Patricia Niday
Yolanda (Yoli) Otero Inman
Lisa Smithgall
Shane Hilton
Sharon Grindstaff
Debbie McInturff

At Johnson City Medical Center in Tennessee, a team approach to better managing nurse staffing not only saved $7 million annually in contract labor costs, but also led to increased nursing satisfaction.

At a Glance

Johnson City Medical Center's approach to maximizing staffing in nursing units, particularly in acute care settings, had four primary goals:

  • Identify opportunities to maximize the effectiveness of nurse staffing based on a review of core staffing schedules.
  • Reduce cost duplication and improve workflow.
  • Decrease the use of contract labor (with the goal of eliminating the use of contract labor).
  • Develop financial dashboards for staffing that could be used by nursing managers.

Nurses represent the largest component of the healthcare team in acute care hospitals. With the availability of more attractive schedules in a non-acute hospital setting-including reduced weekend and off-hour shifts-it's not uncommon for nurses to move from the acute-care hospital environment for lower-paying nursing positions as they grow older to meet the needs of their families and to attain quality-of-life goals.

The aging of baby boomer nurses in the workforce, with some older nurses choosing reduced work hours as they look ahead to retirement, also has contributed to a shortage of nurses for acute care shift work-even as baby boomers are increasing their utilization of acute care hospital services. (Kaufman, K., and Grube, M. E., "Perspectives on Developing Issues in Health Care," Kaufman Hall, "Point of View" letter, 2011). These factors and more are contributing to an imbalance in nursing resources available for meeting the needs of patients in acute care hospital settings.

In September 1998, Mountain States Health Alliance (MSHA), a locally owned and managed not-for-profit healthcare system, was formed when Johnson City Medical Center (JCMC), Johnson City, Tenn., acquired six hospitals in northeast Tennessee. By 2009, MSHA had expanded to 14 hospitals serving 29 counties in Tennessee, Virginia, Kentucky, and North Carolina. As the hospital system grew, processes related to nurse staffing and scheduling did not adjust accordingly. Senior leaders identified communication barriers between hospitals and departments as the primary problem that had led to an inefficient use of human resources throughout the health system. For example, JCMC, the 500-bed tertiary referral hospital for the system, regularly used 140 contract nurses for bedside care-and the cost of using agency labor to meet nurse-to-patient care requirements was putting a strain on the hospital's operating budget.

At JCMC, senior leaders worked with department managers and staff to develop a multifaceted strategy to address increased nursing labor costs, particularly in acute care settings, with the goal of eliminating contract nursing. They identified strategies for improving the effectiveness and productivity of nursing staff, redesigned its staffing processes for nursing, and added new tools that could help nursing leaders better manage staffing. The initiative significantly reduced labor costs-and also led to improved satisfaction of nurses and patients.

How the Medical Center Did It

In 2009, senior leaders for the health system established a team at JCMC that focused on ways to improve the effectiveness of nurse staffing and the productivity of its nurses. The 10-member Staffing Task Force Steering Committee used the health system's strategic plan to identify four improvement goals related to staffing of nursing units:

  • Enhancing financial performance
  • Identifying opportunities for improved function not only within JCMC, but also across the health system's 14 hospitals
  • Creating a safer environment for patients and caregivers
  • Attracting and maintaining the highest-quality nursing team

The committee created work teams, led by senior leaders, that focused on each of these objectives.

An initial staffing assessment for the hospital's nursing units disclosed that the hospital's use of contract nurses increased in 2006 as the number of beds at JCMC began to increase. (The increased beds included those in the hospital's progressive care unit, which specializes in treating medical and surgical patients who require more advanced nursing care than a general nursing unit can provide, but whose conditions are not serious enough to warrant intensive care.) Contract nurse staffing reached its peak in January 2007 and remained at high levels through January 2008 (see the exhibit below). The average hourly rate for staffing during premium shifts reached its peak in October and November of 2008 and again in early 2009. In FY08, the average hourly rate for acute care traveler nurses was $61.38; in FY09, it rose to $62.62. The average hourly rate for a nursing FTE in FY08 and FY09 was $23.96. With benefits, the average salary for an acute care nursing FTE was $62,298.

Exhibit 1


JCMC determined that it could save more than $6.8 million in FY08 and more than $5.7 million in FY09 by replacing contract nurses with full-time RNs and by adding 10.6 FTEs who could fulfill support roles for nursing staff, such as nurse educators and clinical resource staff (see the exhibit below).

Exhibit 2


The committee identified four action steps for improvement:

  • Identify opportunities to maximize the effectiveness of nurse staffing through a review of core staffing schedules.
  • Reduce cost duplication and improve workflow.
  • Decrease the use of contract labor (with the goal of eliminating the use of contract labor).
  • Develop financial dashboards for staffing that could be used by nursing managers.

For each action step, two members of the committee were responsible for ensuring that measures were undertaken and that the desired results were achieved.

To determine how to eliminate agency nursing at the hospital, the committee conducted a review of the hospital's processes for staffing and scheduling. The review revealed that JCMC had a 12-step process for staffing and scheduling with 30 areas of noncompliance that ranged from issues of duplication to lack of communication. For example, some unit managers bypassed the central staffing office and either managed their own staffing or relied on house supervisors to staff their units. Several departments would use licensed staff for nonlicensed duties at a time when other departments were in critical need of licensed staff.

Team members collaborated to redesign the staffing-and-scheduling process from a 12-step process to a seven-step process that all nurses and departments would agree to follow (see the exhibit below for an outline of the seven-step process).

Exhibit 3


The health system also selected a web-based software solution that JCMC could use in developing staffing schedules for nurses. This tool provided an enterprisewide view of nurse staffing and used predictive modeling and other critical data sets to assist managers in determining the predicted demand for staffing during each shift. The health system also interfaced the tool with its time-and-attendance system. The tool ultimately provided hospital leaders and nursing managers with productivity and variance-related data on a daily basis; these data were critical to evaluating the efficiency and productivity of nurses and to making staffing-related decisions that led to more balanced scheduling. As an added benefit, the ability to monitor nursing productivity data daily gave managers the opportunity to work with nurses who were not performing as well as desired and to guide improvements.

Meanwhile, JCMC's chief nursing officer worked with the hospital's human resources department to determine the anticipated number of expected new nursing graduates at area universities and to enhance the hospital's ability to attract these graduates, as registered nurse recruitment, turnover, and retention had been highlighted as areas of focus for the hospital. The hospital created nursing scholarships at local universities and, through its efforts to connect with area nursing students, was able to hire 122 new graduates and nurses in May and June 2009. These successes in recruitment complemented the work of the task force.


By defining and implementing accountability standards, redesigning nurse staffing processes, and providing tools to meet the hospital's goals for nurse staffing, JCMC was able to eliminate the use of contract nurses by Sept. 30, 2009. This resulted in an annual savings of more than $7.2 million, even after investing $750,000 to add 10.6 FTEs-clinical educators and clinical resource staff-to support the 122 new graduates who were hired by the hospital. During this time, patient satisfaction scores remained stable, while nursing satisfaction scores improved. Average hourly rates also decreased significantly.

Lessons Learned

The implementation of a nursing recruitment plan and on-boarding of a large number of new graduate nurses at one time is a viable solution for reducing resource expense of high-cost travel and contract nursing, but it also poses significant challenges for the existing nursing team related to education and orientation of a large number of new nurses. Reallocating a portion of the savings from the elimination of contract nursing toward nurse educators and resource staff promotes effective onboarding of new graduate nurses and supports them in becoming competent nursing care providers. The nursing educators who are hired will relieve pressure from existing nurses, enabling these nurses to focus on providing patient care rather than educating new nurses. Educators also can provide support to existing staff nurses to help them maintain competencies and to promote the acquisition of new skills that will ensure the delivery of high-quality care in a challenging healthcare environment.

Exhibit 4


Ensuring that a tertiary medical center with multiple clinical areas of varying complexity has the appropriate nursing resources available requires diligent attention and collaborative efforts from leaders in finance, human resources, and nursing. This team approach to nurse staffing and scheduling will help acute-care hospitals better meet the needs of nursing providers and ensure that skilled providers are available to meet the healthcare needs of multiple patient populations. A collaborative approach to establishing clear goals for nurse staffing, combined with a targeted nurse recruitment plan, has the potential not only to increase recruitment while significantly reducing labor costs, but also to improve excellence as it relates to nurse-sensitive indicators and patient satisfaction.

Patricia Niday, RN, EdD, is associate vice president and chief learning officer, Mountain States Health Alliance, Johnson City, Tenn. (

Yolanda (Yoli) Otero Inman, MSN, RN, is an interim leader/ nursing consultant, B. E. Smith, Inc., Lenexa, Kan. (

Lisa Smithgall, RN, PhD, RNC-NIC, NEA-BC, CPNP, is a vice president, Mountain States Health Alliance, Johnson City, Tenn. (

Shane Hilton, FHFMA, is vice president/regional CFO, Mountain States Health Alliance, Johnson City, Tenn., and a member of HFMA's Tennessee Chapter (

Sharron Grindstaff is corporate director, staffing agency, Mountain States Health Alliance, Johnson City, Tenn. (

Debbie McInturff is a staff accountant, Johnson City Medical Center, Johnson City, Tenn. ( 

Publication Date: Friday, June 01, 2012

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