In order to increase health-care resources, improvement plan must entail efficiency and cost-effectiveness. Therefore, Nurse practitioners have the ability to provide quality health care services to patients in a cost-effective way. Nurse practitioners (NPs) can improve cost-effectiveness of healthcare by decreasing direct health-care cost and by avoiding undesired outcomes and complications. Conducting a cost benefit analysis (CBA) helps in determining the cost and outcomes of an event simultaneously. This paper seeks to evaluate CBA of employing Nurse practitioners. Therefore, this paper will determine the cost of employing a nurse practitioner, costs saved in improving the outcome of care and finally combining the two analyses in a CBA.
Determining cost of a Nurse Practitioner
Normally, NPs are either paid hourly or salaried. The average salary of an NP working in a hospital averages from $103,000 to $108,000. According to data from Ontario Treasury Board Secretariat, $108,000 will be assumed as the average salary annually for a NP for the purpose of this analysis. Additionally, 24 per cent of the basic salary will be included in employment costs which include support staff, recruitment, training and benefits. However, employing more NPs in a hospital does not increase expenditure by a big margin. For instance, a hospital that has a total budget of approximately $400 million and employing 25 NPs, the actual expense of adding NPs would comprise of a minimum portion of the total budget as shown in the table below:
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Table A: Estimated cost of hired NPs by Ontario hospitals
| Large Hospital | Medium Hospital | Small hospital | |
| Total Unit Wage Cost (+24%) | $133,920 | $133,920 | $133,920 |
| Total Cost of hiring depending with the hospital size |
25 FTE NPs =(25×$133,920) $3,348,000 Total hospital budget ($400 million) |
15 FTE NPs =(15×$133,920) $2,008,800 Total budget ($120 million) |
=(5×$133,920) $669,000 Total budget ($43 million) |
| Total expenditure (%) |
=(25×$133,920)/$400 million =0.84% |
=(15×$133,920)/ $120 million =1.67% |
= (5×$133,920)/ $43million =1.56% |
Evaluating effect of adding an NP (Average Length of Stay) (ALOS)
As mentioned, various benefits can be observed in relation to NPs caring for trauma patients in a hospital. However, costs which are saved through minimizing the length of stay (LOS) will be analyzed as follows;
Study details
Number of patients: Trauma services which are intensive care unit (ICU) and step down ICU. The analysis was conducted in a large trauma center, in trauma step-down ICU from (Mon-Fri 6:00am -6:00pm).The study involved 12 months research period. The roles of an NP included coordination, clinical care, transfers of ICU. After a period of one year, ALOS in the trauma sector went down by a margin 0.8 days per patient.
Table B: approximate cost saved by adding NPs in a care team
|
Using absolute decrease in ALOS (data from the study) Absolute decrease in ALOS: 0.8 days |
Using proportional decrease in ALOS (data from Ontario) The Proportional decrease in ALOS: 1.76 days |
|
| Annual cost of saving |
Cost saved per patient ( decreasing ALOS by adding NP to a trauma service), per 1 NP FTE: $=227.87 ×2035( the number of trauma cases carried out by 1 NP FTE annually) =$565,465 |
Cost saved per patient ( decreasing ALOS by adding NP to a trauma service) per 1 NP FTE: =$611.30 ×2035 (the number of trauma cases carried out by 1 NP FTE annually) =$ 1,243,385 |
Merging costs and the outcomes observed
Table C: overview of CBA by adding Nurse Practitioners to trauma patients
|
Using absolute decrease ALOS ( data from the study) $431,545 |
Using proportional decrease ALOS ( data from Ontario) $1,109,465 |
|
| Incremental net benefit( INB) | Interpretation; through adding an NP in inpatient trauma service, a hospital can save $431,545 by the reducing time of stay. | Interpretation; through adding an NP in inpatient trauma service, a hospital can save $ 1,109,465 by the reducing time of stay. |
| The Benefit Cost ratio |
4.22:1 In summary For each $1 spent on adding an NP, there is $4.22 profit for the hospital |
8.28:1 In summary For each1 $ spent on adding an NP, there is $8.28 profit for the hospital |
In conclusion, as much as NPs provide essential quality services, the cost incurred is much more than the expected returns. However, the only costs saved were through reducing ALOS, which is the only economic benefit of NPs.
References
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.
Nursing Policy and Innovation Branch. Guidelines for Participation in the Nursing Graduate Guarantee Initiative . 2014, Ministry of Health and Long-Term Care.
Ontario Hospital Association. MOHLTC Health Care Indicator Tool . Personal communication A. Gabber, OHA. 2015.
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....
