Richard L. Clarke
We speak a different language. We get on each other’s nerves. But go below the surface, and you’ll find that finance and nursing have the same goal: caring.
“You don’t justify to finance. You fight with them.”
“The lens that a CFO sees through is completely different than the lens we see through. They look at us only when they’re losing money, and when they’re losing money, they look at each one of us because we have the biggest budget.”
“My CFO? I used to view him as an irritant in my butt. I saw us as two people who were talking a totally different language, and two people with totally opposing priorities. But I realized that if I was going to represent the needs of my division at the table and be heard, I had first of all to understand the needs of the organization. At this point, my financial counterpart has become my colleague.”
—Quotes from nurse executives at HFMA focus groups
No doubt about it: We finance types can be frustrating to nursing. Nurse managers often believe that we just “don’t get it,” with “it” being the importance of high-quality patient care. Nursing feels they hear from us when the news is bad—like a negative variance on the P&L. And then we discuss the matter with finance jargon like “a negative variance on the P&L.”
But let’s be honest—nursing executives and managers frustrate us sometimes, too. Many are business-savvy, but some don’t seem to understand that the well of money for patient care is not infinitely deep, and that if money isn’t spent wisely, there will be no care to provide—good or bad—to those people who need care so desperately.
It’s like nursing and finance are driving in opposite directions around a racetrack. We both have the same finish line: providing the best, safest care to our communities. We’re just approaching this finish line from opposite directions.
This situation has deep roots in the personality types and the professional concerns inherent in finance and nursing. But no matter how deep-rooted the situation, the quality of interaction between finance and nursing must change—and quickly.
Let’s take a look at the reasons change is necessary and some specific actions that will make this change happen.
The Alignment of Quality and Cost
Perhaps the single most pressing issue that finance and nursing can rally around is patient safety. The Institute of Medicine reports To Err Is Human and Crossing the Quality Chasm were a wake-up call for all healthcare professionals about the need to improve patient safety and the quality of care. According to those reports, many patient safety issues can be linked to a lack of teamwork among all levels and components of a healthcare system. Blame the silo effect that is omnipresent in many healthcare organizations. Groups like finance and nursing tend not to work together as a team, which causes faulty handoffs. For example, if finance doesn’t know that the reason a nurse manager is requesting new equipment is to reduce patient falls or infections, the needed dollars may not be approved.
The emergence of pay for performance is also forcing nursing and finance to become more aligned. By “performance,” payers really mean “value,” or the best possible quality for the least possible cost. Suddenly, there’s a much closer link between how hospitals get paid and how they deliver care. Nursing and finance are at the front line of the pay-for-performance revolution. If finance and nursing don’t cooperate to ensure high-quality, efficient patient care, an organization will start seeing payments decline.
All of this is occurring in a fixed-price environment, which is a radical change for hospitals. For years, hospitals have been able to fluctuate prices as costs have changed. When costs have gone up, hospitals have asked payers to cover the difference. But hospitals and health systems no longer have this luxury. The public is pushing more and more for transparency about prices as well as quality. Government agencies and consumer watchdog organizations are beginning to publish performance, price, and cost data. For example, in Wisconsin, anyone can go online and see how much hospitals in various areas of the state charge for a normal birth or total knee replacement. Hospitals with higher prices are naturally going to start losing patients to lower-cost competitors.
Instead of driving price to cost, hospitals must now learn to drive cost to price, or find ways to reduce costs so they can maintain or reduce their prices. It’s only natural to review a major cost area like nursing for possible cuts. But the current emphasis on quality and safety makes it more important than ever to enlist the help of nursing managers. Finance and nursing must work together to find ways to improve efficiency—and maintain quality—with technology, process changes, staff education, and other improvements.
This framework for why collaboration is important must be communicated to both finance and nursing. “We need to make collaboration between nursing and finance not only an obvious thing to do but a necessary thing to do,” says Pamela Thompson, MS, RN, FAAN, CEO of the American Organization of Nurse Executives.
Go Beyond the Numbers
When the numbers on the page don’t look right, we in finance tend to assume that management has erred in some way. For example, if a nursing manager’s staffing budget-versus-actual is off, we assume, given the average day census, that the manager is overstaffing the unit.
But we need to look beyond the numbers if we are going to meet the challenges facing health care. Numbers never tell the whole story. Only the people involved in the day-to-day delivery of patient care can tell us why staffing levels have gone up or down or why supply costs are 10 percent higher than average this month.
We cannot look beyond the numbers while sitting in our offices looking at spreadsheets. We need to have regular, frequent, focused conversations with nursing executives and managers.
“Finance needs to understand what it really takes to run a nursing unit and what it really takes to provide quality patient care,” says AONE’s Thompson. How many nurses with different types of skill levels are truly needed from one shift to another? What does it take to reduce hospital-acquired infection rates on a general medical-surgical unit? What about in the intensive care unit, where patients are sicker?
Before identifying places to cut costs, we first need to know what’s essential or core to fulfilling our organization’s commitment to our patients and our communities. Thompson and other nursing leaders tell us that the only way we can find that out is to get down to the nursing units on a regular basis and have conversations with nursing managers and unit nurses around quality and patient safety issues—not just casual conversations, but conversations with a clear purpose.
We need to keep three principles in mind when we approach nurses, according to nursing leaders: listen, understand, and coach. Start by asking nurses questions about what’s important to patient safety and quality—and listen to what they say. Then, ask follow-up questions until you understand what is going on.
Next, finance needs to coach nursing managers, helping them identify better, more cost-efficient approaches. Together, finance and nursing managers might be able to find, for example, ways to reduce staffing costs without harming quality. Alternatively, they might work together to build a case for hiring more nursing staff in order to reduce patient safety problems.
Financial Managers Are from Mars; Nurses Are from Venus
The best-seller lists are studded with self-help books that attempt to interpret the language of men for women and vice versa. Perhaps one of these books is necessary for finance and nursing.
“It’s almost to the point where one is speaking English and one is speaking German,” says Tom Cooper, executive director of the Association of Perioperative Registered Nurses.
But the language problem is just a symptom of a deeper issue, Cooper stresses. “Many nurse managers have been recruited out of the clinical role and thrust into a management position with very little training or support for that position,” he says. “In many cases, they’re left to their own devices to get up to speed on all the business aspects of managing the OR.”
Another problem is the natural fear that many people have of looking incompetent, according to Kathy Sanford, RN, MA, DBA, FACHE, incoming president of AONE. “But it’s OK to be incompetent in an area that is not your expertise. That’s called growth.”
Sanford suggests that CFOs, as hospital leaders, encourage clinicians to grow and learn more about the business side of a hospital. At the beginning of every conversation, she says, encourage nurses to interrupt and ask questions if they don’t understand.
Breaking down these language and cultural barriers is essential for enhancing the working relationship between finance and nursing. Each financial manager needs to view himself or herself as an “interpreter” for clinicians. But keep in mind that being an interpreter does not mean offering dumbed-down explanations of financial terms. It means in every conversation and in every meeting explaining financial concepts within the clinician’s frame of reference—
what’s best for the patient.
Obviously, we cannot forget our fiscal responsibilities. But we can phrase our intentions with a nurse’s perspective in mind. For example, instead of “reduce costs,” we could say, “Let’s benchmark best practice to improve efficiency
or productivity so we can devote more dollars to providing quality care.”
The Business of Caring
There are organizationwide steps that can help bridge the language and culture barriers, beginning with providing business and financial training for nurses. That training should be founded on instruction about the basic financial pressures hospitals face. This macro-level training might answer questions such as:
- Where exactly does the hospital’s money come from? What percentage comes from Medicare, Medicaid, managed care contracts, and patients themselves?
- How does Medicare decide to pay us? What about managed care payers?
- Why is financial performance so important to enable access to capital markets?
- What is pay for performance, and what impact does clinical practice have on payment?
“A simple thing is to make sure that all nursing managers know how to read and understand the balance sheet,” says Sanford. “But, of more importance, they need to understand how decisions they make on the clinical unit affect the overall success of the organization and why the overall success of the organization affects what they can do on the unit.”
More specific business training may also be needed on the hospital’s budgeting process and other topics. “The best way to determine what training nurses need is to ask,” says AONE’s Thompson. “Conduct a needs assessment to see what business processes nurse managers understand and which ones they need some help on.”
All of these educational sessions should be set up to provide joint learning experiences for finance managers as well as nurses. For instance, having the hospital CFO and CNO teach business classes together would send an important message to nurses that the financial and clinical sides of the hospital are intricately linked. It also gives the CFO an opportunity to learn about issues that are confusing or vital to nurses.
Another idea: Have nursing and finance managers, together, attend educational sessions on timely business issues. Or bring in speakers on business topics that are relevant to clinicians and finance. Pay for performance is one topic that would be relevant to both groups. By learning about this topic together, nursing and finance managers will benefit from their different perspectives.
Other Ideas for Enhanced Collaboration
Hospital CFOs should sit down with their CNOs to come up with other specific ideas for increasing nurse-finance collaboration. Here are a few possibilities.
Set a regular lunch date with your CNO. “The collaborative spirit between finance and nursing needs to start at the top,” says Joyce Zimowski, vice president, financial performance improvement, Unity Health System, Rochester, N.Y. “The CFO and CNO need to be friends. The more they are seen in that light—having lunch, joking, being cordial in meetings—the more that message of collaboration will come through and the more collaboration will take place throughout the organization.”
Assign specific financial staff to specific clinical departments. At Unity Health System, each financial analyst is assigned to a specific group of clinical departments, says Zimowski. Each analyst works regularly with the vice president over those departments and with the people who report to that vice president. “This structure creates a familiarity, an ongoing working relationship.”
Give nurse managers tools to help them make a business case. Many nursing managers find it difficult to prove how an investment on one clinical unit, such as the purchase of new safety scalpels in the OR, might decrease hospitalwide infection rates or liability exposure, says AORN’s Cooper. “What they hear is, ‘You’ve got to find the revenue to offset this cost. This has to be budget neutral.’ As a result, nurse managers feel powerless to implement something that may improve care and reduce costs because they can’t demonstrate where those cost savings might be.”
To counteract this type of challenge, Unity Health provides clinical managers with detailed instructions on how to conduct a high-level business analysis when they want to expand or create a service line. Clinical managers can also contact finance for help in analyzing such things as
competition, market share, barriers, and
opportunities to improve quality or reduce costs. “Once this analysis is presented, if the project gets a tentative green light, finance and the clinical departments then work collaboratively on a detailed financial analysis,” says Zimowski.
Present your CNO’s report at meetings—and have the CNO present your report. This may sound like a gimmick, but if you have to present the CNO’s report at the next board or employee meeting, you will have no choice but to learn what the CNO means by “acuity-based master staffing ratio” or why the hospital is using so many agency nurses. And the CNO will have a better grasp of balance sheet issues. But more than just helping familiarize each other with vocabulary, this role reversal will help a CFO and a CNO truly understand each other’s core goals for the hospital and the patients.
Establish a hot line for nursing finance questions. This would be especially useful during budget time.
Provide ample warning of budgetary changes. Avoid surprising nurse managers. “It would really irritate me if I thought I had a budget for five RNs and then I came in on a Monday morning and was told, sorry, you only get four,” says Sanford.
Have financial managers spend time in scrubs. “This is the only way people in finance will better understand how things work in the clinical areas,” says Zimowski. Cooper advises having a nurse or other clinician serve as a coach to the finance manager during a day on the unit to help explain what is happening.
Nurses Have a Responsibility, Too
This article focuses on actions financial managers can take to improve nursing-finance collaboration. But nurses have a responsibility as well. Many of the tips outlined above can be reversed and applied to nurses. For instance, nursing managers need to “interpret” clinical language and concepts for financial managers. They need to help us understand what they mean by “patient care model” and other nursing terms.
Nurse managers also need to keep us financial people in the loop. “I’ve sat down with CFOs and controllers and have been blown away by what they didn’t know about what was going on in operations,” says Sanford. “I’ve thought, ‘Oh my gosh, we have really been unfair to these finance people.’ They don’t know that we are planning this and why. They don’t know that the practice of nursing has changed on this floor and why. They don’t know that there is a new model of patient care and why.”
Nurse managers could benefit from walking in the shoes of financial managers, too. (And they may realize that not all of us wear wingtips.) Nurses need to see why it’s so important to build a business case—as well as a quality case—when they want to hire additional nurses, purchase new equipment, and make other costly improvements. They need to view the organization as a system of care—one in which investments must be rationed to achieve the best outcomes. Considering a resource request within the context of the overall organization gets more buy-in and creative solutions.
We’re All Here for the Patients
Financial managers do not enter the healthcare field because of its logical financial processes or its hefty remuneration. Like nurses, most of us are in this field because of patients.
Just one example comes from HFMA’s 2005-06 chairman, Richard Rodriguez, who is assistant administrator of University Hospital, a part of the University Health System in San Antonio, Texas.
“When I was in college, one of my fraternity brothers had a brother who passed away. The reason this happened was that he had not been able to afford the proper medical care to deal with a chronic medical condition. Now, there may have been some options available to him, but he certainly hadn’t known about them. So as I’ve gone through my career, the story of my friend’s brother has always stuck with me, and it has served as an important reminder of how the field of healthcare financial management truly has the potential to save lives. If we treat health care as a business only, we will lose sight of this greater cause.”
No matter who initiates the conversation, I have to believe that if nurses and financial managers learn why each other got into health care, and what keeps them there, we will see each other with new respect.
This article is full of specific suggestions for how to improve collaboration between nurses and financial managers. Choose just two of them. Or choose only one. Implement it today. Do it because prices can no longer be adjusted based on cost. Do it because pay for performance is coming. Do it for the financial health of your organization.
But do it most of all for the patients. They are why we’re all here. We’re in the business of caring.