How to Manage the Financial Impact of Nurse-to-Patient Ratios

Last Updated on February 22, 2024

How to Manage the Financial Impact of Nurse-to-Patient Ratios

Nursing ratios can be a controversial topic — and that’s especially true for new laws requiring them. But a growing library of research shows that they also support quality care, patient safety, and, ultimately, the financial health of healthcare organizations. With that in mind, here’s what leaders should know about the financial impact of nurse-to-patient ratios, and how to better manage it.

Calculating the Financial Impact of Nurse-to-Patient Ratios

Of course, the concept of nursing ratios, or the set amount of patients each nurse is responsible for, isn’t new. The impact of nursing ratios has been studied for years. And, time after time, researchers find that they directly affect patient safety and outcomes.

That may seem intuitive enough. But what’s become clearer in recent years is that nursing ratios also directly affect operators’ bottom line.

“Minimum nurse-to-patient staffing ratios not only improve nurse staffing and patient outcomes but also yield a good return on investment,” as one 2021 study published in the American Journal of Nursing puts it. “Staffing improvements of one fewer patient per nurse led to improvements in mortality, readmissions, and length of stay.”

This study, and others like it, connect the financial impact of nurse-to-patient ratios in four specific ways:

  • Controlling medical errors and improving patient safety
  • Improving medical outcomes and mortality rates
  • Decreasing patient readmissions and length of stay
  • Reducing nurse burnout and boosting retention

For example, an observational study of hospitals in New York State from 2021 found that “each additional” surgical and/or medical patient added for each nurse “was associated with higher odds of in-hospital mortality, longer lengths of stay, and higher odds of 30-day readmission.”

The authors concluded that hospitals staffed at the ideal one-to-four nurse-to-patient ratio could save an estimated 4,370 lives over a two-year period. In addition, the total financial savings could be as much as $720 million “in shorter lengths of stay and avoided readmissions.”

On top of all this, a 2018 observational study concluded that nurse staffing levels directly affect the patient experience. And that can, in turn, drive poorer financial performance from loss of business.

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Medical Errors and Patient Safety

Medical errors are a major challenge for quality care delivery, and not just because of the cost in human lives. “Preventable medical errors contribute substantially to healthcare costs, including higher health insurance costs per person expenses.” That’s according to a new 2023 book on the topic, which points to an increase in readmissions and malpractice claims as just a few of the ways that errors drive higher costs.

Subsequently, understaffing or failing to employ enough nurses to ensure ideal ratios is a significant source of these errors. A 2022 study from the Journal of Advanced Nursing found that “personnel understaffing and expertise understaffing jointly shape near misses, which are known to precede and contribute to accidents and injuries, through different mechanisms.”

Medical Outcomes and Mortality Rates

In addition to medical errors, the financial impact of nurse-to-patient ratios also includes overall outcomes and patient mortality rates. For instance, one systematic review from Medical Care found “associations between increased RN staffing and lower odds of hospital related mortality and adverse patient events.”

An observational study of Illinois hospitals published in 2021 in the BMJ also stated that “the odds of 30-day mortality for each patient” in medical-surgical units “increased by 16% for each additional patient in the average nurse’s workload.” Maintaining a four-to-one patient-to-nurse ratio could have helped those hospitals avoid “more than 1595 deaths,” the authors add. And that would have saved them a collective $117 million over the course of a single year.

Readmissions and Length of Stay

The BMJ study also found that the “odds of staying in the hospital a day longer” rose by five percent “for each additional patient in the nurse’s workload.” In addition, a 2021 study published in Lancet found that the “costs avoided due to fewer readmissions and shorter LOS (lengths of stay) were more than twice the cost of the additional nurse staffing.”

Nurse Burnout and Turnover

Understaffing is a major source of burnout for nurses, which can impact care and cause errors. It also fuels turnover, a major expense for many facilities. It’s also one of the main complaints behind the recent surge in nursing strikes across the United States.

As a 2019 study published in the International Journal of Environmental Research and Public Health points out, nurse-to-patient ratios are “related to nurses’ intention to leave their job through mediating factors of burnout and job dissatisfaction.”

That makes sense. After all, nurses who feel that they’re working in an understaffed setting can become frustrated by their inability to provide proper patient care. A 2018 survey cited by WHYY found that only 20% of American nurses “feel staffing levels are safe.”

Managing the Financial Impact of Nurse-to-Patient Ratios

Yet given the many challenges facing the industry today, maintaining safe ratios may be difficult to prioritize. Many operators do have guidelines around ratios, but find that it’s not always easy to meet those standards. Additionally, simply investing in more nurses can be tough to justify at a time when margins are already tight.

However, failing to take action could be even more costly. “Given that direct labor costs are the major budget items, hospitals face the dilemma between reducing or limiting direct labor costs and providing better care quality,” as the Int J Environ Res Public Health authors put it. “Although some hospitals reduce nurse staffing to minimize cost, nurse staffing has been reported to be influential not only in hospitalized patients’ prognoses and safety but also in hospitals’ financial performance.”

Solutions to Manage Financial Impact

Luckily, there are other options available to leaders. One solution may be to support nursing staff with more specialized workers. One analysis suggested that adding “specialist nursing and specialist support roles to the nursing workforce.” Doing so could “result in shorter patient hospital stays.”

Education and training are also frequently connected with patient-to-nurse ratios. Investing in development and training programs can help offset this challenge. (Education and training can provide a good deal of other benefits, too – get more details on that here.)

Another solution is the use of contingency staffing services like per diem and travel nurses. Supporting permanent staff with these types of workers can help ensure optimal ratios during times of high utilization. It can also help reduce burnout and turnover by providing the means to give full-time staff a better work/life balance.

Manage the Financial Impact of Nurse-to-Patient Ratios with CareerStaff

At CareerStaff, we’re proud to help healthcare organizations of all types better manage the many workforce issues they face today. With a nationwide roster of contingency workers, as well as a full reserve of specialists and support professionals, we’ve got the solutions to help you manage the financial impact of nurse-to-patient ratios, and much more.

Contact us today to discover how our suite of workforce management solutions can help your organization ensure stronger nursing ratios. Or get started right now by sending us a nurse staffing request for your facility.

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