The effects of nurse staffing on hospital financial performance

Abstract

Background Hospitals facing financial uncertainty have sought to reduce nurse staffing as a way to increase profitability. However, nurse staffing has been found to be important in terms of quality of patient care and nursing related outcomes. Nurse staffing can provide a competitive advantage to hospitals and as a result better financial performance, particularly in more competitive markets Purpose In this study we build on the Resource-Based View of the Firm to determine the effect of nurse staffing on total profit margin in more competitive and less competitive hospital markets in Florida. Methodology/Approach By combining a Florida statewide nursing survey with the American Hospital Association Annual Survey and the Area Resource File, three separate multivariate linear regression models were conducted to determine the effect of nurse staffing on financial performance while accounting for market competitiveness. The analysis was limited to acute care hospitals. Findings Nurse staffing levels had a positive association with financial performance (β=3.3; p=0.02) in competitive hospital markets, but no significant association was found in less competitive hospital markets. Practice Implications Hospitals in more competitive hospital markets should reconsider reducing nursing staff, as these cost cutting measures may be inefficient and negatively affect financial performance.

Hiring internationally educated nurses in hospitals: role of competition and resource availability

“…[48] As such, higher staffing levels may result in better financial performance, particularly in highly competitive markets. [21] The study findings also support an association between bargaining power of the buyers and likelihood of hiring IENs. Hospitals serving ethnically diverse populations (higher percentage of Blacks, Hispanics, and American Indians) are more likely to hire IENs, which is consistent with the findings of Cho and colleagues.…”

“…[21] Factors that affect the availability of this resource could impact hospitals' behavior related to hiring of nurses. This study utilizes Resource dependence theory (RDT) [22] and Porter's five forces model [23] to analyze factors other than market labor shortage, which could influence hospitals' hiring behavior (see Figure 1).…”

“…[24] Hospitals tend to compete on the basis of quality of care, given that it matters to their patients. [25] Since RNs staffing is significantly associated with the quality of care [20] as well as financial performance of hospitals, especially in competitive markets, [21] RNs represent a critical resource for hospitals. Decreased availability of RNs could influence hospitals' ability to provide high quality of care.…”

“…Previous studies have shown that staffing levels are significantly associated with both quality of care [19,20] and hospitals' financial performance. [21] Therefore, recruitment of IENs could have a considerable impact on the quality of care and financial performance of hospitals utilizing IENs. Findings of this study could help health care managers to understand the influence of market factors on utilization of IENs to fulfill hospitals' nurse staffing needs.…”

The Relationship Between HR Capabilities and Quality of Patient Care: The Mediating Role of Proactive Work Behaviors

“…HRM in health care is more complex than many other industries because of labor intensiveness, well‐established separate professions and occupations with their own locus of practice and control, and the sheer scale of operations (Dussault & Dubois, ; Khatri et al, ). The underlying logic of the resource‐based theory and dynamic capabilities would suggest that HRM may be even a more potent source of competitive advantage in health care than other industries (Buchan, ; Everhart, Neff, Al‐Amin, Nogle, & Weech‐Maldonado, ; Townsend et al, ). Indeed, sometimes, health care organizations are not able to manage their HR well because it can become fairly complex for them (McBride & Mustchin, ).…”