Nurses make up the largest single share of a hospital’s personnel budget. Yet the tools hospitals use to measure, reimburse and staff that workforce routinely undercount what nurses do, and in some cases how many of them a hospital needs.
Current reporting metrics only measure nursing by its absence
Nurse scientists are urging the industry to overhaul how it measures nursing care, arguing that today’s CMS metrics focus almost entirely on patient harm. Those measures matter, but they “measure nursing by its absence,” three nurse researchers wrote in a viewpoint published Oct. 19 in JAMA Internal Medicine. Hospitals tally the cost of patient harm events, but not the value of a nurse catching signs of sepsis before a patient becomes hypotensive and requires an ICU transfer.
They proposed a new framework that builds on the 2024 “Blueprint for Change in Acute and Critical Care Nursing.” It includes nine practice domains: creating safe, healing environments; building caring relationships; assessing and managing symptoms; delivering physical, therapeutic, preventive and end-of-life care; providing surveillance; teaching patients and families; coordinating care across the interprofessional team; advocating for patients; and navigating care transitions.
Nurses’ work remains financially invisible
Proposed billing codes for AI-enabled clinical analyses have raised a concern among nurses: Much of nurses’ work remains financially invisible.
The American Medical Association has proposed a framework for “clinically meaningful algorithmic analyses,” which could create a pathway for certain AI-generated analyses to receive billing codes. The proposal has sparked concern across nursing because registered nurses generally cannot bill Medicare independently for their work. Nursing services are commonly folded into hospitals’ broader inpatient payments rather than reimbursed as individual services.
Yet investments in nursing are associated with stronger hospital operating margins.
An American Nurses Enterprise-commissioned survey found that adjusting minimum wages for competitive compensation, as well as investments in safety, well-being, recruitment and retention were strongly associated with higher operating margins.
“Nurses represent the largest single component of a hospital’s personnel budget, yet the economic value of nursing has too often been viewed primarily through the lens of labor cost rather than as an investment in organizational assets,” the American Nurses Enterprise said in a March 26 news release.
A formula error causing hospitals to underbudget nursing staff
A structural calculation error in the formula hospitals use to convert patient care staffing needs into total full-time equivalent budgets may be causing hospitals to underestimate the number of FTE nurses they need. The error has been embedded in nursing workforce planning textbooks, government frameworks and credentialing programs since at least 1960. The formula multiplies the patient care based by the non-productive rate and adds the result. This multiplication method accounts for leave coverage of bedside nurses, but does not account for the leave time of the coverage staff themselves. This produces a compounding shortfall. At a 20% non-productive rate, the multiply method applied to 80 patient-care FTEs produces 96 total FTEs instead of the correct 100 — a four-FTE shortfall per 100 before the fiscal year begins. The correct formula is: total FTEs equals patient care FTEs divided by patient care percentage.
Systems have built their own formulas, nursing leaders told Becker’s.
At Children’s Hospital of Philadelphia, the budget is built on hours per patient day, multiplied by patient volume and average hourly rate, plus a replacement factor to cover leave and turnover. CHOP also standardized hours per patient day across three ICUs, neonatal, cardiac and pediatric, at 20 out of 24 hours, after noticing the units had been budgeted at different rates despite similarly high-acuity patients.
Richmond-based VCU Health’s Children’s Hospital built its nursing budget on benchmark data and a system-established productivity index. Nursing leaders partner with finance and operations teams to weigh projected patient volumes, productivity targets and staffing requirements, with the formula set annually during the budget cycle.
Clearwater, Fla.-based BayCare Health System uses quarterly forecasting. The system tracks discharges, adjusted discharges, patient days, length of stay and case mix index alongside total and productive full-time equivalents, feeding master staffing plans that calculate hours of care needed by unit based on average daily census.
Nurses can catch what hospital spreadsheets miss
Penn Medicine’s researchers have framed the bedside nurses’ judgment about staffing not as a soft data point, but as one of the most accurate early signals hospitals have for patient safety and workforce stability.
A Penn Med study of 1,269 units across 217 hospitals found that on med-surg and stepdown units, nurses’ own assessments of whether staffing was adequate predicted patient falls more accurately than objective metrics such as registered nurse hours per patient day.
An April study analyzed nearly 550,000 medical-surgical patients across 132 Pennsylvania hospitals and found that each additional patient added in a nurse’s assignment carried 8% higher odds of death within 30 days, along with 4% higher odds of readmission and a 2% longer stay. The same added patient raised nurses’ odds of burnout 33%, job dissatisfaction 43% and intent to leave 27%.
Another study found staffing adequacy was the only work-environment domain significantly tied to three outcomes measured — burnout, intent to leave and dissatisfaction — and it was also the lowest rated among 740 inpatient psychiatric nurses.
