Health Care Economics: Looking at Hospital Resource Management in Times of Crisis

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A nurse practitioner stands in front of her team.A robust public health system requires financially stable hospitals to ensure efficient and effective health care delivery. However, a crisis can hamper even the best-conceived plans for effectively managing hospital operations. During the coronavirus pandemic, for example, some hospitals are seeing lower revenues from predictable sources such as scheduled elective procedures, which have been delayed to increase capacity for COVID-19 patients. In fact, hospitals have seen reduced revenues of up to 50%, according to a McKinsey study.

Hospitals that leverage health care economics and hospital resource management strategies can operate better during crises. Health care economics is an approach maximizing the efficiency, effectiveness and value of health care delivery. Through hospital resource management, a process by which health care facilities effectively distribute their resources, hospitals can maintain financial solvency ⁠— even in a crisis.

Hospital Resource Management and Health Care Economics

It is a national priority for the vast health care infrastructure in the U.S. to operate at peak performance to deliver lifesaving care to millions of Americans. Current estimates place the number of critical care beds in hospitals across the country at approximately 95,000. According to a study in the Annals of Internal Medicine, more than double that number of critical care beds are needed to help maintain a sustainable, optimal health care infrastructure during a crisis. The development of health care economic strategies can mitigate these challenges, which can favorably impact health care outcomes.

Health care economics creates efficiency and value in a facility’s care delivery system using a process by which the availability of resources informs decisions. At a moment of crisis, decisions regarding materials, staff, space and finances are not always clear, especially in facilities with limited lifesaving resources. Health resource management can help in decision-making processes.

Nurse leaders can positively impact the health care environments they work in and the communities they serve by helping to build health resource management programs. These efforts involve overseeing a hospital’s operational components, such as technology. Take, for example, electronic health record (EHR) systems, which help ensure proper documentation about patients.

There are also enterprise resource planning (ERP) tools to track the availability of resources throughout a health care facility. Nurse leaders can use these tools to implement plans that improve decision-making at the point of care and prioritize resources to ensure availability when patients need them the most.

The Role of Nurse Leadership in Hospital Resource Management

A hospital resource management strategy can help promote financial efficiency in a dynamic health care market seeing increased regulations and costs. Take, for example, the rising cost of deductibles in employer-sponsored health care plans. The Peterson Center on Healthcare and the Kaiser Family Foundation reports that 85% of workers paid deductibles as part of their employer-sponsored health care plans in 2018, a significant increase from a decade earlier (59%).

Since people are paying more out of pocket for their health care, providers are increasingly reliant on patients to generate revenue. By integrating developmental tactics into their resource management strategies, including training and education, nurse leaders can align clinical workflows with these health care trends. According to a RevCycleIntelligence report, knowledgeable nurses who hold productive cost-of-care conversations with patients to inform them about their financial responsibility help to improve collection rates.

Meeting the requirements of regulations such as the Health Insurance Portability and Accountability Act (HIPAA) can be costly to health care providers. Failure to align hospital operations with regulations can often lead to fines and penalties. Nurse leaders can address the challenges through regularly sharing information, implementing control processes, performing routine audits and delivering compliance training.

Ethics is at the core of health care. In the midst of the current COVID-19 crisis, information can change rapidly. Take, for example, the issue of personal protective equipment (PPE). A stressed nurse may relay concerns about the diminished inventory of PPE. If there is a pending shipment of PPE, but a date of arrival is undetermined, an ethical nurse leader will speak truthfully about the situation and communicate that information to the nurse. Promoting the highest standards of conduct earns patients’ trust and reduces liability costs.

Managing Hospital Resources During Health Crises

In a hospital crisis, the influx of patients with contagious diseases may rise suddenly, putting nurses at risk. In scenarios like these, risk management plays a vital role in managing hospital resources.

Risk management involves reviewing and analyzing current practices to determine areas of risk and to identify strategies to mitigate them. In other industries, risk management helps companies to remain operational even in disastrous events. In health care, the practice takes on another level of urgency because lives are at stake.

Nurse leaders can influence decisions by contributing to risk management planning. For example, when resources become limited amid crisis, nurse leaders can help develop strategies that convert other rooms in hospitals into intensive care units.

Effective risk management can create efficiencies in addressing immediate and urgent challenges while keeping people safe, lowering costs and ensuring facilities operate continuously. In another example, nurse leaders can help ensure the proper PPE is available to protect nurses. They might conduct regular inventories of supplies and form relationships with suppliers of essential items.

Nurses can also help reduce the impact of a crisis and ensure optimal facility performance by creating, reviewing and updating emergency plans. Additionally, as a crisis-derived disruption can include staff absenteeism, alternative staffing plans for emergencies can help ensure ample availability of nursing resources.

Furthermore, nurse leaders can influence changes that provide front-line nurses with essential resources to deliver positive patient outcomes while improving a facility’s bottom line. Implementing resource management strategies can improve the utilization of nursing resources, leading to better nurse job satisfaction, reduced turnover and lower labor costs.

Prepare to Become a Leader in Hospital Resource Management

Nurse leaders skilled in building hospital resource management strategies can enable facilities to operate cost-effectively and efficiently, even during a crisis.

A key to ensuring hospitals’ financial efficiency is to develop influential nurse leaders adept at managing essential resources at every level, from bedside to the executive suite. To that end, University of North Dakota’s online Post-Master’s Doctor of Nursing Practice program prepares nurse leaders for advanced roles in health care.

The DNP curriculum at University of North Dakota includes courses in evidence-based research, which teach students how to develop evidence-based methods to address various problems in health care settings. Courses in health policy; health informatics; and health care economics, finance and leadership provide additional knowledge useful in effective hospital resource management. As a result, graduates are prepared to influence policy change that can lead to better patient outcomes.

Learn more about how University of North Dakota’s online Post-Master’s DNP program can put you on the path to becoming a nursing leader.

Recommended Readings:

Types of Viruses: Flu, Smallpox, Coronavirus & More

Chief Nursing Officer: The Steps to Becoming a Key Health Care Leader

MSN vs. DNP: Comparing Salaries, Job Outlook and More


American Hospital Association, COVID-19 Resources for Health Care Facilities

Annals of Internal Medicine, “How Should U.S. Hospitals Prepare for Coronavirus Disease 2019 (COVID-19)?”

Becker’s Hospital CFO Report, “8 Strategies for Hospitals to Approach Cost Management”

Becker’s Hospital Review, “5 Hospital Crisis Scenarios and How to Overcome Them”

Becker’s Hospital Review, “5 Top Challenges Affecting Healthcare Leaders in the Future”

Centers for Disease Control and Prevention, Coronavirus Disease 2019 (COVID-19), Steps Healthcare Facilities Can Take

Harvard Business Review, “How Hospitals Can Manage Supply Shortages as Demand Surges”

HealthKnowledge, “Principles of Health Economics Including: the Notions of Scarcity, Supply and Demand, Distinctions Between Need and Demand, Opportunity Cost, Discounting, Time Horizons, Margins, Efficiency and Equity”

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Nurse Leader, “The Moral Obligation of Nurse Leaders: COVID-19”

Peterson-KFF Health System Tracker, “Deductible Relief Day: How Rising Deductibles Are Affecting People With Employer Coverage”

RevCycleIntelligence, “Strategies for Effective Cost-of-Care Conversations With Patients”