[ANSWERED 2024] Why it is important for a nurse leader to understand variance reporting. How does this reporting become a valuable tool?

Why it is important for a nurse leader to understand variance reporting. How does this reporting become a valuable tool?

1. Why it is important for a nurse leader to understand variance reporting. How does this reporting become a valuable tool?
2. Staffing is usually the most expensive resource in the provision of care, what reports would provide valuable info for this expense?
3. Finance department regard nursing units as not being revenue generator. Why would you believe they’re inaccurate in their assessment?

Expert Answer and Explanation

In healthcare, budget reporting helps hospitals to identify their expenses including the deviation between these expenses and what they projected to spend, allowing them to make better decisions in terms of how they allocate resources, and budget for various programs. For instance, a hospital can use the generated budget reports to make decisions in terms of what to spend on staff, and the amount of duns to use to acquire essential resources and medical supplies. The budgeting process involves creating a plan with details of what one intends to spend, and what they think they would earn based on the services they provide.

When there is a deviation between the forecasted and the planned financial outcomes, this phenomenon is known as budget variance, with variance reporting denoting the resulting report with details of how the variance occurred (Nuti et al., 2021). It is important to explore why a nurse leader should understand it, and the information that is pertinent to understanding staffing.

Why it is important for a nurse leader to understand variance reporting. How does this reporting become a valuable tool?

For a nurse leader, understanding the variance reporting is crucial in the sense that it informs the decisions they make regarding the management of costs and the allocation of resources. A variance report reveals any discrepancy between the expenses, both actual and budgeted, and by reviewing this report, the nurse leader gains insight into the areas where they can add resources to optimize operational outcomes (Anderson et al., 2020). With this information, still, the leader can understand the different metrics, and make meaningful decisions such as identifying measures that if they initiate in nursing settings, can improve patients’ wellbeing (El-Sayed Aly et al., 2022).

Variance reporting becomes a vital tool for nurse leaders by helping them identify opportunities for the improvement of certain processes that can help optimize clinical outcomes. A nurse informed by this tool, for instance, can make changes to the cash flows to match the resource requirements in specific units or areas. For instance, a nurse leader can rely on reports to identify areas facing a shortage of resources and respond to this by adjusting the budget to address the shortfalls (Kawaguchi et al., 2019). The report also forms an integral tool for informing decision-making during the subsequent budget preparation activities. Relying on what worked in the previous budget, a nurse leader can replicate the same in future budgets.

Staffing is usually the most expensive resource in the provision of care, what reports would provide valuable info for this expense?

When one wants to identify the expenses on staffing, they would rely on various reports which provide vital information in terms of the money used on various staffing activities and programs. As one of the forms of report, employee expense provides a crucial indicator of what is spent in various areas, including the amount and the reason for spending it.

One would also rely on the compensation and benefit report which provides the details about benefits and salaries that various carders of staff received (Wieczorek-Wójcik et al., 2022). Part of the reports they would use when assessing the incurred expenses is the travel expense report which denotes a report that includes what the organization spent on employees’ transport.

This could be in the form of the expenses on the fuel or transport allowance. These reports are resourceful to those who want to gauge whether a significant amount of the hospital’s budget goes into staffing.

Finance department regard nursing units as not being revenue generator. Why would you believe they’re inaccurate in their assessment?

The finance department’s notion that nursing does not generate revenue but is an expense is inaccurate. Health plans compensate healthcare providers for physician-based care, but they do not receive direct compensation because they provide nursing care. In this case, therefore, the department views nursing as an expense.

This is inaccurate because nursing work complements the services that physicians provide because they implement physicians’ instructions, and are directly involved in the delivery of care. Recently, the scope of nursing practice has improved, with nurses playing an important role in addressing patients’ health concerns (Lasater et al., 2021).

Due to the evolving role of the nurse, nurses in states such as Colorado are legally allowed to prescribe medications. Failing to recognize how nurses are bridging the gap in health care access by not recognizing the role nursing units play amounts to the wrong assessment of these units. Thus, there is a need to include these units in the pool of sectors that generate revenue.

Conclusion

In conclusion, variance reporting is important to a nurse because they can use the information on units with limited resources, and make apt decisions that can help improve the subsequent budgeting activities. When a nurse leader wants to identify the sum of the expenses on staffing, they would explore the individual reports including the report that shows the travel expenses.

Using these reports, the nurse leader can be able to tell whether their organization is spending more on staffing. Despite the view that managing nursing units require money, these units support service delivery, enhancing the physicians’ work. It is therefore wrong to consider them as expenses, as opposed to viewing them as revenue generators.

References

Anderson, D. M., Cronk, R., Best, L., Radin, M., Schram, H., Tracy, J. W., & Bartram, J. (2020). Budgeting for Environmental Health Services in Healthcare Facilities: A Ten-Step Model for Planning and Costing. International journal of environmental research and public health, 17(6), 2075. https://doi.org/10.3390/ijerph17062075.

El-Sayed Aly, R. I., Ahmed Mohamed ELBahlawan, G., Aly, M. R., & Mohamed Elsayed, B. K. (2022). Enhancing the Occurrence Variance Reporting System Implementation at one of the Hospitals of the Egyptian Universal Health Insurance. SAGE open nursing, 8, 23779608221142157. https://doi.org/10.1177/23779608221142157.

Kawaguchi, A. L., Jain, R., Hebballi, N. B., Pham, D. H., Putnam, L. R., Kao, L. S., Lally, K. P., & Tsao, K. (2019). Using a Second Stakeholder-Driven Variance Reporting System Improves Pediatric Perioperative Safety. Pediatric quality & safety, 4(5), e220. https://doi.org/10.1097/pq9.0000000000000220.

Lasater, K. B., McHugh, M. D., Rosenbaum, P. R., Aiken, L. H., Smith, H. L., Reiter, J. G., Niknam, B. A., Hill, A. S., Hochman, L. L., Jain, S., & Silber, J. H. (2021). Evaluating the Costs and Outcomes of Hospital Nursing Resources: a Matched Cohort Study of Patients with Common Medical Conditions. Journal of general internal medicine, 36(1), 84–91. https://doi.org/10.1007/s11606-020-06151-z.

Nuti, S., Noto, G., Grillo Ruggieri, T., & Vainieri, M. (2021). The Challenges of Hospitals’ Planning & Control Systems: The Path toward Public Value Management. International journal of environmental research and public health, 18(5), 2732. https://doi.org/10.3390/ijerph18052732.

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