Nurse Manager Budgeting: Recognizing Variances & Planning Events - Essay Sample

Introduction

A summary given after analyzing the main exclusions from the budget throughout a given period is known as a variance report. For a nurse manager to control the budget, he or she must recognize variances. The cost of healthcare has continued to rise while compensation for healthcare provider organizations continues to deteriorate. Hence, leaders in the nursing sector need to familiarize themselves with the budgeting systems. These leaders are obligated to collect information and plan events and amenities. They should also implement awareness of the patient's results and changes to resources which might need to be comprised in a budget total.

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Importance of Understanding Variance Reporting

The duties of the nurse leader involve daily routines such as the management of the nursing team. To have a smooth running, he or she must incorporate the staff in making decisions. Togetherness enhances better results with less cost. Moreover, a leader should assess their unit and ensure accountability in resources. Some of the significant concerns that should be addressed are quality care with overtime cost if need be and variance budgeting regarding the needs of the staff (Taylor and Pinzuk, 2017). A manager should know the variance report and budgeting to help the organization provide quality care at an affordable rate.

Full-Time Equivalents and Bi-Weekly Reports

Since staffing is an expensive resource in healthcare, it should be the first thing to be addressed in variance budgeting. The average cost of replacing a registered nurse is approximately eighty-two thousand dollars to eighty-eight thousand dollars with an estimated national annual turnover of 5.6 to 6.4 million dollars (Taylor and Pinzuk, 2017). Therefore, a nursing leader is obligated to evaluate the staffing needs regularly using different methods to get the most accurate information. As explained by Pamela, (2018), one should consider full-time equivalents and bi-weekly reports to get the correct data regarding staffing. These reports show detailed information about each person-hours and overtime. Hence, a leader can use full-time equivalent reports to track workers' significant information such as working hours and unit needed. Additionally, these reports can be used to provide enough staffing to attain the set objectives of improved results and better care.

On the other hand, a nursing manager should keep track of meetings, orientation hours and education. It is significant to comprehend the importance of patient care results for it affects an organization's budget. Since the healthcare industry is evolving, nurses are experiencing numerous changes in their daily routines and need to be updated through education. Thus, the manager must track hours to be spent in orientation, meetings, and training so that not to affect the working schedules. These meetings enable existing and new employees to build a healthy working relationship, suitable for the organization's growth.

Contract Labor

In most cases, contract labor is an overpriced person-hours. Most of the contract staff is provided by agencies, assigned for months or several weeks and are mostly offered temporary accommodation. Although the staff delivers quality services that enable the organizations to keep running, they are a bit expensive (Taylor and Pinzuk, 2017). Their payments are higher than those of nurses employed on a full-time basis. This is because most of them are expatriates. Hence, the organization must provide for their housing, car rental, foodstuff, and travel which is inclusive of the family members. Since the staff is contracted, they work between the agreed periods. The organization is therefore forced to train and employ new employees, which is costly.

Importance of Using Cost-to-Charge Ratio

The ratio of healthcare expenses and their charges is referred to as a cost-to-charge ratio. A nurse manager should understand this ratio because the most suitable the cost-to-charge ratio is supposed to be close to or one. There must be a difference between the real costs sustained and the healthcare charges. The prices of every hospital vary depending on expenditure in the provision of patient care. Every organization has a limit of money that one must spend to receive care. Healthcare organization earn extra income when they obtain higher sums than their expenses. Conversely, they incur losses when they receive less than they spend to provide care. Loss is equivalent to poor services. Hence, to have quality services and smooth running of an organization, a nurse manager must be able to use cost-to-charge ratio calculating the expenses and revenue.

Nursing as a Source of Generating Revenue

Most of the healthcare finance departments assume that nursing the unit does not generate revenue for the organizations. However, I would like to differ. The relationship between nurses and hospitals are at times confrontational throughout the modern Medicare era. Nurses bring about their specialized skills and knowledge to healthcare organizations equipping necessary practice with their art. Additionally, nurses also attract patients. Every person enjoys a quality service. Hospitals involve direct-to-consumer marketing (Freeman, 2018). So when nurses provide quality care to the patient, that specific organization receives more clients which in this case are patients. As portrayed by this example nurses are the primary source of income for hospitals.

Moreover, nurses have a long hand in generating income for healthcare institutions. This is due to a close connection between nursing retention and recruiting. A hospital with a full complement of qualified, registered and motivated nurses tend to interest and preserve doctors. When a hospital manages to retain a good doctor for an extended period, it attracts more patients who in return increase the income of the organizations. The impact of nursing care on organization income is likely to convert a more distinct track for hospitals offering satisfying concerns. Shortly, people will be using these surveys based on patients treated there to evaluate the quality of care. Organizations with highest patient satisfaction scores will attract more patients which is equivalent to more revenue.

The New Value-Based Reimbursement

Healthcare is shifting its services to a new value-based reimbursement. The new approach involves health providers being paid based on patient health results (Freeman, 2018). Under these new agreements, providers will only be paid after helping patients improve their health, decrease the effects and incidence of chronic diseases, and manage to lead a healthier life after. The modern value-based care differs from the fee-for-service approach which we were used to. The earlier approach patient paid depending on the healthcare services they received. But, the value-based services are derived from measuring results against the expenses of delivering the results.

Through the new approach, organizations might incur revenue loss. Unless it is a high-performing infirmary, hospitals are at risk of losing their revenue, for sometimes their services might not meet the expected results; hence despite the resources used the payment will be declined. Therefore, an organization needs to apply measures to enhance reimbursement and prevent revenue loss. Some of these measures include risk-adjusted readmission rates, low structure rates, and risk-adjusted mortality. However, to achieve these objectives, an organization revenue must stay as a top priority. This will require continued focus on the value-based reimbursement as it continues to evolve and impact the finance of healthcare industry.

To avoid loss of income through the new value-based reimbursements, the nursing managers must recruit the best nurses (Bach et a., 2012). Patients can only pay for the service when they are satisfied. Besides, Medicare is looking forward to higher quality care across different providers with a pocket-friendly cost. The organization should plan on ways to improve the services throughout the inpatient stay. Therefore, an organization must have employees with outstanding facilities and affordable quality care. He or she must involve variance reporting to evaluate the expenditure and revenue collected. One must also comprehend ways to calculate cost-to-charge ratio which help understand the worth of risk an organization is willing to take.

Conclusion

A summary given after analyzing the main exclusions from the budget throughout a given period is known as a variance report. For a nurse manager to control the budget, he or she must recognize variances. A nursing manager must check on the daily routines of nurses under his or her managerial unit. Since staffing is the most valuable resource in healthcare, it should be the first item addressed in variance budgeting. However, the healthcare industry is radically evolving. Hence, organizations must update and educate nurses about current trends. The nursing manager should keep track of meeting, orientation hours and education. Moreover, healthcare is shifting its services to a new value-based reimbursement. Through the new approach, organizations might incur revenue loss. To avoid loss of income through the new value-based payments, the nursing managers must recruit the best nurses. Also, an organization must have employees with outstanding services and affordable quality care

References

Bach S, Kessler I, Heron P, (2012). Nursing a grievance? The role of healthcare assistants in a modernized National Health Service. Gend Work Organ; 19:205-24.

Freeman, G. A. (2018). Healthcare Providers Much More Optimistic About Value-based Care. Retrieved from https://www.healthleadersmedia.com/finance/healthcare-providers-much-more-optimistic-about-value-based-care

Pamela H. (2018). Developing a staffing plan to meet inpatient unit needs. Retrieved from https://www.nursingcenter.com/cearticle?an=00006247-201805000-00006&Journal_ID=54013&Issue_ID=4635452

Taylor, J. D., & Pinzuk, J. (2017). Financial Management for Nurse Managers. Retrieved from https://books.google.co.ke/books?id=4506ErKA5b8C&pg=PA431&lpg=PA431&dq=why+is+Contract+labor+usually+the+most+expensive+manhours?&source=bl&ots=2Zciar6Y3V&sig=ACfU3U16i4_Sakgz5GU2zNGeKtEIWjWng&hl=en&sa=X&ved=2ahUKEwj9rNWw_eLhAhXXURUIHdXQA8MQ6AEwCnoECAgQAQ#v=onepage&q=why%20is%20Contract%20labor%20usually%20the%20most%20expensive%20man-hours%3F&f=false