Part 1: Sharing Financial Information with Staff
One of my pet issues relates to the level of knowledge of nurse managers and administrators about financial operations. I even believe strongly in the importance of beginning to educate staff nurses in the fiscal realities of health care operations! I think nurse managers must be clinically competent as they must supervise direct care staff, but it is equally important that they possess strong managerial skills, particularly related to financial and human resource management. I published an article in JONA a few years ago titled something like "How Prepared are our Nurse Managers?" that addresses this reality.
Similarly, I think senior administrators need an understanding of the current processes that occur at the point of care...which is one reason nurses often do far better at executive levels than non-nurse administrators. However, at that level of administration business knowledge and skill often assumes greater importance than maintaining clinical skills.
So, what is the relative importance of clinical versus business skill and knowledge as one moves up the management and administrative ladder? Are nurse managers prepared for the business-related aspects of the role? Are senior nurse executives even fully prepared?
It has become crucial for staff members at all levels and in all positions understand the realities of financial decision-making and the issues related to expenses that confront us all. One of the things I did as a new nurse manager a long time ago was include financial results in monthly staff meetings for all staff. I took the monthly operating budget reports and simplified them, extracting key information, and used overheads (in the old days before PowerPoint) to show staff where we were related to projected budget numbers. I explained the concept of variances to them, showed them how I was required to justify variances, and demonstrated the way in which current results had implications for future management decisions I had to make.
I know it was eye-opening for them as no one had ever actually explained the "why" of financially-based decisions, no one had ever provided an understandable rationale for making some of the difficult choices managers often have to make. The information ranged from basic, such as the incredible amount of coffee and orange juice we used and were charged for (the stuff that seemed to grow little feet and walk out of the hospital), to complex, such as the aggregate of individual incremental overtime which could amount to an actual full-time salary at the end of a month!
This effort had many positive results as staff became educated about the cost of things they were using as well as the relationship between patient volume and expenses. They felt their intelligence was being respected as it was clear I believed they could understand complex financial operations and appreciated the increased level of open communication. They also felt they were more active participants in controlling costs and in ensuring the unit's financial success.
However, what do we do with staff who are often resistant and glassy-eyed when financial information is presented in meetings? I found dealing with this situation was actually pretty simple. I took my various financial reports---monthly operating statements, biweekly staffing reports, admission and length of stay data---and extracted selected information which I put on flip chart paper. Then I used them for mini-lectures first to educate staff about what these were and then to identify the figures I wanted to discuss. For example, I found the nourishment budget was completely out of control and I assumed the orange juice, coffee, and sugar were growing little feet and walking out of the hospital by themselves as there could be no other explanation for the incredible volume the units were using. When I presented this to the staff, all of them, on all shifts, the changes were dramatic.
I had a situation once, in the same hospital, when I had to reduce staff by two FTEs. In the days before my arrival the last two nurses to be hired would simply have been laid off. Instead, I met with all the staff on each unit, all three shifts, and laid out the financial reality, along with the need to reduce total hours by the equivalent of two FTEs. In each meeting I also asked the person with the least seniority to raise his or her hand. This made it real to them as we would not lose an FTE...we would lose Sarah or John or Yvonne. Eventually the staff themselves all decided to reduce their paid hours by two hours per pay period and the cost savings I needed were realized without anyone losing their job.