The New Rainmakers

Philip Betbeze, for HealthLeaders Magazine , December 13, 2007
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Nurses cost money. In fact, their salaries are perhaps the biggest staffing cost a hospital must absorb. Over the past few decades, though few chief executive officers like to admit it, those costs have caused many hospitals to encourage their nursing managers to try to do more with less--less nurses per patient, that is. But things may be changing as hospitals are forced to compete more on quality than ever, reducing the short-sighted incentive to reduce nursing ratios for a relatively short-term goose of margins.

Long seen as a cost center, nurse staffing may have reached a turning point, at least inasmuch as hospital senior leaders are concerned. Instead, with increasing emphasis being placed on quality and patient satisfaction by health plans and consumers alike, hospitals are realizing that reimbursement increasingly depends on how well nurses do their jobs, making nurses, as a new PricewaterhouseCoopers report says, the "rainmakers" of the hospital.

"Nurses are with the patients more often, making sure the quality of care provided is appropriate and that the patients understand what's going to happen to them," says Janet Hinchcliff, one of the authors of What Works: Healing the Healthcare Staffing Shortage. Hinchcliff has helped hospitals and other local groups with strategies to combat nurse staffing shortages in the Washington, DC, and northern Virginia areas for several years. "Nurses have more hands-on time with the patients and are more involved than any other clinician in helping improve the patient's outcome. As a result, in the long run you'll see more of their impact on pay-for-performance and the dollars that will transfer over to the hospitals."

Do the C's get it?

Hinchcliff is concerned C-level leaders aren't completely on board with the view that nursing can play a role as a hospital profit center. "I'm not sure they realize the interconnections. This is going to be a big deal for them," she says. "Quality and patient satisfaction scores will show that a great deal of how a hospital is perceived has to do with the nursing staff. So they're a revenue contributor from a payment side, but also in terms of the fact that people are going to those hospitals because the nurses are really good."

But some leaders, such as Deborah K. Zastocki, president and CEO of 256-staffed-bed Chilton Memorial Hospital in Pompton Plains, NJ, are stressing the importance of nurses in their facilities' future financial viability. "Nurses can expedite care, and they are the key owners of patient and physician satisfaction," says Zastocki, who is also a registered nurse. "Nurses are our best marketing and sales force."

Lillee Gelinas is another executive who is doing her best to spread the gospel. "In the last 12 to 18 months you're seeing nursing given a whole different attention due to revenue generation," says the vice president and chief nursing officer with VHA Inc. She attributes that newfound attention to two major events. The first is HCAHPS, the Hospital Consumer Assessment of Healthcare Providers and Systems survey, a Centers for Medicare & Medicaid Services initiative that will compile data on patient satisfaction, adjust for case mix, and provide consumers a list of measures by which to compare hospitals.

"As patient satisfaction scores are publicly disclosed, consumers will look more and more at it when they're making decisions for elective surgery," says Gelinas. "Clearly, nursing has a huge role in patient satisfaction."

The second major issue is the new CMS 2008 Inpatient Prospective Payment System rules, which state that hospitals will no longer be reimbursed for any care needed as a result of a hospital-acquired condition, such as infection or certain mistakes called "never events." "Seven of the eight measures are nursing-sensitive," Gelinas says.

Such changes in reimbursement are already being felt in the C-suite, Gelinas says. "In the past, chief nursing officers' conversations with CFOs have gone something like, 'How are you going to improve productivity, and how are you going to cut FTEs?'" Gelinas says. But recently, the tone has changed. "I had two of my CNOs call me recently and say, 'My CFO just left my office and asked how we are going to fix nursing by December, because if we don't reimbursement is going to change for the worse.'"

Retention woes

Nurse turnover among those with three years or less experience at some hospitals is 45 percent to 55 percent, Gelinas says. "We can't hold on to the new kids coming out of school. Retention is tied to stability in the patient care environment, it's tied to nursing excellence, and it's tied to patient care excellence."

But Gelinas says board members and the C-suite are beginning to understand the correlation between nursing care and revenue in the front door. For example, Gelinas recently spoke at Dearborn, MI-based Oakwood Healthcare System's board of directors retreat. The entire two-day retreat centered on clinical quality, patient safety, the role of the nurse--and how the board and senior leaders needed to understand the new dynamic at the four-hospital system. "Five years ago, you would've had Moody's Investors Service come in, talking about bond ratings and the way the health system could build its way to a black bottom line," she says.

Healthcare execs seeking the path to revenue enhancement by bolstering the quality and retention of their nursing staffs might need to look no further than healthcare's version of touchy-feely staff management, the Planetree model, says Bill Powanda, vice president at 110-staffed-bed Griffin Hospital in Derby, CT. Planetree encourages staff to design a care environment based on how patients view the hospital experience. This approach better enables staff to develop healing partnerships between patients, family members and caregivers by encouraging patients to be active participants in their healthcare, Powanda says.

"Who would think the Cleveland Clinic would be looking to create a different patient experience when they've grown up on clinical outcomes?" he asks. Cleveland Clinic and New York Presbyterian Hospital are among the highest profile hospitals to convert to the Planetree model. "They've come to the realization that if you're going to depend on the consumer, whose role is increasingly growing stronger, you should create a patient experience that includes both superior clinical outcomes as well as a unique and positive patient experience."

VHA's Gelinas says healthcare has a nursing retention problem due to a poor working environment coupled with a nursing education system that turns away 30,000 qualified nursing school applicants each year due to a lack of teachers. "We are pouring out nursing students at an all-time high, but they're not staying in nursing," she says. "They're leaving because the work environment is so bad."

Still, the self-described eternal optimist adds: "Talk to me in 36 months. I think our CEOs have the right bent, and our CNOs have the right attitude."

Philip Betbeze is finance editor withHealthLeaders magazine. He can be reached at

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