Healthcare is one of the most important sectors globally and one that people all over the world rely on each day. This makes healthcare staff and also healthcare settings crucial for keeping people in the best shape possible. In terms of healthcare settings, it is clear that proper management is required to ensure that they offer the highest levels of patient care possible.
Although this involves many different factors, all facilities within health should pay attention to financial management. But what is financial management in the health sector, how can nurse leaders help with it, and why is it so crucial overall?
What is financial management in healthcare?
In simple terms, financial management within healthcare is based on the same principles as financial management in business. It involves carefully managing the finances of a healthcare facility to ensure that it remains economically viable in the long term.
By paying attention to not only the current state of an institution’s finances, but also how much revenue is generated and spent, facilities in this sector are able to operate on a firmer footing. This is a much more sensible approach than failing to pay attention to the financial situation that a healthcare facility might be in. If there was no focus in this area by leadership staff, budgets could soon spiral out of control and cash flows could soon begin to cause issues.
What tasks does financial management in the health sector usually encompass?
Financial management in healthcare is a broad term that describes what is generally involved within it. To get a better understanding, it pays to dig deeper into the most common tasks those working in it may be responsible for. These include the following:
- Managing budgets
- Generating income
- Strategic financial planning
- Financial forecasting
- Cash-flow tracking
- Monitoring financial waste
- Cost savings
- Investments on behalf of the institution
- Fraud detection
- Compliance with financial regulations in health
As this list shows, financial management in the health sector is not only a deep subject but also one that is very important for the overall operational functionality of facilities.
What role do nursing leaders play in healthcare financial management?
Specific staff such as financial directors or finance department leads in health are key for looking after the economic viability of where they work. It is not just specific finance professionals who are key to this though, and the crucial role that nurse leaders play is a great example.
As their title implies, nurse leaders are healthcare professionals who are responsible for managing teams of nurses and maintaining the highest standards of patient care in the industry. They are also responsible for driving innovation in the sector and helping new discoveries to be made in nursing theory and practice.
To work in this kind of role, you’ll need the highest level of training. The online DNP degree program from Spring Arbor University is one course that offers this kind of training and is a great choice for aspiring nurse leaders. It not only teaches you more about how to manage finances as leader in this healthcare niche, but it can also be completed in as little as 20 months.
But why are these health professionals so vital for financial management within health?
Nurse leaders are vital contacts for finance managers
Perhaps one of the most obvious ways that nursing leaders are crucial for financial management in healthcare is the bridge they provide between finance staff and what is happening in nursing teams economically.
People working in financial roles within a hospital, for example, may not have the in-depth knowledge of how budgets work for nursing teams; they may not have the latest return on staff hours worked over the previous month; or they may lack access to the latest financial data on a specific nursing unit to make forecasts from.
Nursing leaders help here because they are an easy-to-reach point of contact who provide simple access to figures such as this for finance staff in health. They are able to either find the financial data that is required to pass on themselves or speak to nursing teams/colleagues to get them sent over.
Without nursing leaders to do this, financial management in an institution may not be so efficient or effective. Nursing leaders can also help explain any financial data around nursing operations in a health facility if required.
Nurse leaders can help with direct financial management
In addition to helping financial staff access financial data on nursing teams/departments and explain any data specific to nursing they don’t understand, nursing leaders can also have a direct impact on their facility’s finances.
But how might this look in practice? The most obvious example is how leaders in clinical settings can closely monitor their nursing teams/department’s finances to ensure that they are managed properly. This could be keeping tabs on how much overtime is being paid per month, checking that only medical supplies that are strictly needed get ordered, and ensuring that nurses are using equipment properly so that it does not break. These are just a few examples of the direct impact that nursing leaders can have in this area.
Leaders in nursing can offer advice at senior levels
Nursing leaders can also play their part in terms of advising at a more senior level on how finances could be managed better in a facility. This would most obviously be around nursing staff/teams in general, but could also touch on ideas they have for other parts of the institution.
If they notice financial mismanagement in another area, such as HR or radiology, they can play a crucial role in helping these issues be resolved effectively. By working to develop overall guidelines or policies on financial management as a whole, nurse leaders can have a real impact on financial stability in healthcare.
Nursing leaders in academia are key
It is also vital to consider the role that senior figures in nursing academia play in financial management for healthcare. These groundbreaking innovators help to find new models for how facilities can manage their money better and new techniques to drive better financial management in the industry.
The theories that nurse leaders in an academic setting develop around financial management can prove useful not only for nursing units in clinical settings but also other niches within health facilities. A new approach to budgeting for nursing teams may well be applicable to other departments within a hospital or clinic, for example. If the academic research that nurse leaders perform also uncovers new ways that healthcare in general can operate in a more financially savvy manner, then the impact they have is even more pronounced.
Financial management in healthcare settings is critical
While the above focuses on just how important nurse leaders are to financial management in this sector, it is also key to think about why managing finances in health is so important to begin with. The truth is that, just as tech that can drive improvements in healthcare can help facilities function more smoothly, proper financial management also has its own benefits. But what might they be?
Helps to keep healthcare settings operational
This is perhaps the biggest reason why the management of finances in health settings is so important. If those in leadership roles do not pay attention to the financial situation of their facility, it is hard to guarantee long-term stability and it is tough to remain operational moving ahead.
The net result of this could be that the facility runs out of money to keep going and has to close. If healthcare settings do make the effort to manage their finances properly though, then they are able to keep a firm grip on their cash flow and ensure that there is enough money to remain open.
Better for patient care
It is also worth remembering the positive impact that proper financial management can have for patient care levels. This is a very important point to note because achieving the best outcomes for patients is the main focus of healthcare facilities.
But how can taking the time to keep tabs on the economics involved in running a hospital or clinic help? As noted above, it enables healthcare settings to remain open, stay financially stable, and be there to treat patients. If bad financial management sees a facility close down, patients may have to travel further to get the care they need.
Good financial management in health settings also means that there are more funds available to improve patient care levels. This is because sensible plans will have been put in place to not only reduce financial waste but also manage budgets properly and find ways to increase revenues. This can see departments have more money available to buy essential new equipment to care for patients and upgrade the institution’s general facilities.
Boost for employment in healthcare settings
When you learn that around 18 million people are employed in the US healthcare system, it is clear how major an employment niche it is. This is only possible because of the proper financial management that the best health settings practice.
By taking the time to run their institutions on firm economic principles, leaders in this industry are able to avoid the redundancies that having to close would bring. This naturally helps to keep healthcare one of the most vibrant employment sectors and one that looks set for an even brighter future.
It is not just preserving current roles within healthcare that financial management is vital for – practicing sound financial management also gives facilities more revenue to hire extra staff and improve patient care. This extra cash for more staff can also help cover gaps in certain teams/departments. This provides a real boost for health in terms of employment and shows why paying attention to economics in this industry is essential.
Reduction of financial waste and fraud prevention
Although effective financial management in healthcare can be about generating more income, it is also centered on reducing financial waste. This is critical because it helps facilities run in a more economically viable and streamlined way. It also cuts back on money being wasted, which could be better used elsewhere or which could help the institution run on a better financial footing.
One example of this idea in action is healthcare settings looking at how various departments are spending their budgets. It may also involve looking at supplies being double ordered or overstaffing in certain areas. By focusing on potential areas of financial waste, health settings can cut back on costs and operate in a more financially sound manner.
Keeping a close eye on a facility’s finances is also important for picking up on potential cases of fraud from staff members. While this may be rare, fraud can happen in healthcare and see people misappropriating funds for their own gains. By managing a hospital or clinic’s finances properly, this kind of activity can be picked up on and addressed.
Healthcare settings need excellent financial management
There is little doubt that outstanding financial management is something that any healthcare setting needs in order to function properly. Without these practices in place, it is impossible to operate in a financially sensible way, and it is tough to know the true state of the institution’s cash flow. This can prove very dangerous in the long term and easily see facilities run out of cash to stay open.
As we have looked at above, it is not just finance directors or finance managers in healthcare who can help in this regard – key staff such as nurse leaders can also play their part and help institutions operate in a financially sound way. It is through staff across the whole setting working together that the best results can be produced.