1. Hader, Richard RN, CHE, CPHQ, NE-BC, PhD, FAAN

Article Content

Have you opened your statement from your retirement savings account or other investments and realized that you've lost a significant amount of money? If the answer is yes, you're not alone. How will this affect your organization or, more specifically, your job? Is the business of healthcare insulated from the realities of poor fiscal times?

Figure. No caption a... - Click to enlarge in new windowFigure. No caption available.

As we enter 2009, leaders must prepare themselves and their staff to deal with challenging economics. Although emergent healthcare will always be needed, healthcare organizations aren't immune to the current financial crisis. Many organizations are struggling to achieve positive margins, resulting in the necessity to make tough and unpopular leadership decisions that may result in significant program and operational changes. Leaders will be forced to evaluate the economic performance of all aspects of the business to ensure the financial solvency of the organization.


Leaders need to be ready to closely scrutinize spending on programs, supplies and equipment, and labor. Preventive, elective, and poor financial performance programs are those that are most vulnerable to closure or reduction of service during a financial crisis. These programs provide an essential service to the community but typically have less than favorable contribution margins. Academic programs are also often at dangerous risk because of a lack of revenue generation. New and less costly methods to educate staff will need to be investigated and implemented to control expenses.


The price of healthcare supplies and equipment continues to escalate. Advances in medication therapy and biomedical technology have created severe financial challenges. Pharmacy leaders will be required to study medication formularies to consolidate the choices of pharmaceuticals available to leverage purchasing power. More cost effective medical-surgical supplies will be needed to replace higher-end competitive products in order to conserve spending. Materials management leaders and their respective clinical colleagues will be challenged to find alternative therapies that produce the same or similar outcomes at a significantly lower cost.


It's well known that the largest portion of the budget is nursing personnel salaries. Nurse leaders may be confronted with reducing the number of staff within their area of responsibility. Leaders need to be proactive in evaluating staffing patterns and care delivery methods that will provide quality care while reducing or eliminating unnecessary spending. Staffing patterns should be benchmarked against similar organizations and based on the volume and acuity needs of the patient and mandated regulatory and legislative requirements. Nursing personnel should delegate unnecessary tasks to ancillary personnel to ensure high levels of productivity. Alternatives to traditional methods of care need to be examined to conserve valuable and expensive human resources. Management reductions are a common practice to decrease operational expense, and nurse managers may be mandated to assume additional responsibilities in the event of position reductions.


Sustaining positive results through the implementation of medical management initiatives designed to eliminate costs during the delivery of care will be the expectation of all practitioners and leaders in healthcare, as will a greater focus on eliminating redundancy and waste. Those organizations that are committed to focusing on improved efficiency without compromising care will achieve their mission with a positive financial margin.


Richard Hader

Figure. No caption a... - Click to enlarge in new windowFigure. No caption available.