Tracy A. Cox

A roundtable discussion.

Causes of the current nursing crisis are interconnected and ongoing. Economic pressures, an aging nursing workforce, and scientific advances extending life span all point to an evolving crisis. According to a July 2002 report by the Health Resources and Services Administration, 30 states were estimated to have shortages of registered nurses in the year 2000. The shortage is projected to intensify with 44 states plus the District of Columbia expected to have RN shortages by the year 2020.

The solution lies in redefining recruitment and retention. Hospitals should develop techniques that can be sustained-building interest and image, developing scholarship programs, and cultivating a positive workplace culture and sense of community. These efforts are only successful with bridge building among all stakeholders, including CEOs, CFOs, nurse executives, nursing schools, and physicians. To encourage this collaboration, HFMA brought together five experts to offer their perspectives on both problem and possible solutions.

Panelist Profiles

William A. Hecht, CFO, CHRISTUS St. Patrick Hospital, Lake Charles, La.

Gay Landstrom, RN, MSRN, chief nursing officer, Mercy General Health Partners, Muskegon, Mich.

Mary M. Nisbet, president, Nisbet & Associates, Inc., Pawleys Island, S.C.

Carol Jefferson Ratcliffe, RN, MSN, CNOR, CHE, vice president and chief nurse executive, CHRISTUS St. Patrick Hospital, Lake Charles, La.

J. Larry Tyler, FHFMA, FACHE, president Tyler & Company, Atlanta, Ga.

Nursing is the healthcare staffing area most affected by the current workforce shortage. Is the shortage temporary or indicative of emerging trends?

Tyler: I think it is temporary-the nursing schools will be filled again in the next few years. The word is getting out that in nursing you'll always have a job. The economy is cooling down, but that's not necessarily a negative for nurses, because the opportunities will continue to increase. So hospitals should tap into this trend with retention and recruiting efforts.

Hecht: The economy of the past decade is partly to blame for the shortage. There were so many more options out there, particularly in the technology sector. And people were moving to those career paths without realizing that technology might not continue its rapid growth. Health care, on the other hand, has been around for many decades. Today's situation will change, but it won't be immediate. It's going to take some time to tell the story about health care as a profession and the security of employment found in the healthcare profession.

Landstrom: I agree that things are slowly changing. There has been a movement regionally-at least in western Michigan, where there has been a number of layoffs in industry-in which we have seen a rise in nursing school enrollment. But we can't say that it's necessarily a trend yet.

Ratcliffe: The cause of the shortage is a factor to consider. The nursing shortage was brought about by an aging workforce, with the average age of a nurse falling between 40 and 49 years of age nationally, and by unresolved or unaddressed workplace issues. Grassroots efforts to encourage school-age students to choose nursing as a career have not been a priority, but that is changing, too. A big problem is that nursing has always been a predominately female occupation, and given a wide array of opportunities, women are choosing other careers. Nurses are leaving the bedside and hospital setting to work in other areas, such as pharmaceutical sales, outpatient settings, and physician offices-and some are leaving health care altogether. Until something is done to make nursing more attractive to both men and women, we will continue to see a problem.

Nisbet: Hospitals are facing an uphill battle to reclaim the heart of nursing and maintain levels of care for their patients. Nurses say that hospitals must improve the environment of care. Doing so will no doubt require that models of care are redesigned to focus nurses on direct patient care and use other support staff to fulfill the duties that take nurses from the bedside. Today's shortage appears to be the tip of a very large iceberg. With the aging of the population and higher utilization, the need for nurses will not abate; in fact, it will increase. The baby boomers are no doubt wondering who will provide the care they will need in the not-too-distant future.

How can a staffing shortage affect the financial outlook of a healthcare organization?

Tyler: It can cause the organization to look to traveling nurses as a solution to the shortage issue, and that can cost the organization up to three times more for that staffing resource. This type of problem-solving is not necessarily proactive, and it has a direct negative impact on a hospital's bottom line.

Ratcliffe: If an organization chooses to use contract or travel nurses to temporarily fill vacancies, its labor costs are driven up dramatically. And it's true that these expenses can rapidly diminish an organization's bottom line. Staffing shortages also can reduce the number of beds that are available, resulting in emergency-department overcrowding due to the unavailability of beds. Also, hospitals may choose to close beds to avoid the substantial financial impact of using contract staff. But if you do that, you have to ensure that closing beds does not hurt your most profitable service lines. Staffing shortages can also be associated with low staff satisfaction, turnover, and low patient satisfaction, thus affecting whether patients return to your organization.

Nisbet: Hospitals are learning that retention is as important-perhaps more important-than recruitment. The cost of turnover is tremendous in financial terms, and then there is the issue of the morale of remaining staff.

How should hospitals address these problems?

Ratcliffe: It's imperative that they hire the right person for the right job and ensure that the individual is a fit for the organization. Hospitals need to take time to review their mission and core values with the applicant during the interview process. The applicant needs to know what is important to the organization's success.

Hospitals also should make every attempt to avoid implementing compensation programs that are too costly over time to continue. Wages and benefits should be market competitive. And hospitals should maintain strong relationships with local schools of nursing.

Advocacy is also important. Hospital leaders should make sure that state legislators in their area are educated about how the community is being affected by workforce shortages and how the legislators can help. Hospitals should develop comprehensive student and preceptor programs that provide hands-on experience. Providing on-site education is very important for recruitment, as well as retention.

Also, hospitals should involve staff in decisions that affect their work environment, helping ensure the organization is meeting their needs.

Hecht: The old way of attracting and retaining nurses has not worked, and it is very important that we redesign that process. Building facilities and opening services were sufficient in the past to attract new graduates from the nursing programs. Today, nurses need the greater challenges of a career that provides personal satisfaction for the long term. Therefore, recruitment and retention go hand in hand.

What new strategies for retention and recruitment are hospitals using?

Nisbet: Hospitals and health systems are focusing their efforts on retention and employee satisfaction because they are recognizing that internal scorecards reflecting employee satisfaction are as important as measures of financial viability. Involving nurses in professional development and patient care issues is extremely important. Hospitals have developed shared governance models to bring nursing staff to the table in making decisions that will affect their daily lives, such as developing staffing models, redesigning patient care models, recruiting and interviewing nurse candidates, and defining equipment needs.

Hecht: Our nursing team is breaking new ground with their best practice, which involves on-line access to applications, a retention study, and a return-to-work program. I support the nursing department's efforts to improve recruitment and retention.

Ratcliffe: Nursing managers have been challenged with thinking out of the box, to provide alternatives to traditional 8-, 10-, and 12-hour scheduling. Providing for associates to work full-time at higher pay in lieu of benefits and integrating flexible scheduling are important ways to meet changing needs and expectations of associates. There has recently been, and will continue to be, a more proactive focus on nursing. Prioritization will be based on each region's need.

Many organizations are working with their local elementary and high schools to promote nursing and health care as a profession. Johnson and Johnson recently launched an excellent campaign to promote nursing.

Also, President Bush has signed the Nurse Reinvestment Act, which will provide for scholarships, a loan repayment program, public-service announcements to promote nursing as a career, and many other programs to support nursing. 

Landstrom: Mercy General recently started a scholarship program of the type that hospitals small and large have been considering. The programs are starting up all over and helping overcome the financial barrier for students. Depending on how the scholarship is structured, a nursing student may get a four-year tuition paid by a hospital and then repay this loan by working for that sponsor facility for four years.

If you can lower vacancy rates, scholarships can be the cheap way out. When you look at the lost revenue and high cost of replacements, scholarships are the right investment.

Tyler: The right mentality is, "I want to be able to make some decisions." One hospital chief nursing officer went directly to the nursing staff to solve the problem. Together, they came up with a protocol, assigning mandatory overtime only as a last resort. Nurses made extra efforts to avoid the mandatory overtime by first looking for volunteers and then working through the protocol. As a result, mandatory overtime was reduced, and nurses gained some control over their scheduling. As Carol suggested earlier, today's nursing workforce wants to have some choices and be able to make decisions. 

To what extent is offering bonuses an effective way to recruit nurses?

Hecht: Many hospitals offer bonuses as part of the recruitment process. Whether you need to offer bonuses to new hires depends a lot on the local market. And even if it is common practice in the local market to offer bonuses to attract new graduates, that doesn't mean that those hires will stay for the long term. You have to be market-competitive in both pay practices and recruitment efforts, but that should not be the driving force in your redesign of recruitment and retention efforts. Today, employees are looking for a lot more people contact than they used to-programs such as mentoring.

What are some key management strategies for dealing with a limited workforce?

Hecht: I think it is important to rely on the expertise of nurse administrators and managers to address the needs of the younger nurses and students today who are interested in things like flexibility and new technologies. At our facility, we have developed a win-win philosophy for the organization, and that involves allowing our nurse leadership to develop new recruitment and retention tools. They can best negotiate what resources should be made available because they understand the nurses' needs. We have to spend the dollars on the programs to attract the limited nurses who are available. We need to attract younger associates-both male and female-to the profession and give them the education and tools they need to be successful.

Ratcliffe: It is important to have involvement and support of other members of your organization's senior leadership team. Recruitment and retention are not just a nursing or human resource department issue, but an organizational responsibility. It's great when you work with a CFO who is supportive of your efforts.

Our senior vice president of finance was very involved in our market-assessment compensation strategies. We worked together as a senior leadership team to develop and implement competitive compensation plans while maintaining internal equity. He provided input into the components of our successful recruitment campaign, including the campaign theme, display ads, and outdoor boards. He keeps apprised of our progress and assists in communicating our success to associates and physicians.

The pieces of the puzzle between nursing and finance must link because staff retention reduces turnover, which reduces labor costs associated with recruitment, orientation, and education. As all the dots connect, you should have happier associates and enhanced satisfaction among physicians and patients.

Nisbet: A major challenge for nurse managers is spiraling costs and lack of timely data about the day-to-day implications of staffing. Misallocation of RN staffing on one shift can mean short staffing on another, resulting in lower morale, diminished patient care, and erosion of nursing supply. Finance and nursing should collaborate to measure the use of nursing staff (RNs, LPNs, nursing assistants) on a daily, shift-by-shift basis. A simple spreadsheet of days, evenings, and nights can collect minimal data and disclose how well the staffing model is being used, where utilization is not appropriate, and where nurse managers can focus. Calculating highly variable components such as overtime will ensure that there are no surprises at month's end. Staffing grids, average wage rates, and budget targets should be combined to create a monitoring tool that provides useful, actionable information. Shift-to-shift knowledge about variances from the staffing model supports decision-making about vital nursing resources. The simple spreadsheet becomes a management tool that reflects variance in staffing hours, rates, overtime utilization, and skill mix. 

Also, sending an e-mail flash report to all of the key players will keep them apprised of the workforce status, promoting swift action, in real time, when necessary. Tools of this nature can be developed and implemented if finance and nursing create a collaborative model, with definitive resources and expectations.

Tyler: CFOs need to listen well. Nurses do come from a different mindset, and CFOs should work with that and find common ground. There needs to be a good working relationship with nursing, and that starts with good communication.

One solution to complicated CFO-nurse manager relations is to allow the nurses to have more authority and influence on interdepartmental relations, as seen with the relatively new role of nursing financial officer. This person interacts heavily with the financial staff and is responsible for monitoring the budget, nursing position control, the float pool, and nursing interns. Giving the nursing division the final word on the top three candidates for the nursing financial officer position ensures a positive working relationship between the departments, and it adds some accountability. 

Tracy A. Cox is communications specialist in HFMA's Westchester, Ill., office.

CFO, Chief Nursing Officer: Perspectives on Shortage Solutions

Mary L. Boyd, CFO and vice president of planning and marketing for Mercy General Health Partners, Muskegon, Mich., meets the challenge of the nursing workforce shortage every day and offers tips to successfully bridging the chasm between nursing and finance.

Keep the lines of communication open. Share financial data with staff; let them understand the financial challenges. Implement both short-term and long-term recruitment strategies. Do everything you can to recruit nurses today while also implementing strategies to recruit the nurses for the future. These strategies may include offering scholarships and educational grants, organizing career fairs, and speaking to school groups.

Focus as much on retention as on recruitment. It is important to keep your current staff engaged and satisfied by creating a positive work environment for your nurses. Use surveys to determine their needs, and be willing to respond with the changes they desire, such as self-governance models, sufficient support staff, adequate equipment, ongoing staff development, and other resources.

Don't ignore the needs of your nursing leadership team. These are the people who will help you recruit and maintain your nursing workforce. Be sure to offer them opportunities for education, professional development, and mentoring so they are well equipped to help you with the challenges of the future.

Gay Landstrom, chief nursing officer at Mercy General Health Partners in Muskegon, Mich., recommends hospitals generally focus recruitment and retention on four proactive measures. Build interest and image. Mercy General is working with early- on influence with programs such as recruitment efforts at the third-grade level. Nurses educate students at this young age and speak to the positives of the nursing career.
Recruit new graduate nurses into your organization. Keep students in the pipeline. Once hospitals host a nursing student by scholarship, they maintain close contact with these students through such programs as mentoring and doing a career development check-in on a monthly basis. Beware of recruitment bonuses.

Integrate new recruits into the organization. Programs like preceptor programs, mentoring programs, and frequent meetings with new recruits are critical to integrating new nurses into the organization. Create an attractive environment to retain the nurses within the organization. Hospitals might look at furthering efforts toward work flexibility, and they might look at eliminating mandatory overtime. In health care, the needs of patients cause wide fluctuations in census and acuity causing sharp spikes in demand for nurses. Can you picture a nurse leaving to go home in the middle of a surgery?

Hospital Best Practice Generates Results

In just one year, the nurse vacancy rate at Lake Charles, La.-based CHRISTUS St. Patrick Hospital dropped from 17 percent to 3 percent after the facility dramatically intensifed its efforts on nursing recruitment and retention. Similar success was seen at the registered nurse (RN) and certified nursing assistant (CNA) levels. The RN turnover rate declined from 33 percent in FY01 to 22 percent in FY02. The CNA turnover rate went from 83 percent to 50 percent.

In FY02, the hospital's parent organization, CHRISTUS Health, dedicated $1 million to promote best practices for nursing recruitment and retention throughout its facilities. CHRISTUS facilities could access these funds by submitting applications with proposed plans for education grants based on organizational size.

CHRISTUS St. Patrick Hospital was awarded $100,000 to develop programs for scholarships for persons desiring to become RNs, licensed practical nurses, and CNAs. The hospital developed a marketing program, which included a nursing recruitment video and other recruitment materials, a retention study, a recruitment campaign, and a web page ( describing nursing opportunities and providing an on-line application form. Program development also included a return-to-work program, and a preceptor program with a tiered compensation plan. Through integration and enhancement of programs, overall nurse turnover was reduced by 34 percent. "Our recent recruitment and retention program allows us to fill vacant positions and hopefully create more satisfied employees and associates, which also has improved our retention and decreased orientation costs," says William A. Hecht, CFO of CHRISTUS St. Patrick Hospital.

Publication Date: Saturday, March 01, 2003

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