Nurse leaders need more than just business and clinical skills to manage employees and help patients: They need additional financial literacy to address other elements of leading healthcare facilities. For example, nurse leaders might rely on finance skills when handling budgets, developing crisis plans for public health emergencies like COVID or natural disasters, dealing with health insurance operations and more.
Nurse managers with money sense can operate well-resourced departments with optimized staffing where nurses have the tools and support to provide top-notch care. Their leadership can reduce turnover and improve outcomes, too. Graduates of the Texas A&M International University (TAMIU) Registered Nurse (RN) to Master of Science in Nursing (MSN) – Nursing Administration online program explore the economic and decision-making principles nurse leaders need to maintain fiscally responsible and sustainable healthcare operations. Students discover the connections between financial stewardship, leadership and enhanced employee and patient satisfaction.
Why Do Nurse Leaders Need to Develop Financial Competencies?
Healthcare is a business. Like any other business, nurse managers must assume responsibility for the financial wellness of their department. To deliver high-quality patient care, leaders of hospitals and healthcare facilities must be good stewards of their resources, often relying on solid business skills such as forecasting and risk analysis to remain competitive. Any unexpected expenditures — such as the prolonged financial strain created by COVID and rising material, supply and labor costs — can have a detrimental effect on the services a facility can offer and the quality of care they can sustain.
As part of their managerial responsibilities, nurse leaders may control a significant portion of an organization’s budget found in nursing labor costs. In fact, according to one HealthLeaders article, Kathy Douglas, MHA, RN notes the following: “Nurse leaders control the largest part of a hospital labor budget, in some cases the largest part of the overall budget. The effectiveness of overseeing this responsibility can mean the difference between an organization’s financial stability and financial turmoil.”
However, most undergraduate nursing program curricula do not touch on foundational business skills. So, unless they have completed master’s level coursework, many nurses assuming leadership positions may not have the breadth of business acumen to address the financial aspects of the role.
For these reasons, financial literacy is imperative for today’s nurse managers. According to one 2019 study, nurse managers must be “prepared for their financial management competencies and skills so that they will be able to manage expenditure and contain costs within their departments.” By developing financial management skills and competencies, nurse managers can navigate the changing healthcare dynamics, take control of their budgets and ensure patient care and employee well-being remain high.
What Financial Literacy Concepts Should Nurse Managers Know?
Nurse managers should have the capability to apply the following financial literacy concepts:
- Evaluating potential payer reimbursement models, including fee-for-service and value-based care, and their impact on budgetary considerations
- Forecasting revenues and expenses
- Allocating resources, including establishing a functional operational budget that optimizes patient care and employee staffing
- Conducting risk analysis and financial contingency planning
- Implementing cost-effective, continuous, quality improvements
- Presenting financial information to the executive team
- Communicating financial goals and related decisions to nursing staff
- Advocating for the department’s needs, including additional monetary support for labor, supplies or continuing education
How Do Nurse Leaders Develop Financial Literacy Skills?
Nurse leaders can benefit from a broad understanding of fiscal principles. According to a 2022 Journal of Nursing Administration study, nurse leaders credit continued education and the MSN degree — not work experience — for preparing them with the requisite financial knowledge to excel in the role.
TAMIU’s online RN to MSN – Nursing Administration program can help nursing professionals gain these skills. Students evaluate healthcare’s evolving fiscal environment and managerial competencies for success through a dedicated course: Finance for the Nurse Executive. Topics include strategic financial planning and decision-making, budget control, forecasting and risk analysis. In addition, an immersive 180-hour practicum offers the opportunity to apply fiscal principles and pinpoint areas for deeper exploration.
Financial literacy is a central component of nurse leadership. Not only can financially savvy nurse managers improve the quality of patient care and employee satisfaction, but their actions can also enhance the organization’s sustainability and mission.
Learn more about TAMIU’s RN to MSN – Nursing Administration online program.