Nursing Leadership: Budgeting Concepts

Leadership Budget

Nurses are leaders in general and their leadership subsists in all spheres of their practice. Apportioned leadership bestows excellence in the function of healthcare provision. Available resources should support the operations within any organization, and this does not preclude nursing. This implies that there has to be proper budgeting and management of finances to meet all the requirements within nursing practice.

Due to the restructuring of healthcare systems, technological advances, and economic restraints, leadership has come under pressure to balance diminishing resources and at the same time provide quality services. This throws into a spot the required techniques and knowledge to run a budget successfully. However, what is the role of budget and financing at large to the profession of nursing? Why is a budget important in this profession?

Importance and Role of Budget in Nursing

According to Waxman (2008) even though nurses did not go to that profession for their love of number crunching, they have to learn about budget and finance issues. Operations in any organization run on basis of financial resources and without proper budgeting, there cannot be smooth running of events. Clarke (2006) posits that finance and nursing share a common goal; caring. Finance/budget in nursing helps leaders to improve quality care and patient safety. For instance, if a leader understands the budget well, he or she will be in a good position to approve the purchase of a machine that would reduce infections or patient falls.

Budgeting enhances the implementation of newer methods like performance pay. This means securing the possibly best quality for the least possible cost (Clarke, 2006). Securing such services calls for a leader who understands nursing and finance at the same time. Budgeting helps nursing leaders to justify staff numbers and expenditures on equipment. The public is pushing for accountability, and this is only achievable through good budgeting skills. According to Hunt (2001), budgeting helps nursing leaders to predict staffing levels and requirements, and hours per patient in a day. This facilitates estimating the number of full-time equivalents (FTEs) and prognosticating cost savings.

Knowledge of budgeting in the nursing profession is becoming a necessity as the need to appraise new services and warrant current staffing, supply, and quality requirements upsurge. Budgeting allows control of spending by reexamining departmental disbursements monthly and this also enables leaders to plan for the present and future as well. The most important part of nursing finance is the staffing budget due to the many facets it has. Budgeting helps leaders to ascertain the number of staff required as well as the number of open hours and days per week. It also helps to stipulate plans to cover these open gaps. It also helps to mix skills adequately.

As indicated earlier, nursing and finance share a common goal and that is caring. As nurses take care of patient’s needs, a budget on the other side takes care of nurses’ needs. It is a mutual relationship sustainable only through proper skill in finance.

Currently, governments fund nursing in hospitals through several programs set in the national budget. There are tariff systems through which hospitals receive funding from governments to ensure the smooth running of services. Hospitals then purchase health services for the public. The other sources of funding to hospitals are managed care contracts and from patients themselves. The reimbursement itself is complex for hospitals do not function the same way as other institutions. This is because a huge majority of payments do not come from patients rather they come from third parties on behalf of patients.

Government forms the greatest percentage of these third parties. Therefore, when nurses offer their services, the bill goes to the government for payment. This complicates the whole issue of running a budget in the nursing profession because governments do not negotiate payment. Rather it specifies the rules of defrayment upon which it offers recompense for services rendered for its beneficiaries (Castro and Layman, 2006, p. 9).

Two issues arise in this case of financing. One is the issue of dealing with a third party in settling bills for services rendered. Managers could round this issue by stipulating procedures that are in line with the policies of these third parties. The other issue is costing out nursing as explained in the following paragraph.

Hospitals are costing out nursing and reimbursement through several strategies. Hospitals base costing out nursing on the primary objective of nursing: providing care to patients. Leaders calculate cost per patient by dividing the total cost of nursing by patient count or number (Finkler and Graf, 2006, p. 365). This is the basic principle; however, other complex procedures take place under this exercise. Medicare homecare programs take care of nursing reimbursement. All these practices call for a trained nurse leader with good knowledge of budget and financial matters. However, with a revolution in information technology, there are some computer skills relevant in this field. What are these skills?

Computer Skills Needed for Budget and Finance

Computer technology as aforementioned in this paper has caused a revolution in all sectors of human life without preclusion of budgeting and finance. Many organizations have automated their financial analysis systems and this calls for a budget analyst to have the basic knowledge of word processing and familiarity with financial software packages. The commonly used packages used in budgeting and finance include database software, electronic spreadsheet, and graphic software. An electronic spreadsheet enables individuals to analyze and display numerical data effectively. These skills are necessary for leaders to manage and run finances well in form of a budget. These skills go beyond basic computer skills.

Nursing leaders need to go through proper training to equip them with the necessary skills that will boost their leadership skills at all levels. As mentioned in this paper, they also need to have budget skills that call for basic computer skills and competencies. The current nurse leaders are getting out of office shortly, which implies that new leaders have to take over. The potential future leaders need to have elementary training to prepare them for their future roles. This highlights the necessity to come up with a model that would help potential leaders nurture their leadership skills and at the same time incorporate budgeting and financial skills. However, to develop this model, we have to identify the specific areas necessary for leadership training.

One of the key areas to incorporate in developing nursing leaders, shrewd in budgeting in the area of developing informatics and computer competencies. These computer programs should focus on developing knowledge on interpreting clinical data and the implementation of information technologies. The following is a logical approach that people would use to develop nursing leaders with financial and budgeting skills.

The first step is to have personal mastery. Aspiring nursing leaders need to evaluate themselves to see if they can establish the needs of people and develop confidence. The second requirement is to create interpersonal effectiveness. This transcends the need to communicate effectively; it extends to ‘visible presence’. Leaders need to be around the people they lead to identify with the needs of these people. Thirdly, nursing leadership requires thorough knowledge of financial management.

This is a survival tactic and any leadership lacking this is not likely to deliver in the 21st century. Budgetary here involves learning to pilot the electronic patient information to identify challenges nurses undergo when using the same systems. Moreover, there is increasing pressure to justify and defend the nursing staffing budget to unify it with the overall hospital’s operating budget. This calls for the direct incorporation of financial studies in nursing.

Nursing leaders require human resource management skills now more than ever. This is because the nursing profession is becoming competitive by the day and to select and retain the best workforce requires human resource management skills. This too needs incorporation in nursing studies. The other need is to develop skills for caring for self, staff, and patients. Nursing is all about caring and this involves caring for every person involved in this practice. Finally, according to Sherman (2008), nurse leaders need to be system thinkers. This is the ability to see the big picture as a leader and remain proactive.

Leadership skills are therefore necessary for the nursing profession. Apart from the mere leadership skills, these leaders should have budgeted and financial skills for the effective running of nursing practices. Computer skills like electronic spreadsheets, databases, and word processing knowledge are necessary for this context. The only way to gain these leadership and budgeting skills is through learning. Nurses can take separate classes on financing or push for incorporation of the same in the nursing syllabus.

Reference List

Casto, A. & Layman, E. (2006). Principles of Healthcare Reimbursement. Web.

Clake, R. (2006). Finance and Nursing – The Business of Caring. Healthcare Financial Management Association. Web.

Frinkler, S. & Graf, C. (2001). Budgeting concepts for nurse managers. Web.

Hunt, S. (2001). Speaking the Language of Finance – nursing leadership – Statistical Data Included. Web.

Sharman, R. (2008). The Nursing Leadership Institute Competency Model. Web.

Waxman, K. (2008). A Practical Guide to Finance and Budgeting: Skills for Nurse Managers. Web.