Controlling Nurse Labor Costs

Karen Minich-Pourshadi, for HealthLeaders Media , January 19, 2012
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"There are good reasons to use supplemental staffing, but it's also expensive. By establishing this pool when we have a staffing shortage, we can get the right nurse, at the right time, at the right price," Nash says.

With the ongoing nursing shortage, Polly Davenport, RN, FACHE, CEO at Ochsner Medical Center-North Shore, a 165-bed acute care hospital on the north shore of Lake Pontchartrain in Slidell, LA, says using an in-house nursing pool can keep tenured, more experienced nurses with invaluable skill sets from leaving the facility altogether.

"Although these seasoned nurses want to slow down and retire, you don't want to lose these experienced nurses; they have knowledge that the newer nurses can benefit from," she says.

Many organizations will pay more to in-house pool nurses because of the experience and expertise they bring, says Davenport. These nurses are usually willing to cover multiple clinical areas in the hospital.

"They are typically very flexible individuals, flexible in the hours they work and the locations in the hospital they will cover. There is a price differential; agency nurses … do cost more than in-house pool, but you're paying the RN rate plus the agency who has their own costs to cover," she says.

Stop turnover
"It's a big cost factor," says Aiken. "If an organization could reduce nurse turnover by just 3% it would save a million dollars in costs."  For example, she says, if a 500-bed hospital reduces nurse turnover from 13% to 10%, it could save up to a million dollars because it costs approximately the annual salary of the lost nurse to find a permanent replacement, taking into account recruitment costs, supplemental staffing to fill the vacancy temporarily, and overtime to the other nurse to cover the position. 

Additionally, Nash notes it's important to calculate the cost of the nursing search and the subsequent training the nurse will need as part of the cost. During the transition, a hospital may need to resort to using agency nurses.

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5 comments on "Controlling Nurse Labor Costs"

Bill (2/10/2012 at 1:22 PM)
The key to this ability to pull together granular data often from multiple sources in away that nursing managers can easily understand what is going on without the need to be technical or spending hours a week in Excel. Our client NYU won a Smithsonian award for building exactly this kind of nursing productivity tool.

Mary K Freel (2/2/2012 at 1:16 PM)
"A nurse is a nurse is a nurse" no longer works in this day of advanced technologies and care. You cannot expect a pediatric nurse to take care of cardiac patients or an OB nurse to handle the ER. When a nurse is pulled[INVALID]like the author suggests hospitals do[INVALID]to an unfamiliar floor she is expected to work as though she always worked there[INVALID]often taking a team. I would like to see a study of errors with particular attention to whether that was the nurse's usual floor. I bet the rate of errors goes up dramatically with the rate of pulls. Even with orientation to specific floors pulling is a dangerous practice because your skill sets for each floor are entirely different and often the medicines used are entirely different.

Linda Kozak (1/22/2012 at 1:33 PM)
Well, this is no startling revelation to this 45+ years of nursing service and commitment " old nurse" I have made this statement more than once in my career about using agencies for all the incorrect reasons. and have lost jobs over having an educated opinion. You need a nurse with knowledge and experience to save a life and teach the newbies. Sincerely, Linda K




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