Financial Statements and Quality Patient Care    

Financial Statements and Quality Patient Care

Introduction

Nursing homes always face constant challenges in delivering high quality care in their ever-competitive environment. In many areas around the globe, nursing homes and hospital care are ever faced with problems relating to the workforce, patients’ demands such as an increase in access to care, and improved patient-centered care. Other issues also include changes in policies regarding reimbursement, demands for transparency and accountability, along with regulations from the federal and state means. All this means that nursing homes must be able to balance the challenge of providing quality healthcare while also avoiding financial constraints. Nursing leaders must be able to find ways in which they are capable of raising their value while also reducing the costs. Nursing managers should be able to analyze financial statements, manage financial resources for the effective allocation of resources. In different nursing homes, poor economic performances, which lead to bankruptcy and closure of data, have been associated with organizations’ failure. When interviewing many of the nursing managers, most of them gain knowledge of analyzing financial statements through trial and error or experience. This makes it crucial that when nurses are promoted into management, they have to be prepared in terms of financial management skills.

With nursing homes all over the world facing similar issues, managers or leaders should foster environments that allow growth and development in a place. They should be able to form policies that improve their delivery of services and lower the costs through a proper analysis of financial statements. According to most of the nurses’ leaders, most of these reforms are shaped by health or nursing economics. Maldonado et al. (2019) state that nursing homes with higher quality care are capable of lowering their residents’ costs resulting in improved finances. With the data collected from interviewing a nurse leader, there is a relationship between financial performance and quality care. The different operating costs, financial leverage, and assets are crucial factors in determining quality health care. The questions included what are the various factors associated with financial statements is involved with your work? How do you think about your ability to manage healthcare economics? What are the different ways you got in increasing revenue or reducing the costs in relation to the provision of quality health care? How do you think about other nurses’ ability to help fulfill the financial demands in the organization? Through analysis of financial statements, what are the signs of a quality health care system?

What are the different factors associated with financial statement is involved with your work?

According to the nurse leader, financial management alongside financial statements analysis are fundamental aspects of the entire department. The basics associated with business management include evaluation and planning, making crucial decisions regarding long-term investments, making different financing decisions help to prevent expensive medical conditions. This is mainly ways that help in controlling internal affairs and manage risks within the organization; thus, they are more on business analytics and performance.

In evaluation and planning, the main focus is on the financial plan effectiveness concerning different operations conducted in the organization. This also involves maintaining various issues such as negotiating contracts with clients and nurses and making cash available to cover different unexpected costs. This information allows the organization and other members of the board team to understand and make strategic plans for the future. In making decisions on long-term investments, inputs from different hierarchical levels are considered. Analyzing the implementation of these strategies and determining its financial effects is determined by the financial team.

Meeting and making different financial goals involves activities such as raising funds through loans, grants, or even application of internal funds. The financial team considers various aspects, such as the benefits of a particular investment and also what debt the organization might incur. For instance, in terms of renovation in the organization, the financial team is responsible for determining how much it will cost as well as how long it would take. They are responsible for deciding whether to use internal organization funds or seek a grant or loan to help in the expenses.

Furthermore, the financial team is also responsible for preventing expensive medical costs. The team is responsible for providing cost-effective medicines and equipment’ which cannot be challenging for their clients. With the health care organization serving the same patients for some time, it is crucial to provide a treatment that is cost-effective to them. According to a study conducted by Bai et al. (2017), financial management is emphasized as very important in the development of a senior nurse leader. In matters that involve balancing quality health care and making great financial control in an organization, a nurse leader decision making is crucial in an organization. He/she is also responsible for motivating the other head nurse to make personal improvements and make changes. According to the study, most of the head nurses state that they lack finance-related courses before transitioning into the leadership role. This makes them through their personal experiences prevent an increase in medical costs and prevent a shortage of medical resources.

How do you think about your ability to manage healthcare economics with the provision of quality healthcare?

According to the nurse leader, even though most of them transition to the leadership role without much knowledge in nursing economics, their experience, trial, and error is what helps most of them prevail. Although financial competency developed through financial education is crucial in quality health care economics, he trusted his ability to create strategic plans that enable the provision of costs effective services.  Different matters regarding the provision of better health care facilities and types of equipment require a budget that has to be approved. Some of the decisions also made from analysis of the financial statements may also be crucial in deciding a budget; thus, most of the senior nurse leaders require finance specialists.

Lack of knowledge concerning the budget process was the only hindrance, but he is responsible for coordinating and performing various financial plans and activities. All these activities are crucial during the formulation of a budget. Furthermore, controlling and managing the budget is also one of the duties that he exercises. Monitoring the budget and determining the current financial situation of the organization is part of financial statement analysis.

Despite their lack of prior knowledge before transitioning and financial incompetence, they are capable of making decisions on all expenditures in different nursing sections.   He/ she is part of the committee that is responsible for making financial decisions taken in terms of analysis made from the financial statements. This requires most of them to have skills and abilities to solve different tasks. Financial education can be crucial in making them improve the financial competencies needed in health care economics.

What are the different ways you got in increasing revenue or reducing the costs to allocate resources for quality health care?

According to the nurse leader, ensuring safe and effective health care for patients, it is crucial to have sources where one can generate revenue. These healthcare revenues help in meeting different operational costs within the organization. Some of his significant sources are through government funding, gain some premiums from insurance and out of pocket payments. Funds and aids from the federal government are mainly crucial for individuals seeking medical support. The charities may be informed of grants, programs such as Medicare and Medicaid, which helps in covering costs of different health services. These services may also include small scale disasters that occur in the organization.

In reducing costs to allocate the other resources for quality health care, the nurse leader stated that it is crucial to prevent unnecessary expensive administrative costs, prevent nurse turnovers, and reduce overtime. Lastly, they try to avoid costs generated from Medicaid fraud and abuse. In most health care institutions, the amount of cash allocated to different administrative tasks are costly. Through proper analysis of the financial statements, reductions in aspects such as payment levels and benefits help in reducing the costs. Reducing the nurse’s overtime and preventing turnovers also helps in lowering costly expenses (Mbitcha, 2018). Turnovers in an organization are not only expensive but also affect the safety and quality of work performed in an organization. The time it takes for a different staff worker to reach the levels portrayed by the one who left costs the organization in terms of productivity as well as replacement costs.

The organization, at times, spends some cash in trying to cover the nurse who left through advertising, recruiting, and, at times training new staff. Also, in reducing overtime, the morale of workers may improve, which can have significant improvements in terms of cost savings and productivity. Lastly, a lot of healthcare expenditures can be lost through fraud or waste. Individuals are capable of issuing fake bills. This results in different matters, such as drug shortages in terms of provision and supplies.

With new inventions required to facilitate improved quality and safety conditions in hospitals, increasing the revenues, and reducing different costs are crucial. Competition within the nursing industry thus requires nurse leaders to deliver a much higher quality care. Cutting the prices of various factors and seeking better revenue plans can be of much importance in determining the quality provided by the institution. The provision of high quality care may also lead to generating high revenues making it more efficient.

How do you think about other nurses’ ability to help fulfill the financial demands in the organization?

According to the nurse leader, providing data and different financial statements analysis to other nurses also affects the quality of patient care within the organization. To him, it is crucial for health care organizations to provide high performance and quality services to their patients to satisfy their demands. Lack of necessary financial skills among other nurses is considered a barrier because, in organizations, cost reduction factors without improvement may lead to false savings. Inclusiveness, in terms of financial management, can also help in leading also to effective reallocations of resources and help in increasing profits and reducing different costs.

In terms of financial education for clinical nurses, the aspect has not been thoroughly developed. Clinical nurses lack the necessary financial skills, which can be crucial in managing and allocating resources in the organization. Financial education for nurses can be an essential component in developing their financial competency. According to Lima & Noh (2015), the key six elements that can help overcome this financial barrier is for clinical nurses to understand the basic financial statements and management. Also, advanced use of financial statements will help in preventing the gap between their nursing functions and finance. For the provision of quality health care, understanding the basics and advanced components of financial statements is necessary for clinical nurses. This can be achieved through financial education. This also applies to develop nurse leaders for them to gain essential financial management and statement skills. Proper training can help in learning skills in how to manage budgets, write proposals for grants, and formulate business plans.

 Through analysis of financial statements, what are the signs of a quality health care system?

According to the nurse leader, health care organizations that earn additional profits from patients due to improved quality is one of the positive signs of a quality health care system. He states that declining levels of earnings due to matters such as surgery issues can cause financial pressures. Secondly, healthcare facilities with more liquid assets and are capable of gaining extra financial assistance from outside sources. The third is if there is significance in terms of a demand for quality care and safety services, the health care system may also incur a cost in terms of labor payment. An increase in labor payment due to a high quality workforce demand is also seen as a positive sign.  Lastly is the effective allocation of finance and resources such as reducing medical errors and drug wastage is also a sign of quality health care system.

Through the use of a financial statement, a nurse leader can help in formulating different policies in which the organization can be more like a business-based health care system while also providing quality care.  He /she is capable of developing ways in which capital can be raised in the organization and earn additional profits while also providing a quality health care system. With an increase in terms of profit gained, health care institutions possess an ability to finance different investments. It can also help in raising their labor costs to attract better-skilled personnel, which thus improves their quality care.

In conclusion, a financial statement is a crucial component in the provision of quality health care and safety services. The two aspects co-relate as they are critical in determining the success of a health care facility. Financial statements help in providing an assessment of different matters such as profitability, asset liquidity, costs in terms of operation, and debts. With more health care facilities being in pursuit of profits or business-oriented, it is also of much importance in providing quality health care. Most nurse leaders lack financial education, which is crucial in their skills and abilities to cover different financing problems. It is of much importance for them to engage in different training that will help in developing their expertise. Furthermore, clinical nurses also should be able to possess the necessary skills and understanding of various financial matters. This will help in ensuring the effective allocation of resources and thus improve the health care system and patients’ safety services.

References

Bai, Y., Gu, C., Chen, Q., Xiao, J., Liu, D., & Tang, S. (2017). The challenges that head nurses confront financial management today: A qualitative study. International journal of nursing sciences, 4(2), 122-127.

Lim, J. Y., & Noh, W. (2015). Key components of financial‐analysis education for clinical nurses. Nursing & health sciences, 17(3), 293-298.

Mbitcha, J. C. T. (2018). Strategies for Improving Healthcare Efficiency While Reducing Costs.

Weech-Maldonado, R., Pradhan, R., Dayama, N., Lord, J., & Gupta, S. (2019). Nursing home quality and financial performance: is there a business case for quality?. INQUIRY: The Journal of Health Care Organization, Provision, and Financing, 56, 0046958018825191.