ECONOMICS & FIN. ASPECTS OF HEALTHCARE

DNP-804-ECONOMICS & FIN. ASPECTS OF HEALTHCARE

MODULE 7 DQ

This week’s reading through Chapters 17 through 19 reframe your focus on benefits at the micro-level (patient and individual unit), meso-level (service line benefits of added capacity for patient placement), and macro-level (value-based quality benefits to the organization). Understanding the connection between financial choices made today and the future health of the organizations built to deliver healthcare into the future.

Question:

Consider some of the issues that affect the efficiency of an organization. Answer each of the questions associated with the ways in which effective budgeting and maintaining good financial health can sustain an organization.

· How can budgeting help planning of staff resources?

· How can budgeting improve communication across disciplines?

· How can effective financial health improve the performance of the organization?

This activity aligns with course outcomes 1, 2 and 4.

Lecture Materials

Download the PowerPoint presentations below and use them to take notes on the assigned readings in the Waxman and Knighten 3rd Ed. text for Chapters 17 through 19:

Chapter 17_Making the Financial Case for Academic-Practice Partnerships- The ROI for Specialty Education.pptx

Chapter 18_Financial Management in Times of Uncertainty, Shortages, and Change.pptx

Chapter 19_The Efficient Hospital of the Future- Improving Patient Access and Patient Flow.pptx

PEER RESPONSES

Leslie Webb

· How can budgeting help planning of staff resources?

Establishing a budget can assist an organization to management patient income in and necessary staff to manage this workload. With a budget plan the facility can allot for procedures and supplies needed to create an increase in gross revenue. If appropriate FTE positions for individual units are planned for and in the existing budget this can assist the organization with planning staff resource needs. If the unit is budgeted for primary care and has vacant RN openings unfilled the organization may need to look at the overall cost of the nursing structure and shift to a team nursing approach to decrease the amount of RNs needed in the budget (Waxman & Knighten, 2023).  With a budget for a unit and organization it can assist with prevention of over hiring. Budgeting can also assist with the understanding staffing needs for a facility (Wolters Kluwer, 2023).

· How can budgeting improve communication across disciplines?

Budgeting can improve communication across all disciplines if created in a strategic fashion. The budget process should begin with review of historical and previous data (Wolters Kluwer, 2023). Communication with all disciplines can assist establishment of realistic goals and help to identify capitol expenders. An analysis in real-time to include revenue both departmental and organizational expenses should be conducted. Unit managers can assist with staffing information such as hiring, firing, turn-over and employee compensation. Other departments of an organization can assist with changes in the economy and supply cost for an updated budget preparation. When a budget is formed with communication among all moving parts of the organization a realistic 360-degree view can be established to build in flexibility. Patient census and needs can shift within a unit quickly. With real-time collection of information from all units the organization can make adjustments as needed to the budget. Some organizations establish needs of the organization such as improved 30-day readmission rates or nursing staff and develop partnerships to plan ahead for resolution of these issues (Waxman & Knighten, 2023). The organization can budget ahead for staff tuition reimbursement with contracts of the student assisting with the meeting of organization needs.

· How can effective financial health improve the performance of the organization?

Health plan leaders are facing an obstacle with navigation of a rapidly developing health care industry. Patient issues are more complex and require additional resources to manage. If an organization has planned for flexibility and conducted real-time analysis, they can still meet the needs of our current health care demands. Overall performance of an organization depends on improved patient outcomes, patient satisfaction, reduction of staff turnover, and maximizing of reimbursements. The organization needs to have adequate staffing to ensure safety of patient’s outcomes.

Quality improvement can assist with improved outcomes reimbursement. Unfortunately artificial intelligence (AI) has a long way to go for organizations to use this as a method of building a stable financial environment. Accessing and management of this data is very difficult in most organization software systems. Unstructured data in the electronic medical record can be valuable for a clinical insight to improvement of performance (Wolters Kluwer, 2023). This information can be used to gain a full view of the patient and interaction with the healthcare team. This will assist with improved outcomes and reimbursement.

Resources:

Waxman, K., DNP, & Knighten, M., DNP. (2023).  Financial and business management for the doctor of nursing practice (3rd ed.). Springer Publishing Company

Wolters Kluwer. (2023). Improving health plan quality measures through AI. Wolters Kluwer.  https://www.wolterskluwer.comLinks to an external site.

Jace Sama

How can budgeting help planning of staff resources?

Budgeting can help improve the availability of staff resources. These resources may include additional nursing staff, or supplies. If an organization’s budget is planned and conservative measures are continued to stay within the budget, then the previously mentioned resources can be readily available for staff. For example, if a unit within a facility has budgeted for additional resources, or stayed within budget, and the unit is experiencing an overwhelming increase in patient acuity, the resource of additional nursing staff could be initiated to help the unit. Due to maintaining an effective budget, nursing staff is able to provide safe patient care. Akinleye et al. (2019) inform that hospitals with increased financial strain may struggle to provide safe and effective patient care.

How can budgeting improve communication across disciplines?

Budgeting may improve communication across various disciplines within an organization. Disciplines may include hospital administration, inpatient unit management, environmental services, etc. Budget planning may improve communication among these categories by holding in-person meetings discussing the organization’s planned budget for the year, or financial cycle. Also, collaboration may occur between disciplines concerning budgeting. For example, if environmental services is experiencing an increase charge in cleaning supplies, or an increase of charges of laundry. collaboration with an inpatient unit manager may be performed to find a solution to the issue. Communication can be improved through collaboration and scheduled meetings between multiple disciplines.

How can effective financial health improve the performance of the organization?

Effective financial health can promote an environment for the deliverance of safe patient care. If an organization is financially healthy and has the means to provide adequate staffing and supplies, nursing staff is able to provide safe and effective patient care. Jakobczyk et al. (2021) report that there is a correlation between a hospital’s financial health and patient care. After conducting a literature review on the relationship between financial health and patient outcomes, the researchers concluded that facilities with financial stability have the capacity to maintain methods for quality improvement, including patient care. Due to the improvement in patient care from the benefits of financial stability, reimbursements are likely to increase with the reduction in occurrences of hospital-acquired infections, patient falls, etc. This will lead to an increased revenue for an organization thus allowing the opportunity for other improvements to be made in the facility.

References

Akinleye D., McNutt L., Lazariu V., & McLaughlin C. (2019). Correlation between hospital finances and quality and safety of patient care.  PLoS One, 14(8). doi: 10.1371/journal.pone.0219124.

Dubas-Jakóbczyk, K., Kocot, E., & Tambor, M. (2021). The association between hospital financial performance and the quality of care—a scoping review protocol.  Systematic Reviews,  10(221).  https://doi.org/10.1186/s13643-021-01778-3

Raphaelle Molas

Healthcare is constantly evolving as a result of technological advancement, changing disease patterns and treatment modalities, political reforms, and policy initiatives. The historical landscape of modern health care has undergone significant changes over the last two centuries. As health care discoveries continue to grow, so does the financial burden to sustain its demands. The Centers for Medicare & Medicaid Services (CMS) report that the National Health Expenditure has grown to $4.3 trillion in 2021, or $12,914 per person, accounting for 18.3% of the gross domestic product. Out of pocket spending for health expenditures, grew 10.4% to $433.2 billion in 2021. Prescription drug spending grew 7.8% to $378 billion in 2021. The healthcare spending share of the gross domestic product (GDP) is projected to increase from 18.3% in 2021 to 19.6% in 2031. With the ever-rising cost of healthcare, and finite resources, it is imperative for health care organizations to develop strategies to mitigate mounting expenditures and ensure quality care is delivered. It is therefore incumbent upon nurse leaders to carefully budget finite resources to properly maintain operations and improve performance of the organization.

Astute budgeting can keep the organization’s finances above water especially in the event of unplanned catastrophes such as natural disasters and pandemics. Natural disasters such as earthquakes, tornadoes, floods, fires, windstorms, and mudslides can negatively impact hospitals and healthcare systems in more ways than one. These events can cause damage to the physical building, critical infrastructure, limiting the ability for the organization to provide much needed services, and disrupting normal operations and finance (Waxman & Knighten, 2023). Additionally, natural disasters can also lead to an influx of patients, straining finite resources and functional capabilities and disruption operations and financial performance. In addition to natural disasters, preparing for potential surges of communicable disease such as influenza or even the global pandemic of COVID-19 led many healthcare organizations to financial strain. Many hospitals needed to create more negative pressure rooms, hire back up staff, pay overtime staff, educate staff, and purchase PPE (Kaye, et al., 2021). Approximately $5 billion dollars was allocated to long-term care facilities through the Coronavirus Aid, Relief, and Economic Security (CARES) Act to support enhanced infection control measures, increased testing and hiring of additional staff, and technology to connect residents and families during the time of visiting restrictions. Although these disasters and global pandemics and the financial impact they entail cannot be entirely predicted, it is important for the nurse leader to anticipate potential costs and demands for resources and plan accordingly. Additionally, the nurse leader is responsible to provide influence and strategic guidance in emergency preparedness for times of crisis that will inevitably and massively impact the financial standing of an organization.

Effective financial budgeting can also impact potential staff shortages. With projected workforce shortages due to aging patient population, and aging workforce, properly budgeting for hiring new staff, and the costs of effectively training them will ensure that the organization continue for perform well. By providing new staff adequate training, this not only improves employee job satisfaction, but also improves retention, and subsequently reduces employee turnover and the costs of having to re-hire and re-train new employees.

During events of crises, and even in their absence, it is important for the nurse leader to effectively communicate with other leaders to ensure that the mission of healthcare organization and the priorities therein are achieved (Waxman & Knighten, 2023).  Focused and effective communication with other leaders brings clarity to the needs of an organization, and allows a cohesive approach to problem solving, conflict resolution, and strategic planning and implementation.

References:

Centers for Medicare & Medicaid Services (2023). National Health Expenditure Data.  NHE Fact Sheet. Retrieved August 1, 2023,  https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nhe-fact-sheetLinks to an external site.

Kaye, A.D., Okeagu, C.N., Pham, A.D., Silva, R.A., Hurley, J.J., Arron, B.L., Sarfaz, N., Lee, H.N., Ghali, G.E., Gamble, J.W., Liu, H., Urman, R.D., & Cornett, E.M. (2021). Economic impact of COVID-19 pandemic on healthcare facilities and systems: International perspectives.  Best Practice & Research Clinical Anaesthesiology. 35(3), 293-306.  10.1016/j.bpa.2020.11.009Links to an external site.

Waxman, K.T., Knighten, M.L. (2023).  Financial and business management for the doctor of nursing practice. 3rd ed. Springer.

Carolyn Barnett

Many issues have impacted healthcare organizations over the past several years (Covid-19, SARS outbreak, healthcare cost increases, etc.)  that have led to the instability of some institutions financially. Resource management is imperative in healthcare in order to remain financially stable and efficient. Budgeting enables managers to know how much to allocate to each area based on need. When a need exceeds the budget, it will enable the manager to seek to prove the need to present to administrators who set the general budget. The manager should also look for ways to decrease resource usage by teaching all staff to be aware of waste. Staffing for nursing is a large part of any hospital budget and must be creatively managed to decrease staffing shortages and ensure the availability of trained staff that are able to provide safe care (Clemmons-Brown, 2023). When staffing personnel in an organization, the requirements could be calculated by determining needs through a patient classification system that works best for the patient units (Stafseth et al., 2018). The system would help to determine the number and type of staff needed. Understanding the rise and fall of the needs of the unit will enable the manager to budget accordingly, request more money, or redirect funds to other areas. If budgeting is done in this way, the resources can be allocated more wisely to prevent overspending in one area and deficits in another area.

Budgeting can improve communication across disciplines with all staff understanding the limitations and expectations to work within that budget. Each area needs to determine where inefficiencies are in the specific area and what can be done to correct the inefficiency. It is not appropriate to simply cut back on service as it will not help the organization to grow (Clemmons-Brown, 2023). Leaders of various disciplines can look with the help of their staff to see how various resources can be shared with other disciplines to reduce costs. For example, to care for patients, resources can be kept on a unit to be shared by all disciplines rather than each keeping and bringing their own supplies. The human resource factor cannot be ignored and allowing RNs to work to the full extent of their scope of practice would be beneficial. Nurses, when allowed by their facility, can do a swallow screening before an order is written for another discipline (OT, PT, or radiology) is consulted. This would reduce the burden on other disciplines.

Improvement of communication across disciplines becomes important as many organizations are looking to do group purchasing with other organizations to decrease the costs of resource supplies (Sisk et al., 2021). Communication will help to determine what is commonly used in various disciplines to have a voice in what is purchased by the GPO. Without good communication supplies may be purchased that have little value for various disciplines and will not be used well and end up being wasteful and not saving money in the organization.

The financial health of an organization can improve its performance. Financially healthy institutions will not only reduce waste but will build into the employees through the upholding of their mission, vision, and values. Having everyone on the same page helps to focus on what is important to the organization and be able to map out a plan directed toward reaching their goals. Finances will be directed toward the efforts that are deemed important to the organization. With incentives given through value-based care, organizations are looking to achieve the maximum reimbursement for care given to their clients and to incur the least number of penalties (Daras et al., 2021). Reducing infections, length of stay, and decreased readmissions become important to both acute, skilled, and long-term healthcare facilities. Although Chatburn et al. (2021) applied value-based care to respiratory therapy it is important for all healthcare professions where there is a need for evidence-based protocol-driven models that help to improve the outcomes of clients. Each discipline needs to demonstrate its value in the organization to help support the financial stability of the organization.

Reference

Chatburn, R. L., Ford, R. M., & Kauffman, G. W. (2021). Determining the value-efficiency of respiratory care.  Respiratory Care,  66(12), 1892–1897.  https://doi.org/10.4187/respcare.09100Links to an external site.

Clemmons-Brown, C. (2023). Financial management in times of uncertainty, shortages, and change. In K.T Waxman & M.L. Knighten (Eds.)  Financial and business management for the doctor of nursing practice. (3rd ed., pp. 25-58). Springer Publishing Company.

Daras, L. C., Vadnais, A., Ye, P., DiBello, M., Karwaski, C., Ingber, M., Fang He, Segelman, M., Lang L., & Poyer, J. (2021). Nearly one in five skilled nursing facilities awarded positive incentives under value-based purchasing.  Health Affairs,  40(1), 146–155.  https://doi.org/10.1377/hlthaff.2019.01244Links to an external site.

Sisk, S., Schmidt, R. N., House, M. E., Dayama, N., & Posey, M. (2021). Reducing supply costs in healthcare through the utilization of group purchasing organizations (GPOs).  Journal of Business & Behavioral Sciences,  33(2), 24–35.

Stafseth, S. K., Tønnessen, T. I., & Fagerström, L. (2018). Association between patient classification systems and nurse staffing costs in intensive care units: An exploratory study.  Intensive & Critical Care Nursing,  45, 78–84.  https://doi.org/10.1016/j.iccn.2018.01.007