Controlling Nurse Labor Costs

Karen Minich-Pourshadi, January 19, 2012

"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.

Karen Minich-Pourshadi Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media. Twitter
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