management as it helps them balance patient care with available resources.
Especially important is reimbursement. Most patients in America are insured, and if hospitals don’t coordinate seamlessly to ensure reimbursement, they soon find themselves short of funds. The quality of nursing offered directly correlates with how much money is available.
The smart financial approach is to make sure that reimbursements are made on time and costs are kept low; this frees up money that can be used to improve patient care.
Hospital bankruptcies are on the rise in America. According to one report, although Chapter 11 filings decreased by 53% across other businesses, they rose by 305% for hospitals. Most of those that filed for bankruptcy were in rural America.
Part of the distress can be attributed to the Covid pandemic, but some of it is due to poor financial management. Nurse managers can help fill in gaps. They have a unique understanding of patient care, and with the right type of financial management education, they learn how to spot and correct problems before they happen.
A financially adept nurse manager works with relevant departments to keep their institution financially afloat. They take the time to understand the unique financial risk factors for their institution and take steps to mitigate them before they occur.
Basics of financial management in nursing
During the first year of your online DNP, you’ll learn the basics of financial management. These courses introduce you to the world of finance for healthcare. They are not designed to make a CPA or CFO out of you, but rather impart the basic skills that you need to help you manage resources.
- Managing budgets
After you qualify and are employed as a nurse manager, you’ll be responsible for the operating budget for your unit (remember you’ll be in charge of all nurses).
You will have to look at how much revenue it generates and compare it to the annual or biannual costs of medicines and supplies, staffing expenses, and other expenditures.
You will also learn how to calculate the cost per patient so that you can allocate resources properly in the future.
- Understanding revenue fluctuations
These are usually caused by market share and payer mix. Market share refers to the number of admissions your hospital completes compared to others in the same area.
The more the better; it means that you can attract more patients, therefore generating more revenue.
Payer mix refers to the types of insurance companies that compensate you for patient treatment and care. Reimbursements are not uniform across insurance companies, and you may find the differences affect revenues significantly.
If you understand the payer mix, you can take the necessary steps to have a high number of companies that compensate well.
- Staffing vs. quality of patient care
One of the biggest expenditures in your department will be staffing. Good nurses need to be well compensated or they will seek greener pastures.
You also need to be careful about staff numbers; too many nurses and you have a big budget, but too few and you may not have enough nurses during emergencies.
It is a delicate balance, and you will learn how to do it in your online DNP course.
- How to meet financial goals
Hospitals that want to deliver quality care must find ways to generate revenue. They may buy up smaller practices, add to the variety of specialists, buy new diagnosis and treatment equipment, and sell off assets to raise capital.
All these are financial goals, and as a nurse manager, you need to be included in the decision-making process. You should be able to come up with ideas about how the hospital can meet its financial goals.
- Managing the cost of treatment
This is one of the biggest challenges facing healthcare financial managers. They want to do their best for their patients, but at the same time, they are restricted by their budgets.
Often, nurses find themselves at odds with financial managers because they request expensive patient treatments.
You should learn how to provide the best patient care with whatever resources you have at hand. Work with other administrators to find out how you can provide cost-effective patient care solutions.
- Evaluation and planning
As a nurse manager, one of your roles will be to evaluate the resources you have at hand and use them to plan for the future.
You may predict, for example, that an upcoming flu season will see an uptake in admissions and ER visitors. How can you use that knowledge to plan for the future?
Such knowledge allows you to plan not just for the short term but for the long term as well.
- Financing
As part of senior management, you will be involved in looking for short-term and long-term ways to raise money for your hospital. This may involve fundraising and applying for loans, seeking out grants, investing hospital funds and coming up with efficient ways to manage hospital revenue.
- Preventing and managing conditions that are expensive to treat
The sicker a patient is, the more it costs to treat them. This unique role requires nurse managers to work with patients and other hospital staff to make sure that patients are treated in a timely way. It is also the job of the nurse manager to prevent illness whenever possible.
Nurses, for example, should be properly equipped with gloves and masks for handling patients. If they don’t have the right PPE, they may catch something from a patient and pass it on to other nurses and doctors.
This is expensive; you’ll need to treat everyone who is ill, get replacement staff, and tie up equipment and other resources that should be used for treating patients.
What is the best way to become a competent financial manager in healthcare?
There are two ways: you can do an online DNP or a similar course that imparts financial skills, or you can do an MBA course.
There is an important difference between the two. If you do a DNP, you will become a senior nurse who can diagnose and treat patients alongside other doctors and nurses. The course also equips you with management skills, so you will be in charge of managing nursing staff wherever you work.
If you choose to do an MBA, you are likely going to transition from nursing into healthcare management.
Online DNP vs. in-person DNP
You may feel a bit skeptical about doing a Doctor of Nursing Practice online. How well can you learn if you never have to step into a classroom? Are online nursing courses as good as in-person classes?
Online learning has come quite far. Those who opt for online studies get the same qualifications as those who are enrolled to study on campus, but with one important difference: they enjoy the flexibility that comes with studying online. You can work and study at the same time.
However, to be a successful online student requires you to be disciplined. Carve out a section of each day to study, do assignments, and take part in discussions with other students.
Look for a course that offers clinical placement support. This is an important part of your course. It imparts practical skills and exposes you to the various tasks of a nurse manager. The college will secure placement on your behalf and assign you a coordinator to help you complete the placement.
Choosing the right university is critical. Beeinfo.org has excellent tips on how to choose a nursing program online.
Conclusion
Financial management skills have become vital for nurse managers. They are part of the curriculum of many postgraduate nursing courses, and they teach how to run a financially sound healthcare practice.
An online DNP helps make you competent in financial management. Apart from teaching you about financial management, you also learn clinical nursing practice, leadership, business strategy, data management, and healthcare technology.
