EDN 816 Module 8 Financial Case for a Staffing Decision Example

The Business Case for One More Nurse at Night: A Financial Recommendation for a Medical-Surgical Unit

Student Name

Doctor of Education Program, Aspen University

EDN 816: Financial Management in Healthcare Environments

Instructor Name

Month Day, Year

The Business Case for One More Nurse at Night: A Financial Recommendation for a Medical-Surgical Unit

On Linden Ferry Medical Center's 32-bed medical-surgical unit, five registered nurses usually cover the night shift for about 28 patients, a ratio of more than five patients per nurse. Falls happen most often at night, nurses report missing reassessments and patient teaching, and the unit lost six night nurses last year. The unit's director wants to add a sixth nurse every night. The chief financial officer has asked for a financial recommendation, not a plea. This paper, the final one in the course, applies its tools to that decision: it estimates the cost, estimates the savings, weighs the uncertainty and recommends how to proceed.

The Patient Care Problem

The unit recorded 40 falls over 10,220 patient days last year, a rate of 3.9 per 1,000, and most occurred between midnight and six in the morning. Night nurses carry five or six patients, often including new admissions from the emergency department. The unit's average length of stay ran 0.3 days above the expected stay for its diagnosis groups, partly because discharge teaching and preparation begun at night were often unfinished. Night-shift turnover drove heavy overtime and some agency use, the pattern that raised the emergency department's labor rates in Module 4.

What the Evidence Says

Research connects staffing to both outcomes and costs. Aiken et al. (2002) analyzed outcomes for surgical patients across 168 Pennsylvania hospitals: every additional patient in a nurse's workload raised patients' odds of dying in the month after admission by roughly 7%, with a similar rise in failure to rescue, and raised the odds of nurse burnout by 23% and of job dissatisfaction by 15%. National estimates of the business case found that raising the share of nursing hours provided by registered nurses without adding hours was associated with a net reduction in costs, while adding nursing hours reduced hospital days, adverse outcomes and deaths at a net cost increase of 1.5% or less (Needleman et al., 2006). The evidence suggests that added staffing is not free but that much of its cost returns through avoided harm and shorter stays.

The Cost

One nurse for every 12-hour night shift requires 4,380 worked hours a year. Each full-time nurse provides about 1,872 productive hours after paid time off, so covering the shift takes 2.34 full-time equivalents. At an average cost of $118,000 a year including benefits, the added cost is about $276,100 a year.

The Estimated Savings

The director and the finance office estimated four sources of savings, each based on the unit's data and stated as an assumption to be tested.

The Net Result

On these estimates, the sixth night nurse costs about $276,100 and returns about $337,200, a net gain of roughly $61,000 a year. The result is consistent with the national evidence that added nursing hours come close to paying for themselves. The largest single benefit is capacity: shorter stays free beds that allow the hospital to admit patients now boarding in the emergency department, which brings both revenue and a safety benefit, since longer waits for a bed in the emergency department go with higher hospital mortality (Singer et al., 2011).

Uncertainty and Break-Even

Every savings figure is an estimate, and the two largest carry the most uncertainty. The capacity benefit assumes that freed beds are filled, which depends on demand and on inpatient flow elsewhere in the hospital. The turnover benefit assumes that better staffing retains nurses, which the evidence on burnout supports but cannot guarantee for one unit. A break-even check helps: the proposal pays for itself if total savings reach about $276,100, so it can absorb a shortfall of about 18% in the estimated savings. If the capacity benefit were only half as large, the proposal would cost about $19,500 a year, a small price for the patient benefits.

Value Beyond the Budget

The financial case understates the value of the decision. Avoided deaths, fewer injuries, completed teaching and nurses who stay are the purpose of the proposal, not side effects. The hospital's mission obliges it to weigh these outcomes directly, not only through the money they save. The quality programs described in Module 7 also reward the same outcomes, so the hospital gains financially when patients do.

A Pilot With a Stop Rule

The director recommends a 12-month pilot rather than a permanent change. Measures will be tracked monthly: the fall rate and the injurious fall rate, length of stay against expected, discharges before noon, night-shift turnover and vacancies, overtime and agency hours, patient experience scores for nighttime care and missed-care reports. At six months, the finance office and the director will compare actual savings with the estimates. If savings reach less than 60% of the estimate and patient outcomes have not improved, the pilot will end; if outcomes improve but savings lag, the decision will return to the committee with the patient results in hand.

Recommendation

Linden Ferry should fund a sixth registered nurse on the medical-surgical unit's night shift for a 12-month pilot at a cost of about $276,100, with the measures and stop rule described above. The request should be read as an investment in patient safety that, on reasonable estimates, roughly pays for itself, not as an added expense. If the pilot succeeds, the same analysis should be applied to the hospital's other medical-surgical units.

Conclusion

The course's tools, reading costs correctly, separating volume from efficiency, discounting and testing assumptions, and understanding how payment programs reward outcomes, together turn a staffing request into a financial recommendation. The sixth night nurse costs about $276,000 a year and, on the unit's own data and the national evidence, returns about as much through fewer falls, shorter stays and lower turnover, while protecting patients in ways no budget fully captures. A measured pilot lets the hospital act on that case and learn whether it holds.

References

Aiken, L. H., Clarke, S. P., Sloane, D. M., Sochalski, J., & Silber, J. H. (2002). Hospital nurse staffing and patient mortality, nurse burnout, and job dissatisfaction. JAMA, 288(16), 1987-1993. https://doi.org/10.1001/jama.288.16.1987

Needleman, J., Buerhaus, P. I., Stewart, M., Zelevinsky, K., & Mattke, S. (2006). Nurse staffing in hospitals: Is there a business case for quality? Health Affairs, 25(1), 204-211. https://doi.org/10.1377/hlthaff.25.1.204

Singer, A. J., Thode, H. C., Jr., Viccellio, P., & Pines, J. M. (2011). The association between length of emergency department boarding and mortality. Academic Emergency Medicine, 18(12), 1324-1329. https://doi.org/10.1111/j.1553-2712.2011.01236.x