Financial Fluency: The Currency of Today’s Nurse Leader

Financial management skills are a core competence for nurse leaders and are more relevant today than ever. The American Organization of Nurse Leaders (AONL) and the American Nurses Association have included financial understanding in their core competency models. Within these competencies, the nurse leader must not only have knowledge of financial management but also execute budgets and human resource management and articulate the fiscal impact of decisions.
In the ambulatory care setting, nurse managers are responsible for the clinics' financial performance, including labor expense management and advocacy for resources to meet patient care demands. However, many nurse managers do not feel equipped to speak the language of finance. Therefore, it is essential to develop educational programs and opportunities to strengthen their financial management competencies.
Background: Our facility is a heart and vascular institute within an extensive academic health system in the southeast region of the United States, responsible for 220,000 visits per year across 22 ambulatory care clinics. The institute employs 15 hiring managers who manage over 450 FTEs. With the large number of positions and the financial impact of the salary expense, internal control over resource planning and productivity management was essential. There was an identified gap in the required skills of a manager to build a business case for human capital needs adequately.
Intervention: The heart and vascular institute executive leaders provided training for nurse managers to close the gap in financial skill management. The key focus areas were managing position control, forecasting staffing requirements, identifying and reviewing key performance cost drivers, and developing a business case for change. These focus areas align with the AONL competencies of a nurse leader.
The hiring manager learned to identify the need for additional human resources, justifying this while balancing the clinic's volume and productivity and developing a data-driven justification for the position based on organizational productivity analytics. Additionally, the manager learned how to determine and manage key cost drivers, such as paid overtime and premium salaries. The manager was required to present a business case to a central committee of executive leadership and hiring managers. The committee met weekly to address human resource needs and scrutinize the business case for the resources. The committee reviewed 112 positions in FY24.
Outcomes: Upon implementing the process, the hiring managers have exhibited more confidence in making a compelling business case and have improved their financial acumen. The managers managed the budget to actual FTE variances while managing clinical productivity and decreased the use of overtime and premium salary dollars to below budget. The focus of financial training of nurse leaders leads to professional accountability and management of the financial health of the clinics they lead.