The relationship between nursing and finance executives is often frosty. Promoting a thaw is in everybody’s best interest.
You might call it The Great Divide: on one side, the nursing staff; on the other, the finance department. And in the middle is the CEO, hoping that some day the two camps will finally link arms and make nice for the overall good of the hospital.
Well, maybe the hand-wringing can finally stop. New market realities, such as pay for performance and increased attention to patient safety, are forcing nurses and financial leaders to work together as never before, with significant benefits to staff morale, patient care and the bottom line.
The nursing and finance departments have long been at loggerheads in hospitals. “Nursing has always been seen as wanting, wanting, wanting, while the finance people want to make sure the hospital survives and thrives,” says Kathy Sanford, R.N., chief nursing officer and senior vice president of Catholic Health Initiatives, Denver. “In the past, I don’t think either side made their case well, and I think that goes back to vocabulary.”
Sanford’s point is well taken. Financial execs live and breathe debt ratios and balance sheets, while nurse managers are steeped in clinical care indicators. Richard Clarke, president and CEO of Health Financial Management Association, says his group got interested in changing that dynamic after seeing the Institute of Medicine reports on patient safety and research showing that safety issues can often be linked to a lack of teamwork at a health care organization.
“We wondered, ‘What is our role in this?’” Clarke says. “That got us talking to our members and listening to nurses.” In 2005, HFMA held a series of focus groups and found that the relationship between nursing and finance at many hospitals was cordial but cold at best, and, at worst, downright adversarial. “Finance folks talked about nurses that would ask for budget allocations without a business case, and referred to nurses’ faulty math,” he says. “Nurses would say, ‘Finance only talks to us when they have to cut dollars,’ and that finance managers simply didn’t understand the dynamics of running a patient care unit.”
Given its spending oversight, the finance department often has tense relationships with other departments, but even more so with nursing. “Nursing consumes 30 percent of a hospital’s operating budget and there’s the potential for staffing and supply overutilization. If it’s not managed properly, it can bankrupt the organization,” Clarke says. “Because it represents such a huge outlay, there’s a tendency for finance to focus on nursing.”
HFMA and the American Organization for Nurse Executives have launched initiatives in the last two years to get nursing and finance to better connect. Their monthly financial newsletter for nurses, “The Business of Caring,” now has 10,000 subscribers. The two groups also host podcasts on topics important to nursing and finance executives, such as growing a service line. “How do you achieve quality patient care that is cost effective and maximizes use of resources?” asks AONE’s CEO Pamela Thompson. “You can’t do it if you don’t work together so that each perspective informs the other.“
Both Sides Now
Two colleagues who actively share their perspectives are Shawn Ulreich, R.N., CNO and vice president of patient care services, and Joseph Fifer, chief financial officer and vice president of hospital finance at Spectrum Health Grand Rapids (Mich.), which staffs nearly 1,000 beds with an annual operating budget of $1.2 billion. When Ulreich was hired on three years ago, he and Fifer expressed an interest in learning about each other’s discipline.
“Nursing is the single biggest service we offer and our biggest budget line item,” Fifer says. “To be an effective CFO, it’s critically important for me to understand what goes on on a patient floor.” In the same vein, Ulreich wanted to learn about the financial data related to nursing. At the time, Spectrum was introducing a new way to measure expense: by hours per patient unit, instead of hours per patient day. “Shawn wanted to understand the new metrics as a way of managing those units, and that really opened a door,” Fifer says.
Now, Fifer accompanies Ulreich on patient rounds, and the two hold monthly financial roundtables with nursing managers and members of the finance staff. The meetings include an educational component, such as learning about the impact of transfer DRGs, and selected nurse managers give updates on their units’ financial performance. “It’s a great opportunity to hear the stories behind the numbers,” Ulreich says.
Fifer recalls one instance in which the expenses on an orthopedic unit were running much higher than was budgeted. “We discovered in the meeting that a higher complexity of patient conditions was driving up costs. But that turned out to be a good thing, because it drove higher-paying DRGs as well,” he says. While finance might have been able to decipher the real story, it would have been buried in contractual allowance data. “If we do our jobs just sitting in our offices, you can draw the wrong conclusion,” Fifer says.
Tom Crilly, vice president, corporate controller at Unity Health System, Rochester, N.Y., says that more communication with nursing has strengthened his ability to make business recommendations. “You feel more solid when you have to make a report,” he says. “I can have a much more robust information database, if I have the support of nursing.” Discussions with Candace Smith, R.N., Unity’s vice president of patient care services, helps him see nursing’s side, and that can be eye-opening. “In finance, we are trained to look at what is going to make the most money or save the most money,” Crilly says, “but in health care that’s not always the right thing to do.”
For her part, Smith takes into account costs when proposing new projects, and understands that patient care has to be balanced with the bottom line. “We foster an ‘us’ attitude instead of a ‘we versus they,’” she says. “We work on initiatives together that support the overall delivery of patient care.”
For instance, Unity recently approved a $1 million expansion to its endoscopy suites. Crilly and Smith both serve on the capital equipment advisory committee. Crilly admits he wasn’t initially in favor of the expansion, while Smith was a big advocate. “It took me six months to come around,” Crilly says. “Initially, I didn’t think the business case was strong enough.” But as both nursing and finance gathered more data, demand for the service was evident among both physicians and patients. “If the project would have been rejected, it would have been bad for the organization,” he says now.
The Trust Factor
Spectrum Health’s Fifer and Ulreich maintain that better cooperation translates into better financials. For example, Spectrum’s cost per adjusted admission is on budget—something it wasn’t achieving five years ago. “Our forecasts are more accurate, and that’s because the budgets submitted by nurse managers are more accurate,” Fifer says. Making nurses aware of where their unit stands financially keeps them more vigilant. Nurse managers feel more ownership of their units and feel peer pressure to stay on budget, Fifer and Ulreich say. Budget variances are tracked every month and nurse managers review them closely to see what caused them.
At other hospitals, finance departments are forced into a police role, tracking down variances and why they occur. “I can’t hire enough police,” Fifer says. And financial staffs sometimes hoard information, making it difficult for nursing to take ownership. Empowering nurses to take responsibility for their own units has changed that dynamic at Spectrum Health.
A good relationship at the top also sets a tone. “If Shawn and I work well together, there’s a cascading effect,” Fifer says. “If the finance and nursing managers see us working well together in meetings, the people will think, ‘Maybe I can work well with a finance manager’ and vice versa.”
Of course, the occasional disagreement is inevitable; the difference is it no longer leads to an impasse, with finance simply refusing to OK funds for a nursing request. Now they work through their differences.
There’s also much greater mutual trust. “If I say I really need something, there’s an appreciation of that on the other end,” Ulreich says. “Joe knows that I can defend and support the request.”
And Fifer’s support has proved valuable. “If he supports [an investment request] my getting it approved is much greater because I know he has a closed door conversation with the president and sits down with the finance committee of the board.”
“It comes back to the trust factor,” Fifer says. “I know her first solution to a problem isn’t to throw bodies at it.”
These days, more nurse managers receive financial training, and many even pursue graduate degrees in business. Maggie Ozan-Rafferty, R.N., a nursing consultant in Orland Park, Ill., says she got a wake-up call 10 years ago while serving as a first-time CNO. She made a presentation to the leadership team asking for additional nurses, basing her appeal on nonfinancial factors such as how staff nurses dislike working with agency nurses and that a bigger staff would improve patient care.
“The CFO pulled me aside and told me to be more businesslike,” Ozan-Rafferty recalls with chagrin. “He was calling me on my presentation. At the time, I was mad, but he was right.”
It was a valuable lesson. For a later presentation Ozan-Rafferty met with the hospital’s controller to get solid financial figures to support her request for more staff. Ozan-Rafferty later earned an MBA and the controller—who had been promoted to CFO—critiqued her college papers.
“It all starts when you reach out and ask. You can build a relationship,” Ozan-Rafferty says, noting that, when it comes down to it, “you’re working together for the same goal: high quality patient care.”