The Relationship Between Nurse Staffing, Quality, And Financial Performance In Hospitals
Abstract
Little evidence exists on the relationship of nurse staffing and quality with financial performance in hospitals. This study aimed to measure the relationship between nurse staffing, quality of care, and
profitability in hospitals. This study used longitudinal panel datasets from 2006 to 2010, drawn from various datasets including the American Hospital Association Annual Survey Database, Medicare Cost Report, and Hospital Compare Data. This study used the random-effects linear regression model to measure the relationship between nurse staffing, quality, and profitability. In addition, we tested a mediating effect of quality on the relationship between nurse staffing and profitability. This study found nurse staffing’s significant association with quality and profitability in hospitals. First, compared to hospitals in the lowest quintile of RNs per 1,000 inpatient days, hospitals in the higher quintiles had lower pneumonia readmission rates, and higher total profit margins, operating margins, and cash flow margins. In addition, hospitals with lower pneumonia readmission rates were found to have higher total profit margins and cash flow margins. Lastly, the current study found that the positive relationship between RNs per 1,000 inpatient days and total profit margin and cash flow margin was partially mediated by pneumonia readmission rates. In conclusion, our finding that nurse staffing is positively associated with both quality of care and profitability in hospitals suggests that the idea of hospitals responding to financial pressures by cutting RN resources with a goal of greater profitability should be called into question. The influence of lower RN staffing levels on higher profitability for hospitals is uncertain, while it is possible that RN staff reductions may compromise the quality of patient care. Keywords: nurse staffing, registered nurse, quality of care, readmission rate, profitability, total profit margin, operating margin, cash flow margin, hospital.
Conclusion
On a practical level, the findings on the relationship between nurse staffing, and the quality and financial outcomes in hospitals can assist nurse managers and chief executive officers in identifying the optimal RN staffing level. These findings suggest that RN staffing level may be a strong predictor of quality and profitability and that the quality may mediate the relationship between RN staffing level and profitability in hospitals. This could be of particular interest to current hospital managers because of the payment reductions for excessive readmissions embedded in the ACA, which might have significantly affected the average profitability of some service lines in their hospitals. A lesson that can be learned from the past is that hospitals may attempt staff reductions in response to increased financial pressures as a result of payment reforms. However, as the findings in this research and the literature suggest, the reduction of nursing staffs may be related to an increase in adverse effect on the quality of patient care. The analysis results of this study demonstrated that a higher RN staffing level was associated with a lower pneumonia readmission rate, while the medium level of RN staffing level (≈ 7.7 RNs per inpatient day) had the highest profitability among general and acute care, non-federal government hospitals. Staffing decisions involve balancing between labor costs and the level of care required to fulfill healthcare needs of patients (Blegen, Vaughn, & Vojir, 2008). It is a matter of choice to hospital managers to decide what would be the most effective nurse staffing strategy for their hospitals in response to the HRRP.
https://journals.scholarpublishing.org/index.php/ABR/article/view/8745