Determining true nursing costs improves financial planning.

The traditional method of apportioning nursing care costs ona per diem basis does not consider nursing intensity or patients' special needs and often includes nonnursing duties. Many hospitals now favor a fee-for-service concept and are determining direct patient care costs to identify the true nursing cost. A patient classification system correlated with the diagnosis-related group (DRG) classification improves nursing cost analyses. For each patient, nurse managers need systems to determine quantified nursing tasks and patient acuity levels for each day. This information can be used to adjust staffing and to establish variable billing procedures. Then they can institute variable billing methods that are based on direct care costs as well as indirect costs of administration, education, and supplies. Variable billing identifies revenue cost centers, allows systematic monitoring of nursing services, and improves budget planning. The entire nursing staff must become involved in the financial system so the hospital can obtain an accurate data base for rate setting and third-party reimbursement.