In the current context of seeking to maximize health-care resources, proposed interventions must demonstrate both efficacy and cost-effectiveness. An overall goal is to improve the quality of care, while containing costs.
Nurse practitioners (NP) provide quality care for hospital patients in a cost-effective manner. They improve the cost effectiveness of care both in terms of decreasing direct health-care costs, as well as in avoiding adverse outcomes and complications. Get more details.
Performing a cost-benefit analysis (CBA) allows the consideration of both the costs and outcomes of an intervention simultaneously [1]. There are some existing studies that provide data, which may be used to help assess the impact of NPs in acute care. The following is an example of CBA for the care of hospital patients by NPs. In this example, nurse practitioners are added to an inpatient care team in a complementary, collaborative model of care.
First, costs of employing an NP will be estimated, followed by an estimation of costs saved by NPs contributing to improved outcomes of care. Finally, the two measures will be combined in a CBA.
A. Estimating the Cost of Nurse Practitioner Care
Nurse practitioners employed by hospitals are typically paid either hourly or are salaried, and some NPs are unionized. An average salary for NPs working in hospitals is estimated from is $103,000 to $108,000 [2]. Based on available data from the Ontario Treasury Board Secretariat, the figure $108,000 will be used as an average annual base salary for the purposes of the present analysis [3]. An additional 24 per cent of the base salary is added for employment costs (includes benefits, recruitment, training, support staff) [4].
Relatively speaking, adding NPs to a hospital staff budget does not significantly increase outlays. In the sample case of a hospital with a budget of $400 million that employs 25 FTE NPs, the cost of employing these NPs would comprise a very small proportion of their budget (see Table 1).
Table 1: Estimated costs of nurse practitioners employed by a sample Ontario hospitals of varying sizes
|
|
Large Hospital (Urban, academic hospital) |
Medium Hospital
(Large community hospital) |
Small Hospital (Small community Hospital) |
|
Total Unit Wage Cost (Basic Annual Unit Wage +24%) |
$133,920
|
$133,920
|
$133,920
|
|
Total Cost of hiring NPs [varying number of FTEs (Full-time equivalent)] depending on size of hospital] |
25 FTE NPs =(25 x $133,920)
$3,348,000
|
15 FTE NPs =(15 x $133,920)
$2,008,800
|
5 FTE NPs =(5 x $133,920)
$669,600
|
|
% total hospital budget |
Total hospital budget of $400 million
=(25 x $133,920) / $400 million
= 0.84 % |
Total hospital budget of $120 million
=(15 x $133,920) / $120 million
= 1.67 % |
Total hospital budget of $43 million
=(5 x $133,920) / $43 million
= 1.56 % |
B. Estimating the benefits of adding an NP to an inpatient care team: Decrease in ALOS (Average Length of Stay)
While there are multiple benefits related to NPs caring for hospital patients (see quality of care and economic analysis ), only costs saved through decreasing length of stay (LOS) will be examined in the following cost-benefit analysis. Please note that, although LOS is commonly used as a benchmark, a shorter LOS is not always better; rather, the goal should be to optimize LOS in the context of comprehensive discharge planning and co-ordination of care in order to benefit patients and to decrease rates of re-admission.
Study details
[5]and [6]
· Patient population: Trauma service [includes intensive care unit (ICU), step-down ICU and floor]
· Single-site, retrospective analysis conducted at a large academic Level I trauma centre
· Intervention: added NP coverage in the trauma step-down ICU (Mon.-Fri. 6 a.m.-6 p.m.; equivalent to the addition of 1.5 FTE NP time)
· 12 month study period.
· NP was first point of contact for patients, families and nurses in step-down ICU
· NP role included clinical care, co-ordination, transfers (up to ICU or down to trauma inpatient unit), and comprehensive discharge planning
· After 1 year, ALOS in entire trauma service decreased by 0.8 days per patient; patient acuity remained comparable to years prior to the study period.
Table 2: Estimated costs saved by adding nurse practitioners to an inpatient care team
|
|
Using absolute decrease in ALOS (based on ALOS data directly from the study) |
Using proportional decrease in ALOS (based on ALOS data from an Ontario context) |
|
Estimated annual cost savings
(see Appendix A for detailed explanation of cost estimates and calculations):
|
Absolute decrease in ALOS: 0.8 days
Per patient costs saved (by decreasing ALOS through addition of NP to trauma service), per 1 NP FTE: = $277.87
x 2035 (estimated number of trauma cases cared for by 1 NP FTE per year) = $565,465
|
Proportional decrease in ALOS: 1.76 days
Per patient costs saved (by decreasing ALOS through addition of NP to trauma service), per 1 NP FTE: = $611.30
x 2035 (estimated number of trauma cases cared for by 1 NP FTE per year) = $1,243,385 |
C. Combining costs and outcomes
Table 3: Summary of Cost-Benefit Analysis of NPs added to the care of trauma patients
|
|
Using absolute decrease in ALOS (based on ALOS data directly from the study) |
Using proportional decrease in ALOS (based on ALOS data from an Ontario context) |
|
Incremental net benefit (INB) (see Appendix B for detailed calculations)
|
$431,545
Interpretation: By adding an NP to an inpatient trauma service, an estimated $431,545 could be saved by the hospital by reducing length of stay. |
$1,109,465
Interpretation: By adding an NP to an inpatient trauma service, an estimated $1,109,465 could be saved by the hospital by reducing length of stay. |
|
Benefit-Cost ratio (see Appendix B for detailed calculations)
|
4.22 :1
Interpretation: For every $1 spent on adding an NP, there is $4.22 in benefit to the institution.
|
8.28:1
Interpretation: For every $1 spent on adding in an NP, there is $8.28 in benefit to the institution.
|
The above study was conducted in a U.S. setting. The effects of adding NPs to an inpatient trauma team in an Ontario context were extrapolated by using Ontario ALOS and costing data. The study looked at the addition of NP care to a sizable inpatient trauma unit at a large teaching hospital. This example of the financial benefit of adding an NP to an interdisciplinary trauma team was used here for illustrative purposes. It can be inferred that the cost savings demonstrated here could be applied to similar contexts in Ontario. Benefits may be transferable to other types of inpatient units, however benefits would likely be smaller in smaller units.
It should be noted that to derive full benefit through the addition of NPs, they must be enabled to work to full scope. In order to optimize outcomes, NPs require autonomy to make patient care decisions in a timely manner [7]. This enables NPs to help reduces gap in care that impede patient flow through the system (e.g. timely discharge or transfer). For more information about interdisciplinary models of care involving NPs, see Models of Care.
In conclusion, the cost-benefit analysis presented here provides further weight to the case for utilizing NPs in the care of hospital patients. NPs provide quality care and the cost of employing is far outweighed by the benefits they bring to patient care. In this example, the only costs that were quantified were costs saved through decreasing ALOS, which is but one example of economic benefit of NPs. See further examples of positive economic outcomes linked with NP care of hospital patients.
Appendix A: Estimated costs of Ontario hospitalization
Estimated cost of hospital stay in Ontario
According to a 2008 CIHI report "Why do hospital costs vary?", costs of hospitalizations vary widely depending on a number of variables, including the number of interventions, surgeries and complications [8]. Cost estimates are further complicated by patients with co-morbidities or multiple illnesses/injuries being treated concurrently. The costs that were used in the present analysis are, therefore, considered estimates.
Average inpatient cost per day: $521
This is based on data made available from 2014 from the MOHLTC’s health data branch portal’s Health Care Indicator Tool (HIT Tool). This data was made available to RNAO by the Ontario Hospital Association [9].
Proportional decrease in ALOS in an Ontario context
In the study [5], the ALOS was 6.4 days, and the decrease attributed to the NP intervention was a decrease of 0.8 days.
Average LOS for trauma patients in Ontario is based on data from the Ontario Trauma Registry (Section 3.13) [10]
ALOS= 14.06 days
Calculation of proportional decrease in ALOS:
0.8/6.4= x/14.06
x=1.7575
Thus the proportional decrease in ALOS is 1.76.
Estimated number of patients cared for by NPs in the studies listed:
Total trauma cases over study period (1 year): 3053
NP in the study worked 60 hours = 1.5 FTE
3053 divided by 1.5 FTE
=2035 patients in trauma service looked after by 1 NP FTE per year
Estimated annual cost savings
· Using absolute decrease to ALOS: Per patient costs saved (by decreasing ALOS through addition of NP to trauma service), per 1 NP FTE:
=($521 x 0.8)/1.5
= $277.87
x 2035 (estimated number of trauma cases cared for by 1 NP FTE per year)
= $565,465
· Using proportional decrease to ALOS: Per patient costs saved (by decreasing ALOS through addition of NP to trauma service), per 1 NP FTE:
=($521 x 1.76)/1.5
= $611
x 2035 (estimated number of trauma cases cared for by 1 NP FTE per year)
= $1,243,385
Appendix B: Cost-benefit analysis- detailed calculations
Incremental net benefit (INB):
INB = ΔE-ΔC (change in effect - change in cost)
= ($ saved by ↓ALOS) - (Total cost of additional NP)
A positive INB means the value added is worth the extra cost.
· Using absolute decrease to ALOS:
INB = $565,465- $133,920
= $431,545
Therefore, if an NP were added to a sizable inpatient trauma service team, an estimated $431,545 could be saved by the hospital. (Note: the finding would likely only hold for the addition of one NP to a trauma team. There is no guarantee that a second NP would yield similar savings).
· Using proportional decrease to ALOS:
INB = $1,243,385 - $133,920
= $1,109,465
Therefore, for every NP added to an inpatient trauma service team, an estimated $1,109,465 could be saved by the hospital.
Benefit-cost ratio
Expressed as the ratio of dollars of benefit per one dollar of cost
= total benefits in dollars / total costs
· Using absolute decrease to ALOS:
Benefit-cost ratio = 565,465/133,920
= 4.22
The ratio of benefits to cost is 4.22:1 (for every $1 spent on adding one NP, there is $4.22 in benefit).
· Using proportional decrease to ALOS:
Benefit-cost ratio = 1,109,465/133,920
= 8.28
The ratio of benefits to cost is 8.28:1 (for every $1 spent on adding an NP, there is $8.28 in benefit).
References:
- Hoch, J.S. and C.S. Dewa, An introduction to economic evaluation: what’s in a name? Canadian Journal of Psychiatry, 2005. 50(3): p. 159-166.
- Association of Family Health Teams of Ontario, Association of Ontario Health Centres, and Nurse Practitioners' Association of Ontariol. Toward a Primary Care Recruitment and Retention Strategy for Ontario: Compensation Structure for Ontario’s Interprofessional Primary Care Organizations Report Presented to the Ministry of Health and Long Term Care. 2013.
- Ontario Treasury Board Secretariat. Public Sector Salary Disclosure for 2014: Hospitals and Boards of Public Health. 2014 June 10, 2015]; Available from: http://www.fin.gov.on.ca/en/publications/salarydisclosure/pssd/orgs-tbs.....
- Nursing Policy and Innovation Branch. Guidelines for Participation in the Nursing Graduate Guarantee Initiative. 2014, Ministry of Health and Long-Term Care.
- 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.
- 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.
- Kilpatrick, K., et al., How are acute care nurse practitioners enacting their roles in healthcare teams? A descriptive multiple-case study. International Journal of Nursing Studies, 2012. 49(7): p. 850-862.
- Canadian Institute for Health Information. The Cost of Hospital Stays: why costs vary. 2008 [cited 2015 May 29]; Available from: https://secure.cihi.ca/free_products/2008hospcosts_report_e.pdf.
- Ontario Hospital Association. MOHLTC Health Care Indicator Tool. Personal communication A. Gabber, OHA. 2015.
- Canadian Institute for Health Information. Ontario Trauma Registry 2012 Report: Hospitalizations for Major Injury in Ontario, 2010-2011 Data. 2012; Available from: https://secure.cihi.ca/estore/productFamily.htm?locale=en&pf=PFC1926&lan....