Staffing nurses would 'mostly pay for itself,' says report
ILEPI study finds $1.4B gain to be had in turnover, injury rate, patient costs
By Ted Cox
A new study finds that Illinois hospitals and other medical groups would actually save $1.4 billion over projections by adequately staffing nurses.
The Illinois Economic Policy Institute study “The Fiscal Impact of Safe Patient Limits in Illinois” cites figures from the Illinois Health and Hospital Association projecting that, if the General Assembly passes laws calling for the adequate staffing of nurses, it would need to hire more than 20,000 nurses at an estimated cost of $2 billion.
But the study finds that gains to be found from increased staffing in the form of reduced turnover, a lower injury rate, and improved patient-care costs would actually wipe away about $1.4 billion of that investment.
“While prior research has highlighted the fact that staffing standards would improve patient care and mitigate the occupational hazards that are driving about one-third of all new nurses out of the profession within their first three years, this subsequent research shows that the policy would mostly pay for itself,” said Frank Manzo IV, study author and ILEPI policy director.
A previous ILEPI study published in March in tandem with the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign found that Illinois was facing a dire nurse shortage, and it recommended unionization and improved staffing to address the problems that are driving many nurses from the health field.
State Rep. Fred Crespo of Hoffman Estates and state Sen. Cristina Castro of Elgin have both submitted legislation — House Bill 2604 and Senate Bill 1908 — to set patient limits for nurses.
The study cited gains in California, which enacted similar nurse staffing standards in 2004. California mandated that there be at least one nurse for every two patients in intensive care, three patients in labor and delivery, four patients in pediatrics, five patients in medical-surgical units, and six patients in psychiatrics. Since then, California hospitals have lowered their readmission rate and mortality rate, and significantly reduced the average length of patient stays — all cost savings — while also enjoying a turnover rate in nurse staffing that is 21 percent lower than in Illinois.
“Safe patient limits have been a net positive for patients, nurses, and the bottom line of California’s hospital industry,” Manzo said. “In debating similar standards, Illinois legislators must not just consider the short-term cost of adding health-care professionals, but the long-term benefits of better nurse retention and higher-quality care.”
According to the study, Illinois hospitals spent $40 billion in 2018 and collectively posted a $3 billion gross operating surplus, but they claim that would almost be swallowed up by the $2 billion required to hire the additional 20,000 nurses to address staffing needs.
According to Manzo, those estimates “appear to include only the labor cost of hiring more nurses, but fail to account for the significant cost burdens that understaffing currently imposes on our hospitals. This includes hundreds of millions of dollars in staff turnover and injury costs, reduced Medicare reimbursements due to higher patient readmissions, and additional patient time in costly intensive care and surgical units. On these four metrics alone, safe patient limits could save Illinois hospitals over $1.4 billion.”
Specifically, the study finds that reduced turnover would save hospitals $401 million, fewer injuries for nurses would save $7 million, improved patient recovery would save $876 million in reduced costs, and lower readmission rates within 30 days of a patient’s discharge would save $75 million.
The study projects that the actual cost of hiring those much-needed nurses would be $465 million, “about 1 percent of total hospital spending in 2018, or less than 15 percent of the industry’s annual gross operating surplus.”
The study cites Economic Census data finding that “Illinois’s hospitals currently lag (behind) national averages in terms of both employment growth and revenue growth,” while “California, the only state to have implemented safe patient limits for nurses, far exceeds national averages” in both those areas. In other words, additional nurses would be good for both patient health and hospital vitality.