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Controlling Nurse Labor Costs

Karen Minich-Pourshadi, for HealthLeaders Media, January 19, 2012

At OSUMC, there are also union requirements that the hospital had to consider, such as giving the overtime to senior nurses first. Although the organization couldn't change the union contract regarding overtime, it could reduce the necessity for overtime. This required the implementation of the staffing and scheduling system. Prior to adding this tool, it was not always apparent how to assess patient demand and pay issues. In addition to this system, Nash also added a staffing pool to supplement staffing needs and found immediate labor savings.

"Once we had the tool in place, the administrative nursing supervisor could look at it every four hours and say, 'We have an increase in volume,' and move staff to where the need is greatest," she says.

Staffing to patient need is paramount if a facility wants to reduce costs, says Pamela Hunt, MSN, RN, vice president of patient services and chief nursing executive at the Indiana Heart Hospital, part of Community Health Network in Indianapolis. But many hospitals lack that flexibility, and still use more rigid shifts for nurse staff.
"If there are no cath lab procedures in the evening, then don't have staff come in. If you have five operating rooms, but no cases scheduled for one of the rooms, then the OR should have a crew that can flex their hours and come in at the time of the next procedure, not at a specific shift time. The key to productivity is flexing to volume," Hunt says.

Effective use of supplemental labor
Many healthcare leaders routinely budget for traveling or per diem nurses, but much of that may be unnecessary, says Hunt. Although there are reasons to use supplemental nurse labor, daily census demands shouldn't be one of them, she says. Supplemental labor is expensive, she adds, so these nurses should be used to address seasonal volume increases, medical leaves, or to fill in during large training initiatives such as ICD-10.

"I do believe there is a place for supplemental nurses; it's how you use them. If there are usually four nurses on a shift and you need to use one to replace a member of the unit or add one to address an exceptionally high census, then they work well because you have enough of your core nurses there who know the workload and who know the organization to be able to support this external staff member," she says.

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