Health Care Financial Management
Introduction
The management of finances in any healthcare institution is about the handling of the routine financial operations for the purpose of reducing the services that are ineffective, duplicate, and avoidable that increase the costs of care delivery in the organization, yet they contribute less in the provision of care to the patients.The management of finances in healthcare is essential in managing risk and money to meet the organization’s financial goals. Organized and strong plans for the management of finances in a healthcare organization help in the efficient delivery of care as they promote quality. This paper provides a discussion of the management of finances in healthcare for a nurse manager.
Variance reporting
A variance report in healthcare is a tool that gets used to measure the organization’s overall financial performance(Cleveland & Smith, 2016). It gets used in healthcare in case management and coordination of care. It is important for a nurse leader to understand variance reporting because it contains all the information about a patient from the time of admission to the time they are to be discharged including all the treatments, the general medical data, the costs of the treatment and other details with regard to the care that was provided to the patient. The nurse manager has to understand the variance so that he can involve the nursing staff in helping with the budget control costs. Variance reporting becomes a tool that is valuable as it provides evidence of the whole process that was undertaken in treating the patient and a justification of the costs that the patient is meant to pay for the care provided. It also helps the nurse leader be aware of the resource changes and the patient outcomes and finding a way to work with staff in the improvement of care quality while reducing the care costs. Variance reporting becomes a valuable tool because it facilitates quality improvement in nursing practice by helping the nurse leader in the identification of areas in the process of care delivery that need improvement. The variance report helps in the acquisition of information about the care processes that the nurse leader can use in analyzing the expenditures and identifying areas that have expenditures that are needless then eliminating them(Leger & Dunham-Taylor, 2017). This process is able to create an improvement in the processes of care delivery exponentially.
Staffing expense
Staffing is a variance that is important in budgeting, and for this reason, a nurse leader has to find ways of meeting the staffing needs in the organization as they are essential in the delivery of quality care for the patients. To meet these needs, the nurse has to identify a report that provides information that is most accurate on the essential staffing needs to avoid needless spending. Staffing happens to be the most expensive exercise in the healthcare organization. According to Van Camp &Chappy (2017), the cost of hiring a new nurse is more than 40,000 dollars, while the cost incurred in replacing a nurse can cost the organization up to 88,000 dollars. The costs can become even more costly in the process of orienting a new nurse to an area of specialty as it may require the organization to hold additional training, which can be costly depending on the type of skills that are required. The reports that have been established to be able to provide a nurse leader with valuable information regarding the staffing expense are the full-time equivalents (FTE) bi-weekly reports(Zhao, 2017). The FTE report provides a breakdown of the individual hours that have been undertaken by a nurse and also the overtime hours. The nurse leader can also use this report in tracking the needs of a particular department and the hours covered by the employees as they contain the information necessary for tracking this data. The leaders of the teams in the organization can use the FTE reports ensuring that they provide staffing that is adequate in order to reach the goal of achieving quality outcomes and enhanced care.
Contract labor
Contract labor entails hiring an independent contractor to carry out a particular task for a particular period of time, usually short term as they are not employees of the organization. They get hired for a specific task for a specified period. The need for contract labor in nursing is to achieve strategic staffing for the purpose of enhancing the care quality by meeting the staffing needs of the organization(Africa, 2017).Contract labor in nursing is more costly as the hiring costs are usually high because the organization will not be able to cater to the needs of the employee under the short term contract like the insurance needs. It will, therefore, be more expensive to be able to help the employee meet the insurance and ax needs that are not covered in the contract by the employer. An independent contractor is a business entity that is separate that provides a specific service for which the employer pays. The cost of contract labor in terms of the hourly fee that the employer pays the independent contractor is much higher than the pay for the full-time employees, in the performance of the same task, depending on the needs of the project. The reason for contract labor costing more is based on the additional charges that will be incurred that the employer would usually incur with their employees that would not be a necessity with the independent contractors. Another reason for contract labor being expensive is based on the fact they will have to pay taxes on the payment that gets received from the employer, including tax for Medicare and social security.
Cost-to-charge ratio
The cost-to-charge ratio is the ratio that exists between the expenses of the healthcare organization and their charges in the provision of care. When the cost-to-charge ratio of the hospital is closer to 1, there is little difference between the charges by the hospital and the actual costs they incurred in the delivery of care. The cost-to-charge ratio can simply be defined as the costs incurred by the hospital divided by what he hospital charges(Abualhaija, 2020). It is important for a nurse manager to understand this ratio as it provides him with sufficient information and incentive to make choices of high value for the options of care and coverage in the healthcare organization. The nurse manager can also use the ratio in evaluating the performance of the organization over time and determining the right reforms to implement for the benefit of both their patients and the organization as a whole. The nurse manager can also make use of this ratio in the enhancement of transparency and availability of data for use by the healthcare organization in the successful implementation of the reforms that are necessary for the successful functioning of the institution.
Nursing units and revenue generation
The departments of finance consider units for nursing to be not generators of revenue because the nursing staff does not directly charge or earn money. They argue that nursing staff does not generate income because their salary and other payments come directly from the healthcare organization. This is unlike the other healthcare practitioners, like the physicians who charge their own fees directly and do not depend on the healthcare organization for their salaries. I think the assessment by the departments of finance in this matter is inaccurate based on the fact that a physician is not able to successfully carry out his duties without the help of a nurse(Leger & Dunham-Taylor, 2018). Physicians often need a nurse in the performance of their roles as there are tasks that nurses are rand for that physicians are not. The nurses have the skill to properly take care of patients, and physicians cannot work without them. This clearly establishes that since physicians work with nurses, then they indirectly serve the healthcare organization.
Value-based reimbursement
To prevent loss of money in the new environment for reimbursement that is based on value, the nurse manager can take several measures to ensure payments get done on time and accurately(Dick et al., 2017). The first measure is ensuring that the claims get understood clearly. This entails knowing the claims management components and their effect on reimbursement. These components include the practices for process integrity, the services of pre-registration, the care process, the services for billing, and the administrative services. The second measure that the nurse manager can take is understanding who the stakeholders in the reimbursement process are and have an idea of how the various personnel works with regard to the patient’s billing. The nurse manager also has to acquire enough knowledge about the various federal policies that exist concerning reimbursement. The third measure that the nurse manager can take is properly managing the process of processing of the claims and have an idea that is clear of the billing process type and follow it up to ensure that the payments get made on time. The fourth measure that the nurse manager can take is using automation in the processing of claims as it is more efficient than processing the claims manually.
Conclusion
The efficient management of finances in an organization is essential in the achievement of quality in the provision of care in a healthcare organization. Variance reporting is essential in helping the organization in planning as the managers are able to identify areas that need improvement and establish ways of cost reduction. Meeting the staffing needs in a healthcare organization is essential in achieving quality by ensuring that the needs of the patients get attended to on time and effectively. In some cases, contract labor gets used to meet the staffing needs of the organization. The nurses can use the cost-to-charge ratio is establishing ways of improving performance and how to save costs. Meeting the organization’s financial needs is essential in the effective provision of care in the organization.
References
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Cleveland, K. A., & Smith, Y. M. (2016). Teaching financial literacy: Preparing future nurse executives. Retrieved from https://www.nursingrepository.org/handle/10755/620197
Dick, T. K., Patrician, P. A., & Loan, L. A. (2017, October). The value of nursing care: A concept analysis. In Nursing Forum (Vol. 52, No. 4, pp. 357-365). Retrieved from https://onlinelibrary.wiley.com/doi/abs/10.1111/nuf.12204
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Van Camp, J., &Chappy, S. (2017). The effectiveness of nurse residency programs on retention: a systematic review. Aorn Journal, 106(2), 128-144. Retrieved from https://www.sciencedirect.com/science/article/pii/S0001209217305422
Zhao, A. (2017). A Time Series Forecasting Approach for Nurse Staffing at a Large Academic Hospital (Doctoral dissertation, the State University of New York at Binghamton). Retrieved from http://search.proquest.com/openview/0ec0a03e84c8f0df15b36d670fa8a3e4/1?pq-origsite=gscholar&cbl=18750&diss=y