Why is financial management important in healthcare? Why is it important for nurses to understand health care financing? Name some key financial definitions in Nursing.

Financial management is essential in healthcare because it affects patient care, organizational viability, and the ability to invest in technological advancements. Healthcare organizations must maintain fiscal responsibility to ensure they have the resources to provide the best care possible to patients. Financial management is critical to monitor and manage the organization’s revenue streams and cash flows, including billing and reimbursement. It also helps to identify potential revenue streams, reduce costs, and make investment decisions.

Nurses play an integral role in healthcare financial management by contributing to cost-effective patient care, evaluating resource utilization, and participating in budget development. Understanding healthcare financing is crucial for nurses to make informed decisions about patient care, ensuring the appropriate use of resources while providing optimal care. Nurses need to understand the reimbursement system, regulations, and billing practices to ensure they document services accurately and timely, which has a significant impact on the organization’s revenue streams.

Some key financial definitions in nursing include revenue, expense, profit, loss, and cost. Revenue refers to the money generated from providing healthcare services. Expense is the amount of money spent to operate the healthcare organization, including salaries, supplies, and equipment. Profit is the money earned when revenue exceeds expenses. Loss occurs when expenses exceed revenue. Cost refers to the amount of money spent on providing a specific healthcare service or product. Understanding these terms is essential for nurses to participate in the financial decision-making process, ensuring the efficient use of resources to provide high-quality patient care.

References:

American Nurses Association. (2015). Nursing administration: Scope and standards of practice (2nd ed.). Silver Spring, MD: Author.

Finkler, S. A., Jones, C., & Kovner, C. T. (2017). Financial management for nurse managers and executives (5th ed.). St. Louis, MO: Saunders/Elsevier.

Kovner, A. R., Knickman, J. R., & Jonas, S. (2015). Jonas and Kovner’s health care delivery in the United States (11th ed.). New York, NY: Springer Publishing Company.