It’s probably safe to say that nurse leaders’ favorite subject is not finance. But in today’s healthcare industry, financial incentives and reimbursement have become so entwined with patient care and outcomes, that you cannot have one without considering the other.
Below are recent HealthLeaders Media articles to help nurse leaders make sense out of the dollars and cents attached to patient care.
Last year the Centers for Medicare & Medicaid Services (CMS) reined in its mandatory bundled payment models, leaving many healthcare providers concerned that investments they made to prepare for these models might for naught.
But those investments in value-based care models may not go wasted after all under CMS’ new voluntary Bundled Payments for Care Improvement (BPCI) Advanced model.
Participants in the new model will be expected to keep Medicare expenditures within a defined budget, while maintaining or improving performance on these seven specific quality measures:
- All-cause hospital re-admissions
- Advanced care plan
- Perioperative care: Selection of prophylactic antibiotic (first or second generation cephalosporin)
- Hospital-level risk-standardized complication rate following elective primary total hip arthroplasty and/or total knee arthroplasty
- Hospital 30-day, all-cause, risk-standardized mortality rate following coronary artery bypass graft surgery
- Excess days in acute care after hospitalization for acute myocardial infarction
- Agency for Healthcare Research and Quality patient safety indicators
CMS is changing its formula for calculating and allocating funds for uncompensated care for hospitals that qualify under its Disproportionate Share Hospital program. This new method presents both opportunities and challenges for organizations.
Thanks to the changes, hospitals may be able to identify care currently written off without a determination of financial need. Additionally, the new methodology for calculation of Factor 3 — a hospital-specific factor representing its share of the total uncompensated care provided — may allow hospitals to capture a larger portion of uncompensated care funds.
However, leaders should be aware that CMS is phasing in the use of cost report Worksheet S-10 data, including charity care and unreimbursed bad debt. This year, one-third of Factor 3 will be based on this data, but by fiscal year 2020, use of this data will be fully implemented.
To ensure compliance with reporting data on Worksheet S-10, leaders need to review new guidance from CMS as well as their own organizational policies for charity care determinations, uninsured patient discounts, and bad debt collections. Training for staff involved with submission of the cost report and handling charity care write-off is imperative.
One concern consistently raised about the implementation of pay-for-performance models is that healthcare providers and organizations serving more complex patients would not reap the same rewards as hospitals caring for less sick patients.
New research suggests that those fears may be warranted. A November 2017 study found that Medicare’s Value-based Payment Modifier program inadvertently shifted money away from physicians who treated sicker, poorer patients to pay for bonuses that rewarded practices treating richer, healthier populations.
The study’s lead author Eric Roberts, PhD, of the University of Pittsburgh Graduate School of Public Health, said that if changes aren’t made, value-based payment models will continue to foster this inequity.
“Risk adjustment is usually inadequate in these programs, in part, because it is difficult to measure the differences in complexity of patients across providers. We need to take a careful look at how incentives in these programs are structured and how performance is assessed in order to create the right incentives to improve value and outcomes for the most vulnerable patients,” Roberts said.
This story was originally posted on MedPage Today.
The 15 Cities That Make Most Financial Sense
Nurses are in demand, and the hiring site Indeed.com has the facts to prove it. The terms “registered nurse,” “RN,” and “LPN” were among the top searches in 2017, according to a report the site released.
Chances are that trend isn’t going anywhere soon. And again, population means there’s increasing demand for nursing skills. It also means more nurses are leaving the ranks to pursue a retirement of their own.
Nurses are one of the highest-paid fields that don’t require a college degree. In fact, according the Bureau of Labor Statistics, the highest average annual salary is in California, at over $100,000. Massachusetts, Hawaii, and Oregon all follow on the list of states with the highest nursing salaries.
When you factor in the cost of living, though, you get a slightly different picture of where nurses can make the most out of their paycheck. Here are the top 15 cities for nurse pay, adjusted for the costs associated with living there:
There are some notable changes from last year’s list. Maybe most impressive is Atlanta’s jump from 15th place to third. Houston also remains high, with two hospitals that employees rank as some of the best in the country.
Phoenix, which had ranked second on last year’s list, barely made this year’s cut.
The site also looked at the places where job postings most outpace clicks from prospective employees. In some places, they found, hiring is harder than others, and pay alone isn’t always enough to even out the disparity.
Seattle, for instance, had the seventh-highest salary after adjusting for the cost of living. But it still had the most out-of-whack ratio between job postings and clicks, with postings outpacing clicks on a more than 3:1 basis. Other cities that were most desperate for qualified applicants: Kansas City; Riverside, Calif.; St. Louis; San Diego; and Atlanta.
“Clearly, while salaries are important when it comes to attracting talent, they is no magic bullet for closing the talent gap,” the company wrote.
This story was originally posted on MedPage Today.
“The $3-9 million or more you’ll likely earn over the course of your medical career is surely an asset worth insuring…”
Most people know they need to insure their life, their car, and their home or condo. But they often overlook insuring their most important asset—their ability to earn an income. Your income is the primary source of funding for a lifetime of things, from basic necessities to the hopes and dreams you have for yourself and those you love. The $3-9 million or more you’ll likely earn over the course of your medical career is surely your greatest asset, and certainly one worth insuring.
What a nurse would earn over a 35-year career, starting at $55,000 and getting 4% annual pay raises
But what would happen if your income stopped because you were too sick or injured to work? Without a paycheck, how long could you pay your rent and utilities, buy groceries, make student loan payments, etc.? In all likelihood, your life would be thrown significantly off course.
Before you say this could never happen to you, consider the fact that 1 in 4 of today’s 20-year-olds will become disabled before they retire. And if you’re thinking that most disabilities are the result of freak accidents, you’re in for a surprise. The vast majority of disabilities, about 90%, are caused by various forms of illness including cancer, mental disorders like anxiety and depression, muscle and back problems, and heart disease.
What to Look for in a Disability Income Policy
Disability income insurance (DI) can help replace your income if you become too sick or hurt to work. It provides a buffer against the unexpected. Should disability strike, DI provides income that can be used to keep your household running as well as to help you adjust to your changed circumstances. While it’s common to have some disability coverage through your employer, these types of policies typically have taxable benefits and will only cover you under certain conditions. Supplemental coverage, in most cases, is necessary.
But before you go shopping for a DI policy, you need to know what features to look for to get income protection you can count on.
How Disability is Defined
The definition of Total Disability outlines what constitutes being totally disabled:
- If a policy defines Total Disability as inability to return to work in any occupation, then it would typically pay benefits only if you were unable to perform any job, either your own or a job in a new field or occupation. If you are unable to work as a nurse, but are able to work as a telemarketer, the insurance company would no longer consider you disabled – benefits would stop.
- If the policy defines Total Disability as an inability to work in your own occupation, it typically pays benefits if you cannot perform the duties of the occupation you were engaged in prior to becoming ill or injured. If you are unable to work as a nurse, a benefit is paid. Period.
Coverage for a Partial Disability and/or Recovery
A policy’s Partial Disability benefit provides protection in the event of partial disability or during a recovery period.
- Typically payable in an amount that is proportionate to the loss of income suffered due to sickness or injury.
- Prior to a disability, you were earning 50,000 per year working full-time as a nurse. Now, due to your sickness or injury, you can only work part-time earning 25,000. The insurance company would pay you the difference.
- Supports your financial recovery while you recover physically.
- Not available with most group plans.
Flexibility to Tailor Coverage to Your Specific Needs
Both now and in the future, options (also called “riders”) like these let you:
- Increase coverage as your income grows with no medical insurability requirement*
- Adjust benefits to help keep pace with the cost of living
- Safeguard retirement contributions
- Protect student loan payments
Most nurse practitioners expect to change jobs or employers multiple times during the course of their career. You can take individual DI coverage with you when you change jobs, whereas Group Long-Term Disability (Group LTD) plans typically are not portable.
To avoid the possibility of losing your coverage just when you need it most, choose a policy that’s both non-cancellable and guaranteed renewable to age 65—with premiums also guaranteed until age 65. With group or association group coverage, you run the risk of being dropped and left unprotected at a time in your life when, due to your age or to a change in your health, it would be very difficult to qualify for coverage from another provider.
It’s important to note that the cost of individual disability income protection is age-based, so you can lock in a lower rate by buying now while you’re young and healthy.
As a nurse, you’ve made a significant investment of time and money to build your career with the promise of financial security and the other rewards your profession provides. But should you become too ill or injured to work, that promise evaporates. To ensure you have adequate protection for your greatest asset, consider getting supplemental disability insurance today.
*Restrictions and limitations apply. The amount of additional coverage available will be financially underwritten based on the amount of disability insurance you have or are eligible to receive, as well as your income at the time you apply.
Registered Representative and Financial Advisor of Park Avenue Securities, LLC (PAS), Securities products/services and advisory services are offered through PAS, a registered broker-dealer and investment advisor. Financial Representative, The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is an indirect, wholly owned subsidiary of Guardian. Luttner Financial Group, Ltd. and Lifetime Financial Growth, LLC are not affiliates or subsidiaries of PAS or Guardian. PAS is member FINRA, SIPC
Nurses, like many professionals, build their confidence by learning, asking questions, and then doing. However, according to a Fidelity Investments® Money FIT Nurses Study, more than half of nurses surveyed (56%) say they lack confidence in making financial decisions.
But Alexandra Taussig, senior vice president of marketing and business management at Fidelity Investments, believes that while more than half of nurses lack confidence when it comes to managing their money, it is often unwarranted.
“Many nurses are diligent savers and are actively saving for their retirement, so it may start with a mental shift,” says Taussig. “The more educated nurses are about financial planning and investing, the more empowered they will be to control their financial future.”
Steven A. Boorstein, president and CEO at RockCrest Financial LLC, recommends nurses who are hesitant about making financial decisions to start small. “Starting something begins to take you down the right path now. Over the course of a year or two, if you tackle the small issues, you find that you’ll start to clear up the mess and can focus on the bigger issues (e.g., student loans, retirement, major purchases, college planning for your children).”
According to Taussig, one specific step nurses can take regarding retirement planning is to strive to save 15% of their salary (including any employer match) each year towards their retirement. If that is too difficult to start, commit to increasing savings 1% each year until you get to the 15% savings rate.
For nurses in their mid-30’s or later who haven’t started planning, Boorstein says it’s critical to not only start saving, but also to start setting specific financial and retirement goals.
“As you get into that age range, college planning, housing expenses, childcare, retirement, and other issues start to become more important,” he says. “It’s easy to push those things off, but in your thirties they are now more prominent and are going to take potentially more effort to solve.”
Making Time to Plan
The same Fidelity Investments study found that four in 10 nurses (41%) attribute their lack of confidence in their financial decisions to not having enough time to focus on them. But taking steps to address your financial future is not as difficult as many of us like to think. Just as the health care community encourages patients to get annual physicals; a similar approach can apply to your own financial wellness. Taussig suggests the following:
- Write down your financial goals.
Taussig recommends writing them down as it helps visualize and feel more accountable. Also think about the timeline when you want to reach each goal.
- Check retirement readiness.
Check your retirement score to see how you are tracking toward your savings goal. After answering a few quick questions, find out if you’re in the green, yellow, or red “zones” and learn how small adjustments may help bolster your readiness
- Get guidance at work.
Find out what financial resources your employer offers. Schedule a time to talk with a financial professional to discuss your financial goals and retirement readiness.
Knowing When to Retire
Nurses have always worked past the traditional age of retirement. But Taussig believes when it comes to preparing for retirement, age is an important factor when making some decisions, and less critical in other areas. For instance, she says age is a significant factor when it comes to tapping into benefits such as Social Security, because eligibility is determined by one’s age. The longer a person can wait before they start taking social security (up to age 70), the greater the social security monthly benefit will be. So, it’s important to understand what you are eligible for and at what age.
“Furthermore, full retirement age (which differs depending on the year you were born) is when people are entitled to begin receiving their full monthly benefit,” Taussig explains. “However, many people (often more women than men) take benefits earlier than Full Retirement Age—meaning they lock in a reduction to this benefit for life.”
Age should also be considered when investing, especially for a substantial goal like retirement. The longer a person can invest their savings, the longer their investments can potentially grow. However, Taussig says age is less important in determining one’s mental and physical readiness for retirement.
“There are many factors that people need to consider as they prepare for retirement in addition to their finances—they need to look holistically at their job situation, their health, their family obligations, lifestyle needs, etc.,” she says. “Having a sense of readiness comes less from achieving a certain age, and more from feeling that all those elements are well-aligned.”
There are a number of pitfalls nurses can make when retirement planning. Taussig says that taking loans from retirement savings plans is a huge blunder. Even more, she says they’ve seen an increase in the number of loans nurses are taking from their retirement savings plan. From 2012 to 2015, outstanding retirement account loans has grown 35%.
“Nurses should borrow from their workplace retirement savings only as a last resort,” she says. “These types of loans, like any other, are another expense that must be paid and the impact to their total retirement savings may be greater than they expected.”
Boorstein says not protecting income is the one of the biggest retirement planning mistakes he sees people make. They don’t know the risk that they are taking with their investments and either stay too aggressive or become too conservative in retirement.
“As you get to the last 10 years or less before social security kicks in, I think the discussion needs to shift from how much a person has in assets to what kind of income that they can generate throughout the rest of their plan,” he says. “And that usually requires taking money that is probably in riskier investments at that point, and shifting it into investments that can help them sustain a certain standard of living no matter what the stock markets do over the short or intermediate term.”
Lastly, Taussig says most employers offer financial guidance as a free employee benefit but 62% of nurses who are eligible for free workplace guidance don’t take advantage of it. However, guidance is important and can lead to action.
“Fidelity data finds that 35% of nurses take actionn after receiving guidance,” she says. “For instance, of those nurses, 69% of those that have taken action increased their retirement savings contribution without 90 days of completing a guidance interaction by phone, in person or online.”
Boorstein advises nurses who have not started saving or investing, to start creating a retirement plan today. Once you’ve done that, he suggests coordinating your plan with your other goals and risks.
“Review your plan every six months to a year and gauge where you are at that point. It’s much easier to make small adjustments than it is major changes,” he says. “If you’re 37 and you make 30 small adjustments every year, it’s much easier than waiting to do your retirement plan at 60 and realizing you only have seven years to make major life changes and it may just not be possible.”
The nursing profession is fraught with challenges on every front—from high-interest student loans and taxing mandatory overtimes to ensuring patient satisfaction and preventing on the job hazards. All these factors make future savings for a nurse all the more essential because Medicare and social security may not be adequate to cover you through retirement.
If you were in a perfect world, you would be saving a significant chunk of your paycheck in a retirement account, but if your existing financial situation is at odds with your basic necessities, here are 10 tips to help you start saving.
1. Start Early, Save Big
Whether you have just started your nursing career or you are half-way through, it is never too early to commit some amount from every paycheck. You can raise the bar with every hike you receive. Save as much as you can because social security may not be enough.
2. Prioritize Your Retirement Savings
If you start saving at the age of 22 by putting in 10% of your compensation which is $40,000 with a matching contribution of 3% from your employer, your nest egg is likely to give you a sizeable return of $1.7 million when you retire. Waiting any longer will only work to bring down your returns, so in your twenties is the right time to start.
3. Don’t Rely on the Government
While government policies and programs may aid your medical expenses to a certain extent, you cannot count on them, as a single medical emergency in the family is enough to deplete your lifetime of savings. Evaluate all your income sources and know your retirement options to build a portfolio that lasts you through your retirement years.
4. Take Advantage of the Employer’s Match
Be sure to contribute to a retirement account if your employer is making a matching contribution. This will boost your retirement reserve, so make the most of it as you would not want to miss out on free money being added to your savings.
5. Invest in a 401(k) or 403(b) and Reduce Your Taxable Income
If you fall in the 25% tax bracket, your 401(k) contributions will reduce your taxable earnings and help you save $25 for every $100 you contribute. This will boost your retirement account by 100% but your earnings will only decrease by 75%.
6. Explore Roth IRAs
Unlike a traditional IRA where you are taxed on withdrawal, a Roth IRA does not give you a tax break but allows you to enjoy a tax-free retirement. It makes a great option for young savers.
7. Don’t Cash Out; Come What May!
Retirement accounts were created to help you cope with the adversities of old age, so keep your reserve intact till you turn 59.5. An early withdrawal can invite a 10% penalty over and above the federal and state taxes. Once you have invested, just let it grow.
8. Diversify Your Financial Portfolio
If you are too conservative with your investments, the returns may not be adequate to keep up with the cost of living by the time you retire. If you have a long time to retire, consider investing in stocks, bonds, no-load mutual funds, and exchange-traded funds. A diversified portfolio makes a smart move when saving for retirement.
9. Create a Sound Withdrawal Strategy
You can consult a financial advisor when designing your financial portfolio. This will help you evaluate all the income sources that can nurture your nursing retirement and last you longer. Creating a sound withdrawal strategy will help save taxes and avoid penalties.
10. Know If You Qualify For the Saver’s Credit
If you belong to the moderate-income bracket, you may be eligible for a special tax break. This credit is given over and above other tax benefits on retirement savings to low-income taxpayers. A saver’s credit can be claimed if you are contributing to a 401(k) or 403(b) plan, SIMPLE IRA, or a SEP IRA.
If you haven’t started as yet, don’t delay any further. Just do it!
Whether your savings are meager or substantial, it is important to get started and take smarter decisions. Take professional help if needed and create a plan that considers income taxes and your buying power. Don’t let your busy schedule or unpreparedness keep you from building your nest egg. Once you start saving, funds will accumulate and your nest egg will continue to grow even before you know.