Consolidating Nursing Budget Across System Brings Great Cost Savings

When nursing at all Cleveland Clinic health system hospitals moved under the Stanley Shalom Zielony Institute for Nursing Excellence umbrella in 2008, so too did the operating budget. Consolidating finances has allowed the Nursing Institute to look at costs across all its facilities and make sound decisions concerning staffing, pay practices, supplies, capital budget procurement and so on.

“We wanted to make sure we weren’t addressing each nursing area individually and in a silo,” says Chad Minor, Institute Administrator and Finance Director. “When we begin the annual operating budget process, we approach it from a system perspective to ensure consistency across all hospitals.”

How the process worked

The first thing the finance team did when the budget became centralized was look at all the detailed cost centers to get an accurate view of nursing expenses at each facility. The team examined labor expenses, which account for 89 percent of costs, and nonlabor expenses such as supplies. It took a year to get expenses mapped to the appropriate areas. Now, each nursing unit at every facility has its own cost center, which includes only nursing expenses.

Next, Minor and his team developed uniform naming conventions. “All nursing cost center descriptions begin with ‘NRS,’” he says. “Anybody, anywhere – whether a CNO, the hospital COO or someone in finance – can quickly identify cost centers that the Nursing Institute manages.” Finally, the institute developed service-line reporting that allows leaders to assess how the entire health system is doing from a nursing standpoint as well as a fiscal breakdown by hospital.

Minor says the advantages of a centralized budget became evident last year. “As we began to see changes in the industry materialize, everyone’s focus was on identifying opportunities to improve quality while reducing cost,” he says. In 2013, the Nursing Institute removed $30 million from its budget. One of the biggest cost-saving decisions was to eliminate weekender pay.

Changing the weekender pay policy

Under the weekender program, when nurses worked two 12-hour weekend shifts, they received pay for an additional eight hours, bringing their total hours to 32 per week, which made them eligible for full-time benefits. The Nursing Institute changed its policy to pay nurses only for hours worked; however it “grandfathered” in benefits for existing weekender nurses.

Nursing leaders relied on a multipart communication plan to explain weekend changes to frontline staff. First, frontline leaders were informed to get their buy-in. Next, Executive Chief Nursing Officer Kelly Hancock, MSN, NE-BC, RN, held a town hall meeting to present the policy and the reasons behind it.

“We were transparent about changes in healthcare today,” says Hancock. “We need to be more efficient and provide quality care that’s more affordable to our patients.” Ultimately, frontline staff understood that eliminating weekender pay saved jobs, minimized layoffs and preserved the number of caregivers at the bedside.