Role of Nurse in Budgeting

Role of Nurse in Budgeting

Literature Review: Role of Nurse in Budgeting and Financial Decision Making

Nurses play an intricate role in managing the limited resources in the healthcare facilities to optimize their utility to the patients and the public at large. Due to the financial constraints and frequent cutbacks, the nurses and particular nurse managers are expected to reduce the expenditure without compromising the healthcare quality. Naranjee et al. (2019) sought to explore nurse managers’ role in financial decision-making and budgeting and identify the need for financial management development among the nurse managers.

Even though this study focuses on public hospitals in South Africa, similar challenges exist in the healthcare sector in the United States, and the Nurses often deal with the same challenges when it comes to financial management. After applying the naturalist paradigm based on the constructionist theory approach, the primary people who are primarily responsible for the oversight of financial management in a healthcare organization are the assistant nurses, the operational managers, financial managers, and the chief executive officers.

Role of Nurse in Budgeting

Nurses are, therefore, the executors and ensure that resources are optimally utilized. Understanding the budget-making process is critical for nurses as they get to understand how they can influence resources allocation in their respective department for effective patient care.

Therefore, this requires a solid understanding of key concepts like financial control, financial decision-making and budgeting, financial planning, financial monitoring, and the extensive clinical expertise and interpersonal skills required for their job. The business component of the nurse’s role makes the healthcare organizations extremely reliant on the nurses throughout their careers. The nurses have to make complex financial decisions over a wide range of scenarios.

Nurse Managers

Nurse managers, in particular, tend to influence the legislative framework on finance for the healthcare organizations, thus determining the nature of financial activity in a healthcare organization (Naranjee et al., 2019). South Africa has managed to streamline the health sector’s financial decision-making by incorporating nurses’ nurses in decision-making committees.

In health, budgeting is defined as the process of resource allocation to provide the best healthcare services at a relatively low revenue level. The government generally handles the health budget, and it requires that healthcare organizations report on their expenses and revenue streams.

Even though the nurses fundamentally make the budgetary decisions under the respective healthcare organization’s guidelines, they are often influenced by government policy on the hospital’s priorities. However, the nurses are often consulted in the making of this decision. Therefore, the need to understand the budget-making process and the underlying principle of economics and financial management (Rajan et al., 2016).

Performance Budgeting

One such concept is performance budgeting, which is program-based, something that gives the nurses direct control over the organization’s financial decision-making and, thus, another role in patient care optimization. Here, each department’s marginal effectiveness in resource allocation can be determined and used to formulate effective resource allocation frameworks. This gives them the mental tools to identify the loopholes that can optimize resource allocation without compromising patient care.

The Budgetary Process

The budgetary process is often a political process with the need for quid pro quo among the departments, which can be frustrating for nurses whose sole objective is to optimize patent care (Rajan et al., 2016). Therefore, healthcare organizations need to base their budgets on objective truths and not compromised by this politics’s involvement.

Walsh (2016) poses the question of whether budgeting should be left to the nurses’ finance department to have a say in the decision-making on where resources are allocated. Healthcare professionals, more so nurses, have valuable information on the areas where resources are required and the loopholes that exist where resources get wasted. The nurses ought to develop the goals for their respective departments and the optimal resource allocation strategies.

Optimization of Resource Allocation

The optimization of resource allocation should not be aimed at increasing the hospital’s profits but not to increase the quality of patient care. The budget for each department should be optimized and aligned with the goals for that department in particular. The budgets can then be consolidated to develop an overall financial decision-making plan for the healthcare organization.

All nurses and healthcare providers should contribute and the nurse managers communicating with the team on which are the priorities and develop the resources allocation framework. Nurses can harmonize the budget to ensure that the hospital is not or underspending on a particular department or activity. Here, the conventional budgeting process holds whereby the research is conducted on the optimal resource allocation for effective patient care.

Effective Budget Plan

The most effective budget plan is created with the consultation of all the stakeholders as they all play a role in its implementation and eventually evaluate its impact on the healthcare organization’s financial well-being and, most importantly, in the quality of patient care delivered (Walsh, 2016). However, the nurse leaders need to ensure that the same budgetary plan is reproduced every year. Therefore, the budget should be updated to the evolving patient needs and the continually evolving healthcare sector.

Affordable Health Care Act

With the Affordable Health Care Act, programs have been put in place to optimize American healthcare by improving the quality of care provided while improving the quality of care. Salmond & Echevarria (2017) identified that nurses play an intricate role in this transformation of the healthcare sector, which grants them the role of financial decision making by advising the financial managers who have no clinical experiences with the various implication of their decisions and patient care friendly alternatives.

Role of Nurse in Budgeting

Therefore, in general, nurses and healthcare providers must understand the political environment in the hospital environment and national and international politics to influence budgeting for quality patient care. Financial decision-making in healthcare organizations involves the coordination of the various healthcare providers, with the nurses playing the mediator’s important role among other healthcare providers and between other physicians and other hospital staff and the patients.

This involves the reduction of spending on healthcare services at large, improvement in quality and outcomes. The nurses contribute to the decision-making by ensuring that unnecessary hospitalization.

They also decongest the emergency facilities by ensuring that the department is not misappropriated dealing with cases that are not emergencies, given that the nurses have interpersonal relations with almost all other stakeholders involved in the healthcare. The driving forces for the transformation of healthcare organizations are reducing costs and optimizing patient care quality (Salmond & Echevarria, 2017). The nurses’ clinical experience can play an intricate role in reducing the rate of readmission, which can help reduce the wasted financial potential of healthcare organizations.

Even though the nurses are involved in the financial decision-making in healthcare organizations, the main duty lies in ensuring that the wellness of the patients is restored and that their financial well-being is not adversely affected by the high cost of healthcare care a priority in this pursuit. The provision of patient-centered care is a clinical role, but it spills over to the patient’s financial well-being, healthcare facility, and the nation at large.

Challenges Role of Nurse in Budgeting

Bai et al. (2017) looked into the challenges faced by nurse managers while making decisions to improve the quality of care delivered while minimizing the cost incurred. Even though the junior level nurses make many decisions that end up affecting healthcare costs, the head nurses, nursing coordinators, and nursing executives play a direct role in structuring the overall framework that affects the healthcare organizations’ financial well-being.

Therefore, this healthcare personnel at the higher ranks in hospitals should have an in-depth understanding of the underlying economic principles that guide the optimal allocation of financial resources. Therefore, there is a need to incorporate this in their training curriculum for nurses, which nurses’ challenges in financial management are the lack of intrinsic motivation to mind about the hospital’s resource allocation. This is common among junior and senior-level nurses, attributed to the lack of communication among the department to establish the most effective methods.

It is therefore essential that the different department analyze their financial management. Nurses’ education in economics and financial management want to understand resource allocation for optimal utility, which is high-quality patient care. This should be added into the nursing school’s curriculum and be a fundamental requirement for people seeking to join the nursing career.

In addition to this, there is also insufficiency of managerial tools for nurses to refer to while making financial decisions. These are mostly resources that inform the nurses of the most influential and up-to-date optimal financial allocation methods Bai et al. (2017). Therefore, nurses need to understand financial management more so regarding financial decision-making.

Role of Nurse in Budgeting


  • Bai, Y., Gu, C., Chen, Q., Xiao, J., Liu, D., & Tang, S. (2017). The challenges that head nurses confront on financial management today: A qualitative study. International journal of nursing sciences, 4(2), 122-127.
  • Naranjee, N., Sibiya, M. N., & Ngxongo, T. S. P. (2019). Development of a financial management competency framework for Nurse Managers in public health care organisations in the province of KwaZulu-Natal, South Africa. International Journal of Africa Nursing Sciences, 11, 100154.
  • Rajan, D., Barroy, H., & Stenberg, K. (2016). Budgeting for health. Strategizing national health in the 21st century: a handbook. Geneva: World Health Organisation.
  • Salmond, S. W., & Echevarria, M. (2017). Healthcare transformation and changing roles for nursing. Orthopedic nursing, 36(1), 12.
  • Walsh, K. (2016). Managing a budget in healthcare professional education. Annals of medical and health sciences research, 6(2), 71.

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