Economic analysis

Current economic reality for hospitals

According to the 2015 Ontario provincial budget, hospital base operating budgets will be frozen for the fourth consecutive year [1]. Given the current economic climate of fiscal restraint, hospitals are looking for cost-effective ways to deliver safe and effective care. Full utilization of nurse practitioners (NPs) presents a viable means to this end.

Nurse Practitioners: a cost-effective solution

The cost-effectiveness of NPs in primary care has been well established [2]. As NPs are increasingly employed hospitals, there is an expanding body of research that captures the quality and cost-effectiveness of NP care in this setting.  Much of the data is from other jurisdictions, such as the United States, where the NP role in hospitals is well-established. However, the Canadian body of evidence is also growing.

Nurse practitioners provide safe and effective care for admitted patients. The value of NPs in hospitals is derived both from the relative costs of models of care that include NPs, as well as from the cost-savings from avoiding adverse outcomes. There are concerns in the nursing community that NPs may be seen as simply a cheaper alternative to physician coverage, rather than a value-added service [3]. From a review of the literature, it is clear that NPs in hospitals contribute to many favourable economic outcomes. Many of these outcomes, including decreased length of stay and decreased rates of complications, may also be aligned with organizational priorities. NP-sensitive clinical outcomes are examined in more detail in the "Quality of Care" section of this toolkit.

The following is a brief summary of evidence of the economic advantage of NPs in hospitals. Please note that this is based on a scoping review of current literature and this review is not exhaustive.

Economic Outcomes:

Nurse practitioners involved in care led to favourable economic outcomes in a number of studies. Compared to usual care, NPs contributed to the following outcomes:

Decreased length of stay

  • General medicine inpatient unit:
    • Decreased LOS and overall cost savings to hospital [4], with no changes in mortality or rates of re-admission [5]
    • Cost savings during hospital admission as well as decreased post-discharge costs [6]
  • Intensive Care Unit (ICU):
    • Cardiovascular ICU: Decreased LOS and overall cost of hospitalization[7]
    • Neuro ICU: Shorter stay in ICU and decreased overall LOS[8]
    • Trauma: Shorter stay in ICU [9]
    • Decreased length of ICU stay length, as well as decreased overall hospital LOS admission[10]
    • Decreased ICU re-admissions [10]
  • Step-down ICU:
    • Decreased LOS in trauma step-down unit [3]
  • Timely discharge and increased continuity of care: [4, 10, 11],[12]
  • Decreased rates of re-admission [13]
  • Decreased rate of complications[10], [8], [9]
  • Decreased resource utilization [14]
  • Decreased overall cost of care [9], [7], [4], [3]

Secure funding for NPs in hospitals

NP services for hospital patients are paid for out of a hospital's base operating budget. In times of leaner hospital funding, this can threaten NP positions[15]. In order to stabilize NP positions and grow the role in hospital settings, NP services ought to be funded outside of the main hospital budget [15].

Role clarity for NPs is essential. Funding for physicians and other members of the interdisciplinary team should be secured in order to prevent a competitive environment. The needs of the patient population and health system ought to guide decisions about models of care [15]. As of May 1, 2015, the Ontario government has implemented amendments to the Health Insurance Act and the Schedule of Benefits for Physician Services, in order to ensure that NPs are recognized as a direct referral source for specialists [16]. This regulatory amendment supports the full utilization of NPs in hospitals.


1.            Grant, K., Ontario budget continues hard line on health care in bid to tackle deficit, in The Globe and Mail. April 23, 2015.

2.            Dierick-van Daele, A.T.S., L. M. Metsemakers,J. F. Derckx,E. W. Spreeuwenberg,C. Vrijhoef,H. J. , Economic evaluation of nurse practitioners versus GPs in treating common conditions The British journal of general practice : the journal of the Royal College of General Practitioners, 2010. 60(570): p. 160-168.

3.            Collins, N., et al., Outcomes of adding acute care nurse practitioners to a Level I trauma service with the goal of decreased length of stay and improved physician and nursing satisfaction. The Journal of Trauma and Acute Care Surgery, 2014. 76(2): p. 353-7.

4.            Gross, P.A., Aho, L.,  Ashtyani,H., Levine,J., McGee,M., Moran,S., Anton,T., Feldman,J., Kuyumjian, A., Skurnick, J., Extending the nurse practitioner concurrent intervention model to community-acquired pneumonia and chronic obstructive pulmonary disease. Joint Commission Journal on Quality and Safety, 2004. 30(7): p. 377-386.

5.            Cowan, M.S., M; Hays, RD.; Afifi, A; Vazirani, S; Ward, CR; Ettner, SL, The Effect of a Multidisciplinary Hospitalist/Physician and Advanced Practice Nurse Collaboration on Hospital Costs. Journal of Nursing Administration, 2006. 36(2): p. 79-85.

6.            Ettner, S.L., Kotlerman, K., Afifi, A., Vazirani, S., Hays, R.D., Shapiro, M., Cowan, M., An Alternative Approach to Reducing the Costs of Patient Care? A Controlled Trial of the Multi-Disciplinary Doctor-Nurse Practitioner (MDNP)Model. Medical Decision Making, 2006. 26(1): p. 9-17.

7.            Meyer, S.C. and L.J. Miers, Cardiovascular surgeon and acute care nurse practitioner: collaboration on postoperative outcomes. AACN Clinical Issues: Advanced Practice in Acute & Critical Care, 2005. 16(2): p. 149-158.

8.            Russell, D., VorderBruegge, M., Burns, S. , Effect of an outcomes-managed approach to care of neuroscience patientes by acute care nurse practitioners. American Journal of Critical Care, 2002. 11(4): p. 353-362.

9.            Sise, C.B., M.J., Kelley, D.M., Walker, S.B., Calvo, R.Y., Shackford, S.R., Lome, B.R., Sack, D.I., Osler, T.M., Resource commitment to improve outcomes and increase value at a level I trauma center. The Journal of Trauma, 2011. 70(3): p. 560-568.

10.          Fry, M., Literature review of the impact of nurse practitioners in critical care services. Nursing in Critical Care, 2011. 16(2): p. 58-66.

11.          Kapu, A.N., R. Kleinpell, and B. Pilon, Quality and Financial Impact of Adding Nurse Practitioners to Inpatient Care Teams. Journal of Nursing Administration, 2014. 44(2): p. 87-96.

12.          Jarrett, L.A.E., M, Utilizing trauma nurse practitioners to decrease length of stay. Journal of Trauma Nursing, 2009. 16(2): p. 68-72.

13.          Delgado-Passler, P., McCaffrey, R., The influences of postdischarge management by nurse practitioners on hospital readmission for heart failure. Journal of the American Academy of Nurse Practitioners, 2006. 18(4): p. 154-60.

14.          Chen, C.M.-S., D. Cowan,M. Upenieks,V. Afifi,A, Evaluation of a nurse practitioner-led care management model in reducing inpatient drug utilization and cost. Nursing Economics, 2009. 27(3): p. 160-168.

15.          van Soeren, M., et al., Report to: Ontario Ministry of Health and Long-Term Care On Research Project: The Integration of Specialty Nurse Practitioners into the Ontario Healthcare System. 2009.

16.          Care, O.M.o.H.a.L.-t. Enhancing the Role of Nurse Practitioners. 2015  [cited 2015 05/25/2015]; Available from: