Oregon: HEALTH SYSTEMS CUT BACK AGENCY NURSES

[NRSKarenRN, BSN, RN]

As the gap between demand and supply for registered nurses grows, administrators say health systems and hospitals will have to be inventive to avoid the high costs and patient care issues associated with heavy use of supplemental staff.

From the August 15, 2003 print edition of the The Business Journal of Portland

Robin J. Moody

Business Journal staff writer

http://www.bizjournals.com/industries/health_care/hospitals/2003/08/18/portland_story3.html

Kathy Dias, vice president of nursing at Legacy Health System, knew something had to change when Legacy went more than $8 million over budget for supplemental nursing staff in 2002.

The system, which employs about 2,700 nurses in five regional hospitals, responded by implementing a four-pronged approach. The key was to reduce Legacy's dependence on non-staff nurses.

For the first time, Legacy leaders began hiring new nursing graduates into critical care units, with improved orientation; they beefed up an internal "float pool" composed of 125 experienced and highly-paid nurses who can work at any Legacy hospital; they offered additional pay incentives to core staff willing to pick up extra shifts; and they hired more staff than in years past.

Legacy's approach has proven effective. In the fiscal year ending March 2003, the health system spent $3.6 million for supplemental nursing staff--it had budgeted $8.7 million.

As the gap between demand and supply for registered nurses grows, health systems and hospitals will have to be inventive to avoid the high costs and patient care issues associated with heavy use of supplemental staff. In 2002, Legacy's agency and traveler nurses accounted for 28 percent of hours worked, and 42 percent of wages paid.

"The fact that you are paying so much more for fewer hours, it shows you how expensive agency nurses really are," said Dias, who also serves as site administrator at Legacy Good Samaritan Hospital and Medical Center.

Although it seems counterintuitive given the highly publicized nursing shortage, all the nursing employers interviewed for this article--Kaiser Sunnyside, Legacy, Oregon Health & Science University and Adventist Medical Center--said use of supplemental staff is on the decline. Providence Health System declined to be interviewed.

Supplemental staff include agency nurses who typically work one or two shifts in a workplace, and traveling nurses who might stay on site for as long as six months.

Warren Johnson, a registered nurse and former owner of Stat Medical Service, which employed 700 agency nurses, noted that traveling nurses are in greater favor with employers.

"The price and better patient outcomes are the big reasons for using travelers," Johnson said.

Oregon Health & Science University, which employs about 1,600 RNs, has also slashed use of agency and traveling nurses in the past year.

"We are using approximately one-third of the traveling nurses that we were using just after the strike. We were using greater than 200 nurses after the strike--our rate was above 20 percent," said Jenny James, OHSU's chief nursing executive and associate dean of clinical affairs.

In February, Diana Gernhart, director of OHSU fiscal services, named the nursing strike and use of traveling nurses as one of the institution's biggest financial challenges. The nurses went on strike from Dec. 17, 2001 to Feb. 11, 2002. They returned to work with a promise of a 20.5 percent wage increase over three years.

OHSU currently fills about 5.7 percent of its nursing positions with external providers, James said. Its largest provider is American Mobile Nursing. The institute has 94 nursing vacancies.

OHSU is looking to increase the ranks of its internal staff pool, which is similar to Legacy's, and fill existing positions to further decrease supplemental staff usage.

"I think everyone wants to have their own staff. Their own people know the system, the patient population and have loyalty to their institution that can develop over time. Sure, economics play into it but you get the highest level of commitment, productivity and quality from your own staff," James said.

Johnson said supplemental staff will always play a role in medical staffing, but noted that a heavy dependency could compromise patient outcomes.

"It is smart to use agency nurses, but you don't want to get into a position where it compromises continuity of care or ability to recruit," Johnson said.

However, James noted studies show traveling nurses are among the most skilled in the field.

Carol Kunau, vice president of patient care at Adventist Medical Center said the hospital spent 3 percent of its total labor budget on supplemental nursing staff in 2002. The hospital, which employs 600 nurses, had not budgeted for the $2 million expense.

Currently, Adventist has limited use of supplemental staff to operating rooms, and only because the hospital recently opened new operating suites, Kunau said. In 2002, agency nurses were used in multiple units.

Adventist's expenditures for supplemental staff in 2003 will be one-third of last year's, Kunau predicted. The hospital has stepped up its hiring and recruitment to fill the gap. It has a 4 percent vacancy, or 24 openings.

Successful nursing recruitment suggest the sour economy is not all bad.

"The economy has solved most of the [recruitment] problems in the city," said Deb Burton, executive director of the Oregon Center for Nursing, which is working to improve the nursing shortage.

The economy has prompted aging nurses to delay retirement, prodded others to switch from part time to full time and others are coming to nursing as a second, more stable career, nursing administrators said.

[sjoe]

"For the first time, Legacy leaders began hiring new nursing graduates into critical care units, with improved orientation; they beefed up an internal "float pool" composed of 125 experienced and highly-paid nurses who can work at any Legacy hospital; they offered additional pay incentives to core staff willing to pick up extra shifts; and they hired more staff than in years past. "

Common sense--how rare it is in healthcare.