ANA: Economic Value of Nursing

...The average annual cost for hospitals to employ an RN in 2005 was approximately $83,000 (salary of $57,820 and a fringe benefit rate of 30.4%).22 An expansion in RN supply of RNs to improve staffing levels could cause the cost per RN to rise. The benefits of increased RN staffing included in our analysis find that each additional patient care RN employed (at 7.8 HPPD) will generate over $60,000 annually in reduced medical costs and improved national productivity (accounting for 72% of labor costs). This is only a partial estimate of the economic value of nursing, omitting the intangible benefits of reduced pain and suffering by patients and family members; the risk for patient rehospitalization; benefits to the hospital such as improved reputation, reduced malpractice claims and payouts, and reduced compliance-related costs; the benefits of increased staffing related to improved work environment (eg, reduced turnover and risk of injury); and the value of administrative activities that patient care nurses perform (eg, functions related to billing and ordering). Omitted areas of economic value reflect gaps in the literature and warrant future research.

The approach we used to quantify the economic value of increased staffing levels has several limitations:
One, the estimates omit the value of some services that RNs provide and consequently underestimate their economic value.

Two, a major component of estimated medical savings is reduced patient LOS. Prevention of nosocomial complications explains only a small portion of the total decrease in inpatient days. Additional research is needed to better understand the pathways that lead to reduced LOS.

Three, the approach used may encounter effect modification. If overall healthcare quality improves causing patient risk of nosocomial complications to decline with existing staffing levels, effect modification causes the estimates of economic value per RN to decline (there is less potential for quality improvements).
Four, estimates from the literature on the relationship between RN staffing level and quality of care are based on cross-sectional studies. These studies rely on associations that imply but do not establish causality. Work by Mark et al suggests that failure to adequately control for hospital characteristics can bias the estimated relationship between nurse staffing and quality of care.23 When we compared the results reported in our paper to results using hierarchical linear models, we found differences in the estimates of control variables but minimal differences in the estimates used in our analysis (ie, the impact of nosocomial complications on predicting mortality, LOS, and cost).


The findings from this study point to 2 related issues with policy implications. First, because healthcare facilities realize only a portion of the economic value of professional nursing, under current reimbursement systems the incentive (and financial reality) is for facilities to staff at levels below where the benefit to society equals the cost to employ an additional nurse. Perception of a market failure or the increased potential for social good often results in calls for political action-as is the case with calls for mandated minimum nurse staffing ratios. A study by Evans and Kim (2006) studied the relationship between hospital staffing levels and adverse patient events in California hospitals to investigate the merit of California's mandated minimum nurse-to-patient ratios.24

In 1994, the American Nurses Association (ANA) launched the Safety & Quality Initiative to explore and identify the empirical linkages between nursing care and patient outcomes. The Nursing Care Report Card for Acute Care (ANA, 1995) proposed 21 measures of hospital performance with an established or theoretical link to the availability and quality of nursing services in acute care settings. In 1997, ANA issued a call for organizations to submit proposals to develop and maintain the National Database of Nursing Quality Indicators. Midwest Research Institute (MRI) and the University of Kansas School of Nursing (KUSON) were selected by ANA to take on this task because of their expertise in database programming and outcomes research. The database eventually moved from MRI to KU in 2001. From 1997 - 2000, a series of pilot studies were funded by ANA to test selected indicators: definitions, data collection methodology and instrument development. Selected state nursing associations (Arizona, ANA/California, Minnesota, North Dakota, Ohio, Texas, and Virginia) were involved in the pilot projects. http://www.nursingworld.org/MainMenu...I/NDNQI_1.aspx

...As you peruse these articles, recall that economic value is dynamic, not a static process. Value is not the purview of the supplier of services (in this case, nurses), but rather is created in tandem with users of services (the patient or health system, dependent upon the unit of analysis). Economic value is but one way, albeit a very significant one, of valuing nurses and nursing. In traditional economic models the notion of the law of demand drives prices and value beyond the reach of users, giving access to those who can demand services preferentially. Among the challenges for the nursing discipline is the creation of fair value and economic reward for a discipline that extends itself to all aspects of society to be non-scarce in light of influencing the health and well-being of society, through which healthy workers emerge to constitute the backbone that feeds all other industries.