Financial Management in Nursing



Discuss the Inpatient Hospital Value Based Purchasing Section 3001(a) of the Affordable Care Act. What financial planning/budgeting strategies could a nurse manager implement on a medical-surgical unit to reduce adverse financial outcomes?


Discussion Post


Affordable Care Act

The Center for Medicare & Medicaid services, since its establishment, has incessantly worked to ensure high-quality health care is provided in hospitals all over the United States. It has driven many programs ranging from the reimbursement of health providers based on reasonable rates to the creation of prospective payment systems. However, it’s most renowned achievement is the creation of the hospital inpatient value-based purchasing program which is under the mandate of the Affordable Care Act, section 3001(a). The program creates a link between the Medicare’s payment system and a value-based scheme thus giving providers “incentive” payments on the provided quality of care (CMS, 2011).

The hospital inpatient value-based purchasing program requires payment of incentives to hospitals for their outstanding services based on their performance standards for a various fiscal years. As a result, the hospitals are rewarded for their quality performance and not by reporting data presented(CMS, 2011). The program utilizesquality data contained in the inpatient quality reporting structure, to achieve an equitable scoring system. In addition, the program ensures a neutral budget is maintained by penalizing worst performing hospitals. The penalty obtained from these hospitals, is used to reward the best-performing hospitals(CMS, 2011). Therefore, the program creates a “race to the top” atmosphere hence promoting high-quality care.

Nurses constitute the majority of providers within a hospital. They are often under strict unit budgets to safeguard operational costs i.e. expenses and revenues. It is a nursing manager’s responsibility to ensure feedback on actual expenses is presented for detection of any variances(Kaplan & Porter, 2011).To further reduce costs, the nurses designate a targeted number of hours per patient day.  The nursing hours are required to be within the designated limits. Any extension warrants a written explanatory report to the nursing manager. Moreover, the nurses ensure the unit budgets are retained within required confines by avoiding overstaffing, reducing the number of impromptu leaves causing overtime working and by controlling supplies used.




Centers for Medicare & Medicaid Services (CMS), HHS. (2011). Medicare program; hospital       inpatient value-based purchasing program. Final rule. Federal Register, 76(88), 26490.

Kaplan, R. S., & Porter, M. E. (2011). How to solve the cost crisis in health care. Harv Bus Rev,   89(9), 46-52.

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