The Nurse Manager: The Neglected Middle

Jim McLarty
Debbie McCartney

Hospitals can improve operational and financial effectiveness by providing nurse managers with data-driven, evidence-based management tools and training.

At a Glance

There are seven simple steps hospitals can take to address the development of department managers:

• Survey the development needs of department managers.
• Prioritize development needs.
• Implement results-oriented, hands-on education.
• Implement tracking reports and review sessions.
• Provide accessible tactical financial management support.
• Create top-level mentoring relationships for managers.
• Celebrate successes.

The delivery of patient care is labor-intensive and costly. With staffing and supply costs steadily rising and reimbursement levels declining, hospitals face financial pressures that will only increase in the future.

Nurse middle managers control many labor costs on a daily basis. They are also involved in decisions that have an impact on the cost of patient care. All hospitals work to ensure their nurses are qualified to assess and manage patient needs and follow physician directives. These organizations understandably focus much time and resources on recruiting, retaining, and motivating their nursing staffs. However, many do not focus sufficiently and consistently on ensuring their nurse managers have the skills to manage the high-pressure business complexities of patient care operations. These complexities include budget management, the management and motivation of individuals and teams, and the multilevel communications required in fast-paced healthcare settings.

Training nurse managers on business issues related to patient care operations is a relatively low-cost investment that can pay significant dividends in terms of improved nurse management and nursing staff effectiveness and retention, as well as the overall financial performance of hospital departments.

The Business Case for Business Training
It is difficult to understate the pivotal role of front-line nurse managers. They are truly on the front line of hospital operations, where the realities of effective, individualized patient care and the business of patient care meet. Nurse managers must:

• Make numerous decisions at the point of care that impact day-to-day operations
• Manage large numbers of staff—professional and nonprofessional—that constitute more than half the cost of delivering care, including scheduling, personnel mix, overtime, and hiring
• Serve as a conduit for immediate communications among patients, their families, medical staff, physicians, and hospital management
• Use medical information and technology to administer treatment and make timely patient care decisions
• Influence the retention, performance, job satisfaction, and development of nurses
• Direct implementation of process change and culture change efforts
• Represent a repository of institutional and patient care knowledge

Every day, front-line nurse managers make critical decisions on behalf of the hospital. These decisions relate to managing staff with different personalities and attitudes who represent various disciplines, age groups, and cultures; responding to the different needs and expectations of multiple physician groups and specialties with various practice patterns; meeting the requirements of multiple hospital departments that impact care of the patients; and sometimes addressing the concerns of multiple upper-management staff and administrators with different needs. 

Front-line managers exercise span of control over their work environment, make critical decisions at the point of care that impact the patient outcome, staff morale, medical practice, and the hospital’s financial bottom line. There is a strong case for investing time in providing business training for those who make decisions that affect the hospital’s bottom line.

So for good reason, there is increasing research and attention focused on front-line nurse managers. The focus has primarily been on patient care and the critical interfaces among nursing staff, physicians, and medical technology as they coalesce in the effort to treat and care for patients. However, front-line nurse managers also need skills in the management of hospital business operations—sometimes “financial triage”—including, for instance, knowing how to meet staffing budgets and other operations objectives.

Often, in patient care management settings, nurse managers must contend with time management and resource issues, all the while struggling against the misalignment of their experience, training, and daily job requirements. Too often, nurse managers are overlooked and taken for granted and do not receive the specialized, continuing professional training and development of specific management accountabilities needed to help their units and their organizations thrive.

The Imperative for Change
Opinions differ regarding how much and how well hospitals have responded to changes in what is expected of nurses and nurse managers—as well as in what nurses and nurse managers expect from their organizations. There seems to be broad consensus around one core idea: Organizations should focus more attention and innovation on preparing, developing, and managing nurse managers so these managers can realistically meet and exceed performance expectations.

Nurse managers perform in uniquely high-pressure, contention-filled environments:

• Meeting increasingly more acute patient needs and striving to maintain high patient satisfaction scores
• Working to meet physician needs and marketing services to physicians to continue to enhance market share
• Setting and managing budgets, finding cost savings, and increasing productivity
• Managing diverse individuals from different age groups and ethnic and social backgrounds, and with different levels of professional commitment
• Resolving conflict within and among teams and levels of hospital authority

These facts of professional nursing life should be cast in positive and constructive terms that can help hospitals understand the values and behaviors that nurse managers seek in their work environments. Hospitals should work with their nurse managers to develop a core list of nurse-management-related issues and needs and assess the nurse managers’ work environment in those terms.

For example, some of the more intuitive critical issues and needs include:

• Recruitment and retention of nursing staff at all levels
• Professional nursing development and training opportunities
• Management skills training (including skills for managing people and teams, appreciating ethnic diversity, working with different age groups, managing budgets, performing strategic and succession planning, and implementing process improvements) 
• Career experience progression, formal advancement, and recognition
• Mutual respect and effective communications with all levels of professional and nonprofessional staff
• Conflict resolution involving different personalities, cultures, age groups, and disciplines
• Physician relations, and management of multiple personalities and practice patterns
• Control over work environment
• Working with others to promote sufficient and reliable support services for effective and efficient patient care delivery (such as clerical, IT, housekeeping, maintenance, and other support services)

Critical management resources and tools that nurse managers need include:

• Access to operations data on a timely and reliable basis (e.g., patient throughput data, complaint/error data, overtime and agency logs, and industry benchmark data)
• Budgeting reports that provide budget-to-actual figures, with monthly management reports to document variances and action plans for variances
• Quality measures that support value-based pricing and Joint Commission quality and safety requirements
• Scheduling and productivity tools
• Process and change management tools and training
• Dashboards to assist in daily management reporting that support the strategic plan

Nurse managers are typically promoted internally from the ranks of clinical nursing staff. This is a positive staffing approach in that clinical nurses bring to their management positions rich medical and organizational knowledge. Such promotions also provide a career advancement option for nursing professionals. However, promotion from clinical care to management without ensuring that individuals are prepared and trained—or retrained—is risky business, at best.

Hospitals should develop strategies and training resources that will support the successful performance of nurse managers in their roles. It is interesting—and a critical issue for hospitals to recognize—that when a hospital’s front-line management has the tools and training it needs to succeed, the organization almost always performs at a higher level of financial and operational effectiveness. There is an integral relationship between nurse manager performance and the effectiveness of decision making, controls, and processes throughout the organization.

Data-Driven, Evidence-Based Approaches for Improvement
Translating management theory into operational practice is always a challenge, particularly in patient care environments. However, always focusing on “putting out fires”—one fire at a time—will result in perpetual firefighting, reactive approaches to problem resolution, and no permanent organizational progress. Both anecdotal evidence and formal studies suggest that nurse managers can best succeed in their management roles—and, therefore, make the greatest contributions to their organization—by adopting data-driven, evidence-based approaches in their work.

It is a universal business premise that what cannot be measured cannot be managed. The management decisions most likely to be effective are those based on solid evidence. In a healthcare setting, this simple but profound premise is linked to evidence-based medicine, in which patient treatment decisions are based on proven clinical results. The evidence-based management movement argues for a mindset that emphasizes the collection and analysis of data relating to previous and current relevant experience.

Despite the widespread acceptance of less rigorous management approaches based on unproven new theory and highly selective data, an objective evidence-based approach to assessing the effectiveness of the operations, using proven tools and management approaches, offers hospitals the most reliable means to improve their operations—and, specifically, the effectiveness of their nurse managers’ performance.

A straightforward, five-step approach can accomplish this transformation.

Assessment. Assess current operations management practices and nurse manager effectiveness. Nurse managers and other key personnel should participate in this analysis and help develop recommendations to strengthen operations. It is critical to identify areas in which key data are not readily available or are unreliable and situations in which nurse managers are not trained to use the data to make decisions and track performance.

Improvement. Introduce stronger procedures and controls where needed. For example, it is common to find hospital operational areas that have weak or erratic budget development and daily management practices. Contributing factors are management personnel turnover, a nurse manager’s lack of familiarity with budget tracking, and breakdowns in collaboration between a department and IT or finance, or both.

Improvements almost always involve increasing the availability and use of operational data in management and decision making. When nurse managers have easy-to-use tools to monitor key indicators—such as metrics regarding staffing versus patient days and/or volume, length of stay, or various errors and complaints—it becomes feasible to track performance and achieve improvement. In fact, nurse managers are likely to feel a sense of personal empowerment and satisfaction when they have concrete data with which to make informed decisions.

Training and mentoring. Important for all managers—and for nurse managers in particular—are the linkages among the implementation of new management tools, procedures, and training. In making the transition from clinical nurse to nurse manager, training and mentoring should be available to help nurse managers develop a comfort level with nonclinical processes involved with budget development, analysis and problem resolution, the interpretation of financial data and its impact on the hospital’s bottom-line, productivity tracking and analysis, personnel decision-making and its financial impact, strategic planning (and how the nurse manager’s area of care plays into the big picture for the organization), and effective and efficient nonmedical interactions with hospital administration.

Tracking and measurement. When nurse managers have timely, readily available information, they almost always make better decisions and manage more effective operations. It is critical not only to track routine operational data, but also progress made against specific objectives, such as overtime data or patient admission or length-of-stay data that impact scheduling and staffing decisions.

Transparency. What can be measured can be managed—and the data upon which management decisions are made and the results achieved should be transparent to the team. There is ample evidence that the most successful nurse managers also tend to be open communicators. Having this quality is particularly important when difficult decisions must be made about budgets and personnel, but it is also important in helping staff understand an organization’s productivity, quality performance, and other aspects of its performance.

In short, strong and unequivocal leadership and decision making are critical for successful nurse managers, but so are team buy-in and open communication. And these qualities will only increase in value and importance as the work force becomes younger and the expectations and values of workers evolve.

Improvement Doesn’t Need to Be Expensive
The symptoms of hospital departments that need stronger financial performance are not hard to spot. Typically, the key factors are:

• Recurring budget variances, particularly in regard to overtime
• Declining patient satisfaction
• Increasing staff turnover and other indications of staff stress and low morale
• Managers’ own expressions of feeling overwhelmed and distressed about not reaching their key management objectives

These symptoms are most likely to beset managers who are new in their positions, often coming from exclusively clinical positions. The causes of poor management performance typically include lack of experience and knowledge in financial management, particularly budget management; responsibility to manage a large number of staff members; heavier-than-anticipated patient loads; and other factors that add to the pressures of the work environment.

Addressing these issues and achieving both shorter- and longer-term improvements are not difficult or expensive propositions. The key investment involves a partnership between two internal subject-matter experts—the CNO and CFO. It is these two executives who need to work together to develop the financial skill set of the nurse manager role.

To this end, there are seven simple steps the CNO and CFO should advocate toward recognizing and addressing the development needs of a hospital’s department managers with investment of time from internal resources.

Survey the developmental needs of department managers. The hospital’s CNO and CFO should work together to gain insight into how department managers view their own development needs in financial management. Periodic surveys of front-line managers can identify areas in which managers feel the least confident and in control.

Prioritize development needs. Knowing that everyone’s time is limited, it is important to prioritize needs and identify the most practical approaches and time frames for improvement.

Implement results-oriented, hands-on education. It would be impractical to expect that generic “Finance 101” classes would address managers’ needs in a timely and realistic manner. Instead, a three- or four-session course or a series of workshops built around a few key management topics—such as budget development and management, strategic planning, and score card tracking and reporting—would likely be more appealing and have a more immediate impact. These sessions should be held as part of in-service development rather than a generic management orientation.

Implement tracking reports and review sessions. Steps should be taken to ensure that budget performance tracking reports and scorecards are accurate, timely, and understandable. A financial analyst should meet regularly with department managers to review tracking reports, particularly focusing on variances. Such sessions offer low-pressure opportunities to understand the causes of variances and discuss evidence-based approaches to achieving improvements.

Provide accessible tactical financial management support. A financial analyst should be assigned to each department manager. Brief, regularly scheduled meetings to review budget tracking and other operations reports provide a nonthreatening, nonburdensome framework to help managers maintain a sense of control and empowerment over their operation.

Create top-level mentoring relationships for department managers. Department managers—both new to their position and experienced—benefit from regular review and mentoring sessions with the CNO or other appropriate senior staff member. These one-on-one sessions to discuss progress made against budget and strategic plan goals provide both managers and the CNO with a structured, positive communications channel and opportunities for the senior executive to coach the department manager.

Celebrate successes. Publicly recognizing progress encourages more progress. Recognizing managers who reached or surpassed their monthly, quarterly, and/or annual goals encourages those managers and inspires their peers to stretch their personal goals.

Nurturing the Middle to Achieve Gains
Equipping nurse managers with data and analytical tools and training them appropriately is a relatively low-cost investment that can pay significant dividends. Faced with the need to manage their way through the day-to-day, hour-to-hour “fire fighting” that can become all consuming, nurse managers require these data and productivity and decision making tools to be effective and to have a stronger sense of professional and personal empowerment. In today’s tough healthcare environment, the most immediate and welcome benefit will be stronger—or at least far more predictable and consistent—financial performance. There is also an important corollary between effective nurse managers and the effectiveness and retention of their staffs. In fact, armed with the data, tools, and personal resolve, the front-line nurse manager can be the fulcrum in truly effective and financially stronger hospital operating environments.

Jim McLarty is a senior manager, Ernst & Young Health Sciences Advisory Services, Roswell, Ga. (jimmy.mclarty@ey.com).

Debbie McCartney, RN, MBA, is associate director, health care, Navigant Consulting, Inc., Chicago (debbie.mccartney@navigantconsulting.com).