Standardizing Indirect Staffing Hours

By ChrysMarie Suby RN, MS

Many questions—and frustrations—arise when clinical and finance leaders try to determine how to count various types of staffing hours, such as manager hours, charge nurse hours, and education and orientation hours. Adopting standardized definitions and classifications for these hours can help.

For example, both clinical and finance leaders struggle with whether to classify indirect hours as productive (worked) hours, or as paid and worked “other” (nonproductive) hours. Classifying employees as “nonproductive” when they are working and attending education programs to learn how to improve patient outcomes can create frustration among nurses and other clinicians.

Compounding the challenge is the lack of uniform national or international standards by finance, nursing, and software systems (e.g., cost accounting, scheduling and staffing, payroll/time and attendance systems) to define direct and indirect hours. This lack of standardization can impede how unit managers plan the division of work, which can ultimately impact caregiver-to-patient ratios. It also affects how managers allocate hours and dollars for unit-based preceptors and trainers and plan for “back-fill” staff to cover for employees attending meetings and education programs.

Below are some insights about how hospitals across the country are defining and classifying indirect care hours.

Are Your Indirect Hours Adequate?

To ensure quality care and optimum financial performance, indirect caregiver labor hours should be in the range of 11 percent to 20 percent of a unit’s total budgeted productive (worked) hours of care (Labor Management Institute, 2009 PSS™ Annual Survey of Hours Report©).

Here are several diagnostic indicators to tell if a unit’s budgeted indirect care hours are on target or not. The budgeted hours may be inadequate if any of the following are true:

• Nurses are absent from the bedside to provide nonnursing tasks—at a much higher cost than clerks and nursing assistants.
• Patients complain that they rarely see their nurses.
• Staff nurses complain that promised RN-to-patient ratios are not being honored.
• Staff nurses complain that they can’t attend meetings, shared governance or unit practice council meetings, in-services, and training sessions because they are transcribing patient orders, transporting patients, and/or hunting and gathering supplies.

Another possible indicator: Elevated orientation and education hours in the face of low turnover percentages. Most human resources departments only report turnover as “new hire, rehire, and voluntary resignations” and ignore “unit erosion,” which are employees permanently transferring to other units. Unit erosion is often the underlying source of elevated orientation and education hours and dollars when official turnover levels reported by HR are low.

How to Count Hours

Standardizing how the hospital counts the following types of labor hours in the budget can help ensure adequate indirect and direct care hours.

Manager hours. Manager hours should be spent supporting staff, monitoring care delivery, and providing leadership. Therefore, managers should be included in the indirect hours of care only. It has been our experience that most organizations classify their managers as indirect caregivers.

Education and orientation hours. Many organizations believe that the time employees spend attending educational programs, work as preceptors, or trainers, or are in orientation programs should not be counted towards direct hours of care with the patient. Reporting these hours has followed two strategies:

• Report these hours as paid and worked “other” (nonproductive) hours because they are the basis of allocated dollars for staff development and the unit-based educators and/or preceptors; the challenge is that “paid and worked “other” (nonproductive)” hours by definition are hours paid but not worked.
• Report these hours as productive (worked) hours categorized as indirect caregiver hours because the employees are working and paid and excluded in the caregiver-to-patient ratios.

Annual education budgets should be developed based on unit and service line required skills and competencies because specific mandatory education needs vary between departments. Approximately 1 to 4 percent of indirect time should be allocated to education hours (Labor Management Institute, 2009 PSS™ Annual Survey of Hours Report©).

Orientation budgets should reflect historical use of orientation based on turnover with unit erosion and experience level of the new hire (e.g., new graduate, novice, or experienced). Consideration should be given to medical-surgical units that often experience higher orientation demands due to unit erosion. Medical-surgical units tend to become “stepping stone” units for nurses who are waiting for intermediate and critical care unit positions.

Approximately 1 to 5 percent of indirect time should be allocated to orientation hours based upon the unit and service line type. (Labor Management Institute, 2009 PSS™ Annual Survey of Hours Report©).

Back-fill hours. Every manager needs to be able to staff their units to cover times when core staffs are attending education programs and meetings and precepting orientees. These “back-fill” hours should be scheduled from the part time, per-diem, and/or casual staff to avoid the use of overtime or premium rates for agencies and travelers. See the exhibit for mean average percentages of indirect hours based on indirect labor, education, and orientation hours for the intensive care unit.

Charge nurse hours. The assignment of “charge” hours depends on whether the charge person will be taking a patient assignment and is, therefore, included in the nurse-to-patient ratios for staffing purposes. 

When charge nurses take patient assignments, their hours should be tracked as direct hours of care or service so the RN-to-patient ratios are calculated correctly and the direct hours per unit of service (e.g., hours per patient day) are accurate.

When charge nurses are responsible for staffing coordination, supporting staff, and monitoring care delivery, we recommend allocating the charge nurse hours to indirect hours of care. 

Calculating Positions as Direct Versus Indirect

Many scheduling, staffing, time and attendance/payroll systems do not have the capacity to assign the charge nurse hours based on actual hours worked in each role and will default their hours in whole-shift increments to either direct care or indirect care under labels such as project day, management day, etc. Thus, managers must choose an “all or nothing” default assignment to one category or the other.

A commonly used formula to define the position(s) as a percentage is to divide the required indirect time into the direct time and multiply by 100 percent:

Indirect time ÷ Direct time = 240 minutes ÷ 480 minutes x 100% = 50%

If the work that unit clerks, supply coordinators, and patient transporters perform does not flex to the volume of patients, and their direct time is the minority of work performed in the unit, then classify them as indirect caregivers. If the charge nurse is split 50 percent direct and indirect, defaulting the position to direct care will mean that, at least 50 percent of the time, patient assignments and staffing assignments won’t match the volume of patients because charge nurses will be included in caregiver ratios when they are in meetings and providing leadership, thus depriving the unit of nursing coverage for that shift.

For best practices, we recommend clear divisions between direct and indirect hours within the budgeted productive (worked) hours. The exhibit identifies the mean average labor hour’s percentages of total worked hours by service line type.

Benchmark for Confidence

It is critically important to benchmark your hours of care to several benchmarks so that you can build your confidence in your budget to meet your needs and to be alert to changes in trends. Comparing direct, indirect, and total worked hours of care and watching for changing trends will allow you to benchmark more accurately and confidently budget the necessary labor hours to keep nurses at the bedside and preserve agreed upon nurse-to-patient ratios. It will also help you plan support labor, education, and orientation hours so that adequate dollars are allocated to cover the staff development and dedicated unit expense for permanent positions (e.g., preceptor, unit-based educator).