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Better Nurse Staffing Pays for Itself

In a study published in Health Affairs and reported by ABC News and other news outlets, UCLA's Jack Needleman, Ph.D., and his research team simulated different approaches to nurse staffing using data from 799 acute care general hospitals in 11 states.

The researchers modeled the effect of three options to increase nurse staffing:

  1. raising the proportion of registered nurses (RNs) relative to licensed practical/vocational nurses (LPNs), without changing the total number of hours of care, to the same level as in the top 25 percent of hospitals
  2. increasing the number of licensed nursing hours per day, without changing the proportion of RNs and LPNs, to the same level as in the top 25 percent of hospitals
  3. raising proportions of RNs and the level of licensed nursing hours per day to that of the top 25 percent of hospitals.

Option —raising the proportion of RNs to LPNs, without increasing the total number of licensed nursing hours per patient—could potentially result in nearly 5,000 fewer patient deaths and generate net savings of $242 million over the short term and $1.8 billion over time (see table). It would require hospitals below the 25 percent level to replace more than 37,000 LPNs with RNs, at an estimated cost of $811 million. Savings would be generated from shorter hospital stays, fewer patient deaths, and decreased rates of complications.

Although the researchers found that options 2 and 3 would save lives and produce substantial savings, they would not be enough to offset the costs of the increased staffing, resulting in short-term net costs of $5.8 billion and $5.7 billion, respectively. These cost increases, while large, would represent only about 1.5 percent of hospitals' annual expenditures.

The researchers note that, depending on the reimbursement policies in use, hospitals investing in nursing staff may be required to share cost savings with insurance carriers and other payers—creating a strong disincentive for hospitals to pursue quality improvements.

Avoided Hospital Days, Costs, and Deaths if Proportion of Registered Nurses (RNs) or Number of Licensed Nursing Hours Were Increased

 Option 1. Raise proportion of RNs to 75th percentile of hospitals studied, without changing number of licensed hoursOption 2. Raise number of licensed hours to 75th percentile, without changing proportion of RNsOption 3. Raise both proportion of RNs and number of licensed hours to 75th percentile
Hospital days avoided1,507,4932,598,3394,106,315

Cost impacts
Net Costs of increasing nursing (in millions)-$242$5,819$5,716
Net cost as percent of hospital expenses-0.1%1.5%1.4%

Cost savings assuming that fixed hospital costs are recovered
Net cost of increasing nursing (in millions)-$1,821$3,240$1,558
Net cost as percent of hospital expenses-0.5%0.8%0.4%

Avoided deaths4,9971,8016,754

Source: Adapted from J. Needleman et al., "Nurse Staffing in Hosptials: Is there a Business Case for Quality?" Health Affairs, Jan./Feb. 2006 25(1):204–11.

The authors argue that policymakers, as well as public and private payers, should focus on ways to reconcile these issues. For example, when Medicare was introduced in 1965 and hospitals faced significant nursing shortages, Congress made extra payments to help hospitals raise wages and increase staffing. Could a similar policy be adopted now to help bridge the gap between patients' and hospitals' needs?

Ultimately, the authors say, policymakers, insurance carriers, hospital administrators, and other players will have to face serious questions regarding the importance of improving patient safety, the feasibility of increasing nursing staffing, and how to make funds available to help hospitals realize their goals.

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