1. Home
  2. Features
  3. The nursing-finance alliance
FeaturesProfessional Development

The nursing-finance alliance

In many healthcare facilities, the finance and nursing departments are adversaries. But such conflict serves no one—not patients, not nurses, and certainly not the organization.

Resource constraints in health care are nothing new. Reimbursement changes and Medicare adjustments have brought close, continuous scrutiny of resource allocation. And such programs as pay for performance and transparency in hospital quality reporting put pressure on facilities to provide the highest quality of care while staying cost-competitive.

For innovation, problem-solving, and win-win strategies, interdepartmental partnerships are a must. Nursing-finance collaboration helps facilities deliver high-quality care and achieve exceptional outcomes while maintaining a positive bottom line.

How the partnership evolved

At the University of Maryland Medical Center (UMMC) in Baltimore, the nursing and finance departments have a long history of working together to plan and fund the capital and operating resources needed to deliver patient care. We routinely partner to address such issues as optimizing nurse staffing plans, managing environments with changing patient acuity, analyzing the cost/benefit of new capital equipment, and modeling new-program innovation or expansion. Our established structure and processes allow us to optimize value within the organization while staying financially healthy. (See Defining value in health care.) Nursing is the largest department in the Division of Patient Care Services. It doesn’t have its own finance officers; instead, it’s supported by a dedicated group of analysts within the finance department, called Decision Support.

The nursing-finance partnership grew out of a desire to be responsible stewards of UMMC resources. The senior vice president (SVP) of Patient Care Services, Chief Nursing Officer, and Finance SVP set the stage for open exchange, trust, and creativity. Through successful initiatives, both parties showed they had critical knowledge and expertise to share.

Our efforts to work together continue to evolve. Our interactions have been so beneficial that the director of Decision Support is a member of the nursing leadership group, which includes the chief nursing officer, vice presidents, and directors of nursing. From time to time, the senior vice president of Finance updates the group on financial performance and strategic developments.

Together, our finance and nursing departments collect and analyze data to support clinical, operational, and financial decision making. The financial analyst assigned to each nursing division participates in cost-center business issues, meeting regularly with nursing leaders and staff in the areas of his or her responsibility. As a team, they review financial performance by analyzing budget variances, monitoring productivity, and using benchmark data to identify issues and create action plans for improvement. Each year, nurse managers develop unit- and program-based capital and operating budgets with support from the financial analysts.

Partnering examples

Our nursing-finance partnership has achieved key organizational outcomes. Here are two examples.

Managing growth and budget variances

Each year, UMMC cares for more patients than the previous year, and these patients tend to be more highly acute. To meet this demand, we add approximately 100 to 150 new nursing positions annually and recruit nurses to replace those who left during the previous year.

Our nurse vacancy rate is consistently between 7% and 9%. But in 2006, we set a goal of reducing the rate to an extremely challenging 4%. To do this, we created a plan to recruit 400 nurses over 12 months. The plan emphasized retaining current staff while hiring nurses to meet the new demand. It also required a large investment of organizational resources, including nursing salary, recruitment, and orientation expenses. In the short-term, this would mean the nursing department would exceed its budget. However, we were confident that long-term benefits would be worth it.

The plan was initiated in June 2006. By October 2007, it became clear that nursing’s budget overage would be greater than predicted. Historically, we average 50 nurses in orientation at any given time; in the first 3 months of the plan, that figure jumped to more than 100. Anticipated reductions in agency nurse use and voluntary overtime hadn’t been realized because staff counts didn’t include orientees. Our success in recruiting and retaining nurses had brought a significant salary variance.

The nursing-finance team quickly gathered the data needed to understand the situation, including dates when nurses would complete orientation, projected nurse hires for the next month, average daily census by unit, and completion dates for traveling nurse contracts and voluntary overtime bonuses. Team members met regularly to review the data and agree on next steps.

However, the data under review was at least 2 weeks old, making it hard to know if the plan should be changed. Also, the data existed in more than one system, and collecting it was an extremely manual process that took significant time from nurse managers, directors, and financial analysts. Asking leaders to continue to work harder and longer hours wouldn’t solve the problem; next week or next month, the same information would be needed and the same process would ensue.

So the nursing-finance team looked at long- and short-term alternatives, investigating systems that could synthesize the data in real-time format. It purchased a system that can be used for decision making and ultimately will let us model various staffing and hiring scenarios and determine their impact on patient volume, costs, and staff work/life balance. The team submitted a capital request to buy an Internet-based staffing and scheduling system to promote use of real-time data for decision making. Ultimately, the system will reduce the amount of time nurse managers spend creating data, giving them more time to manage their units and programs.

Improving interpreter services

In 2006, UMMC went $1.5 million over budget for interpreter services. Yet despite this spending level, staff had difficulty accessing interpreters at the times and locations needed. An outside vendor was providing most of our interpreter services, including on-site interpreters, a 24/7 telephonic foreign-language service, and a system for hearing-impaired patients. Given these options, it was unclear why we were overspending and underdelivering.

A multidisciplinary group from nursing, social work, interpreter services, and Decision Support evaluated the existing process, and developed and tested ideas for improving operating performance at all levels. The group found the telephonic service was rarely used; phones were lost, staff weren’t trained as turnover occurred, and rooms weren’t equipped with correct phone jacks.

Then the group analyzed the process of ordering an interpreter, and found it enabled almost unlimited access to on-site interpreters. Group members developed criteria to determine if and when an on-site interpreter was needed and established intervals to reevaluate this need. A centralized triage process for ordering an interpreter 24/7 was developed by creating an easy-to-remember beeper number (8-TALK). No longer would staff need to make multiple phone calls to order an interpreter. By using the criteria and the 8-TALK beeper, one call would provide timely access to interpreter services.

The group also examined which units had high interpreter use. Finance compared the costs associated with the existing outsourced interpreters to the cost of hiring internal interpreters; this analysis showed we’d reap significant savings by hiring permanent interpreters. Thus, three Spanish interpreters were hired. Finance also analyzed invoices submitted by the interpreter company, making sure these bills were accurate and timely; this, too, generated significant savings.

Over a 3-month period, these changes saved nearly $2 million, which was reinvested to fund other patient-care priorities. Thus, more than just saving money, the work of this group supported patients’ and families’ clinical needs.

Collaborating for exceptional outcomes

Collaboration and information exchange between nursing and finance are essential to navigate today’s dynamic healthcare environment. As our facility discovered, such relationships can make a crucial difference in the ability to achieve desired results.

Collaboration is the key to our future and to creating exceptional outcomes for patients and families, nurses, and organizations. A strong nursing-finance relationship provides superior benefits for healthcare organizations—and for some, a great untapped resource.

Selected references

Moody’s Investors Service (March 2007). Finding an Rx for the nursing shortage: Not-for-profit hospitals respond with multiple strategies that have varying credit implications. http://www.alacrastore.com/moodys-credit-research/Finding-An-Rx-For-The-Nursing-Shortage-Not-For-Profit-Hospitals-Respond-With-Multiple-Strategies-That-Have-Varying-Credit-Implications-PBM_PBM102357. Accessed March 11, 2009.

Porter-O’Grady T, Mallock K. Quantum Leadership. A Resource for Healthcare Innovation. (2nd ed.) Sudbury, Mass.: Jones and Bartlett Publishers, 2007.

When she wrote this article, Mary Beth-Esposito-Herr was Vice President of Patient Care Services at the University of Maryland Medical Center (UMMC) in Baltimore. She recently died after serving as Senior Vice President and Chief Nursing Officer at Children’s Hospital of Philadelphia. Our condolences to her family and friends. Keith D. Persinger is Senior Vice President of Finance; Ann Regier is Director of Clinical Practice and Professional Development; and Sherrie Stephens Hunt is Director of Decision Support at UMMC.

Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.

cheryl meeGet your free access to the exclusive newsletter of American Nurse Journal and gain insights for your nursing practice.

NurseLine Newsletter

  • Hidden

*By submitting your e-mail, you are opting in to receiving information from Healthcom Media and Affiliates. The details, including your email address/mobile number, may be used to keep you informed about future products and services.


Recent Posts