Nurse Leader August 2004
Financial Education for Future
Carol Reineck, PhD, CCRN, CNAA-BC, and
Anne Garner, PhD, RN
The purpose of this article is to highlight the basis for and
briefly describe a 2-credit graduate nursing core course called
“The Nurse’s Role in Health care Financial Management.” The
course—required for all graduate nursing students across all
programs at one school of nursing—is designed to respond
to requests from nurse executives in the community to
emphasize and develop the critical role nurses have in achiev-
ing both profitability and safe, quality patient care.
WHAT SHOULD BE TAUGHT?
A review of the Cumulative Index of Nursing and Allied
Health Literature (CINAHL) using “financial management
education” as keywords revealed only 28 articles since
1987. The most common number of articles per year from
1987 to 2003 was 1. It is interesting to note that in 2002,
the number of articles jumped to 6. These articles includ-
ed how to teach financial principles to children,1-4financial
education for dieticians,5and multidisciplinary financial
education.6Few articles were data-based.
One data-based article7described a financial manage-
ment survey of nurse administrators (NAs) and chief exec-
utive officers (CEOs). The sample included 100 people in
100 medical centers. The purpose of the survey was to
determine the most important aspects of financial manage-
ment for the NA role as a foundation for developing a
graduate course. Despite a low response rate from the
CEOs, the results showed that both NAs and CEOs rated
budget preparation and productivity as very important.
The survey was based on 9 competencies: understand-
ing the components of financial statements and how to
Peter Drucker, management guru,
poses two questions: “What’s your
business?” and “How’s business?” To
respond, students in graduate nurs-
ing programs are learning the busi-
ness of health care. Graduate nursing
students studying to become nurse
practitioners, clinical nurse special-
ists, or nurse administrators in one
graduate program in south central
Texas all share a common need for
graduate financial education.
Integrated clinical and business deci-
sion-making in today’s health care
financial environment requires nurs-
es to have specialized financial
knowledge, skills, and abilities. No
one knows that better than nurse
managers and executives.
analyze them, profit analysis, cost accounting, forecasting,
budget preparation, programmatic budgeting and break-
even analysis, productivity, time value of money, and vari-
ance analysis. The graduate course described in this article
provides instruction on elements of each competence.
Table 1 lists the course objectives.
HOW THE COURSE UNFOLDS
The financial management graduate core course begins
with an interactive discussion of the health care financial
environment, setting the tone for the course. The discus-
sion emphasizes the financial environment and its impact
on health care. As the course progresses, students receive
modules on budgeting, costs, and financial evaluation
methods. Each of these three areas will be described.
Contino8suggested that 6 periods of budget education
with various emphases occurred between the early 1900s
and 1990. In the early 1900s, the budget emphasis was on
cost control. By the 1950s the emphasis was management,
economy, and efficiency, with a focus on tasks. In the 1960s
the Planning, Programming Budgeting System (PPBS) was
the trend, emphasizing the need to cross department
lines. The 1970s and 1980s brought zero-based budgeting
and prioritization. The 1990s theme was the performance
budget, stressing outcomes and results instead of activities
or outputs. While a theme for the first decade of the 21st
century is still emerging, it is apparent that business plans,
productivity, reimbursement, and performance measure-
ment are among important emphases in 2004.
Budgeting education begins with three minimodules—
budgets and budgeting, the operational budget, and the
flexible budget and variance analysis. The first minimodule
presents an overview of budgets and the budgeting process.
Faculty define budgets and discuss their purpose. Types of
budgets covered are operating, master, capital, cash, long-
range, and program budgets. In addition, faculty describe
product line, performance, special purpose, and construc-
Faculty discuss the budgeting process for an organiza-
tion in a top-down fashion, presenting the underlying ele-
ments. The students examine how organizational philoso-
phy influences the budgeting process. Management func-
tions of planning and control relative to the budget are pre-
sented. The budget foundation includes an environmental
scan, organizational goals, organization-wide assumptions,
program priorities, and specific operating objectives. The
budgeting process is therefore presented from an organiza-
tional level, progressing to the department level and how a
department participates in the process.
The second minimodule covers the operational budget.
The emphasis is on developing staffing levels in 24-hour
and other departments. Faculty present the basis for devel-
oping staffing levels and give examples, including the use
of acuity systems. They also present a model nursing unit
as an example for staffing determination that includes cov-
erage of nonproductive time for nursing personnel.
Students learn how to allocate staff by shift and personnel
skill level and how to calculate shift differentials, overtime,
and on-call costs. Frequently, the staffing concepts and cal-
culations are the most difficult for students to grasp.
Faculty give extra practice time and assistance during these
important discussions and exercises.
Successful completion of staffing calculations is a course
requirement. Faculty assign several problems covering
both 24-hour units and others. The students are required
to submit problems and solutions on a spreadsheet to
familiarize them with spreadsheet applications, with which
many students have limited or no knowledge.
The third budget minimodule covers flexible budgeting
and variance analysis. The emphasis is the various types of
information that can be developed by flexible budgeting. A
clinical example of variable budgeting developed by a pre-
vious student is discussed. Students begin to appreciate
the meaning of unfavorable and favorable variance with
Cost concepts begin with discussions on fixed, variable,
and total costs; service units; the impact of volume on costs;
and the relevant range. Financial evaluation methods include
break-even analysis, activity-based costing, and 5 methods of
economic evaluation.9Break-even analysis follows the discus-
sion of fixed and variable costs because those concepts are
used in the break-even equation. Faculty present activity-
based costing using a clinical example showing the minutes
of service required by different skill levels (and thus salary
levels) of various members of the health care team.
Economic evaluation education
The 5 types of economic evaluation presented are cost
minimization, cost effectiveness, cost consequence, cost
benefit, and cost utility analyses. Students become familiar
with the appropriate use of these methods and often use
them in their final paper, presentation, and work settings.
See Table 2 for examples of titles of students’ final presen-
August 2004 Nurse Leader 41
1. Examine the impact of fiscal and monetary policy on health
2. Discuss methods of organizing health care delivery that con-
sider economic and technically efficient use of resources
3. Incorporate principles of fiscal management in the develop-
ment of a budget
4. Demonstrate proficiency in the use of a computer spread-
5. Discuss cost concepts and their use in evaluating health
care practice/clinical alternatives
6. Describe health care marketing and its potential financial
impact on a health care organization
Table 1. Financial Core Course Objectives
Invited guest speakers present special topics, including
clinical documentation requirements for billing and coding
and program evaluation. For the former topic, reimburse-
ment is defined and major payers are identified. The coding
portion of the course focuses on the clinical documentation
requirements for effective coding. For the latter topic, stu-
dents learn what a program consists of and the importance
and types of evaluation. A guest speaker from a major health
care institute presents this block of instruction, focusing on a
real-life system in which program evaluation is ongoing with
regard to services provided for the vast diabetic population
in the community. Finally, marketing principles, including ele-
ments of a basic marketing program and how to conduct a
market assessment, conclude the course. Resources and
materials used in the course include the text,10selected arti-
cles,9Excel tutorials, and practical exercises.
HOW DO WE KNOW THE STUDENTS LEARNED?
Evaluation of student learning is both formative (during
the course) and summative (at the end of the course).
Students write 2 1-page financial point papers. To meet this
requirement, they define 1 financial term, discuss briefly
the importance or relevance of the concept in health care,
and then offer an example in practice. Students submit an
ungraded, 1-page summary of their intended major paper
about a month before the paper is due. The purpose of this
assignment is to give feedback to ensure students under-
stand the financial concept underlying their paper and
know how to apply it.
Students submit a 5-7-page paper near the end of the
course that centers on application of a selected financial
concept. Table 2 lists examples of student papers submit-
ted since 2002. Class participation and completion of a
basic spreadsheet with the solution to a staffing problem
complete the methods of evaluation.
One graduate course in financial management for nurs-
es goes a long way to acquaint them with the financial real-
ities of modern health care. The course follows the sugges-
tions of Lemire7for specific competency development.
While at the familiarization level, students have comment-
ed in their written evaluations that they feel increasingly
confident and less afraid to tackle financial issues in their
practice and remaining graduate education.
1. Garland S. “Mom, I need money!” Parents 2002;77(5):193-4.
2. Kaylyn W. The top five money lessons for kids. Good House-
3. Immerman R. Dollars and sense. Parents 2002;77(8):177-8.
4. Gillespie N. Money matters. Educating children about money.
Virginia Nurses Today 2002;10(3):9.
5. McKnight L, Dunda M, Girvan J. Dietetics program directors affirm
the importance of teaching financial management concepts in all
areas of practice. J Am Diet Assoc 2002;102(1):82-4.
6. Krugman M, MacLauchlan M, Rippi L, and Grubbs J. A multidiscipli-
nary financial education research project. Nurs Econ 2002;20:273-8.
7. Lemire J. Redesigning financial management education for the nurs-
ing administration graduate student. J Nurs Admin 2000;30:199-205.
8. Contino D. Financial management. Budget training: it’s overdue.
Nurs Manage 2001;32(8):16-7.
9. Stone P, Curran C, Bakken S. Economic evidence for evidence-
based practice. J Nurs Scholar 2002;34:277-82.
10. Finkler SA, Kovner CT. Financial management for nurse managers
and executives. 2nded. Philadelphia: W.B. Saunders; 2000.
Carol Reineck, PhD, CCRN, CNAA-BC, and Anne Garner,
PhD, RN, are assistant professors in the School of Nursing at
the University of Texas Health Science Center at San Antonio.
Carol is also a member of the AONE annual meeting sub-
committee and can be reached at firstname.lastname@example.org.
1541-4612/2004/$ - see front matter
Copyright 2004 by Elsevier Inc.
Nurse LeaderAugust 2004
Long-term acute care nursing budget proposal
Budget analysis of a newborn intensive care unit
Psychiatric emergency services: cost & productivity
Cost-minimization analysis: comparing sutures versus der-
mabond skin adhesive
Cost analysis of long-term care for patients with Alzheimer’s dis-
ease and related disorders
Cost-consequence analysis: silver-hydrogel catheters vs noncoated
Decentralization of telemetry: can it be cost-effective?
Hemodialysis cost-minimization analysis
Cost-effectiveness analysis: is it cost-effective to utilize agency
Cost-effectiveness of sterile towels utilized in the burn intensive
Admission of observation patients: a financial analysis
Cost benefit analysis of B-type natriuretic peptide (BNP) testing
in the emergency room setting
Cost-effectiveness analysis for providing low-risk prenatal care:
collaborative team model vs. traditional medicine
Cost-effective analysis: nurse practitioners as primary care providers
Post-anesthesia care unit’s weekend and on-call staffing: a cost-
Financial analysis of PICC line insertions
Break-even analysis of a mobile health clinic
Break-even analysis of telephone triage and a pediatric clinic
Activity-based costing in labor and delivery admissions of a
Activity-based costing in the treatment of attention deficit hyper-
Variance analysis of contract nurses and impact on total operat-
Table 2. Selected Examples of Graduate Nursing
Students’ Financial Analysis Paper Titles