Running head: BUSINESS CASE 1

NUR 490W: Business Case Analysis

Allison Carlucci

Old Dominion University

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Business Case Analysis

Insufficient numbers of nursing personnel is a significant issue in health care today.

According to Sullivan, assuring that sufficient staff are available and that they are scheduled

appropriately is a demanding task and one that is constantly in flux. Nevertheless, such activities

are critical to achieving positive patient outcomes and providing safe, effective, and cost-

conscious staffing (2013, p. 224). The scenario presented that must be resolved involves an

inadequate number of nurses available to work a 1530-2330 shift at the hospital. There are

several potential options presented to aid in solving this problem. These options include hiring

additional permanent staff, hiring short-term temporary staff, bringing nurses from other

underutilized units to fill these spots, or paying nurses on this unit overtime and bonuses in order

to work this shift. Therefore, based on this scenario, the purpose of this paper will be to

determine the most appropriate solution to this staffing problem. Additionally, it will take into

account various aspects related to this problem such as business and operational impacts as well

as the benefits and costs of the potential solution.

Global Background

There has been a significantly increasing focus on nurse staffing in health care over the

years. According to the American Nurses Association, central to health care reform is the

emphasis on value based health delivery. Nurses comprise the largest clinical subgroup in

hospitals; a common avenue for cost containment is to reduce nurse labor hours and their

associated costs (Nurse Staffing, n.d.). The issue of understaffing has several impacts on health

care. For example, the inconsistency among staffing and increased patient load per nurse has the

potential to lead to decreased patient safety and poor patient outcomes, in addition to increased

nursing turnover rates. According to a study conducted,

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an increase in a nurses' workload by one patient increased the likelihood of an inpatient

dying within 30 days of admission by 7% (odds ratio 1068, 95% CI 10311106), and

every 10% increase in bachelor's degree nurses was associated with a decrease in this

likelihood by 7% (0929, 08860973). (Aiken et al., 2014)

Therefore, the findings of this study demonstrate the need for adequate nurse to patient ratios for

the purpose of ensuring patient safety. Furthermore, when deciding the most appropriate solution

for procuring staff for the understaffed shift, it is necessary to consider safe staffing ratios as well

as which option offers the best long-term solution to the issue in terms of all costs involved as well

as quality of care provided.

Business and Operational Impacts

Staffing shortages have a substantial impact on the business as well as operational aspects

of nursing units. The lack of adequate staff puts a strain on the unit and presents the issue of

how to most cost efficiently fill the gaps. Impacts of staffing shortages on the business aspect of

the unit include significant costs associated with finding staff to fill the shift. This could come

from paying current nurses overtime, pulling in travel nurses or hiring temporary or permanent

staff, all of which are costly to the organization. Furthermore, high turnover rates also add to the

increased costs of staffing. Nursing turnover is costly to the organization as well as impacts the

quality and consistency of care provided to patients (North et al., 2013). Therefore, hiring and

investing in new staff by providing adequate training and orientation has the potential to decrease

turnover rates. Additionally, according to nursing research,

total costs of a turnover of a RN can be as high as $145,000. In a study conducted by

Jones (2008) of nursing turnover for the fiscal year 2002, the RN turnover ranged from
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approximately $62,000 to $67,000. Jones (2008) noted also that the literature states that

costs per nurse turnover can vary from $8,000 to $64,000. (Hillman & Foster, 2011)

This data provides an estimate of the cost associated with nursing turnover rates and reaffirms

the importance of taking measures to decrease turnover. Thus, from a business aspect, while

initially hiring new permanent nursing staff may be costly, in the long run, proper staffing and

training that leads to greater staff retention will ultimately be more cost efficient than the other

options for the staffing issue presented. The other options, hiring short-term temporary

personnel, pulling personnel from other underutilized units, or paying overtime and bonuses to

current employees, are all costly, temporary solutions to the staffing issue and are therefore, not

ideal solutions. From an operational aspect, the issue of a staffing shortage has the potential to

impact the quality of care provided to patients. The increased workload has been shown to lead

to potentially preventable errors and accidents, such as medication errors and inpatient falls.

According to Choi and Boyle, a study conducted found that the fall rate was 0.3% lower for

each percentage point increase in the percentage of nursing hours provided by RNs among all

nursing personnel (2013, p. 589). Thus, hiring new permanent nursing staff will potentially aid

in decreasing the workload per nurse and ultimately result in improved patient safety, better

patient outcomes and satisfaction.

Options and Cost/Benefit Analysis

As with any organizational change, it is always necessary to consider the costs as well as

the benefits associated with implementing the change. Changes associated with staffing are

costly and therefore, it is important to determine which solution offers the most efficient and cost

effective results. Of the options presented in this scenario, pulling nurses from other units and

paying current nurses overtime and benefits are costly as well as band-aid fixes to the true
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problem of staffing shortages. Therefore, analyzing the costs and benefits of the additional

solutions, hiring temporary versus permanent staff, is imperative. Hiring temporary nursing staff

to fill the understaffed shift may appear to be more cost effective. However, the costs of having

to consistently hire and train new nurses is significant. A study conducted found that the main

contributor to turnover costs was temporary cover, incorporating costs of temporary staff,

overtime, clerical time and time of experienced staff to arrange cover, and productivity loss

related to permanent staff assisting temporary staff (North, 2013). Furthermore, the time spent

orienting and training these new temporary hires may hinder the quality of patient care provided.

The second solution to the staffing shortage issue, hiring new permanent nursing staff,

must also be analyzed. Initially, it may be very costly to hire, orient and train these new

permanent nurses. However, this option offers a more permanent and long-term solution to the

staffing issue. Additionally, significant costs are associated with hiring, training and orienting

new hires (North, 2013). However, it has been reported that the actual cost of turnover

approximates a nurses annual salary when hiring and orientation costs are calculated for

4 months (Hillman & Foster, 2011). Therefore, hiring permanent staff may aid in reducing

costs associated with turnover in addition to providing continuity and quality in patient care.

Recommendations

Based on data obtained concerning the costs and benefits of hiring temporary versus

permanent nursing staff, I believe that hiring permanent staff offers a better long-term solution to

the staffing shortage issue. Hiring new permanent nursing staff will ultimately be more effective

because it not only allows for safer nurse to patient ratios, but also will decrease costs and time

spent training and orienting temporary staff. However, while I think the best solution to the

staffing shortage is hiring new permanent nurses, I also believe that they should be looked at as
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an investment and time and costs should go to providing appropriate and thorough training in

hopes to prevent turnover. A study conducted found that when we examined the reasons for the

turnover, we discovered that the newly hired staff was frustrated with the orientation process or

the lack thereof (Hillman & Foster, 2011). These findings suggest that an emphasis on

improved orientation and training provided to new hires may aid in preventing turnover and the

associated costs. Therefore, I would recommend investing more money into the training of new

hires for the purpose of improving satisfaction, preventing turnover and ultimately increasing the

quality of patient care provided.

Implementation Strategy

Developing the implementation process of a change, such as hiring new permanent staff,

is important. In order to implement my recommendation, hiring new permanent nurses, it is

necessary to include all appropriate personnel that will be involved in the change process.

Approval for hiring new, permanent staff as the solution to the staffing shortage would include

that of nurse managers and human resources. Additionally, according to Sullivan, the direct

costs of recruiting, selecting, and training an employee who must later be terminated because of

unsatisfactory performance is expensive and unnecessary (2013, p. 200). Thus, it is vital that

the recruiting, interviewing, selecting, orienting and training process be thorough and effective.

Therefore, I would suggest developing a strong interview and selection process to ensure the

most appropriate individuals who are best suited for the unit are selected. After the initial hiring

phase, it will be important to utilize an in-depth training and orientation process to promote

quality nurses who are equipped to provide the best possible care and prevent unnecessary

nursing turnover.
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Conclusion

Staffing shortages are a significant and common issue faced by health care organizations

today. While, there are several potential solutions to the staffing issue in the scenario presented,

it is necessary to analyze the costs and benefits of these solutions in order to determine which is

most appropriate. Based on nursing research, while the initial costs associated with hiring,

training and orienting new permanent nursing staff are high, it is ultimately a long-term solution

to the problem. Furthermore, taking measures to provide a thorough training and orientation

period to these new hires have the potential to decrease costs resulting from high turnover rates

as well as prevent errors associated with inexperienced staff, ultimately leading to increased

patient safety. Therefore, the best solution to this staffing shortage issue is to hire new,

permanent nursing staff.

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References

Aiken, L.H., Sloane, D.M., Bruyneel, L., Van den Heede, K., Griffiths, P., Busse, R.,

Sermeus, W. (2014, May 24). Nurse staffing and education and hospital mortality in nine

European countries: a retrospective observational study. The Lancet, 383 (9931), 1824

1830. Retrieved from: http://thelancet.com/journals/lancet/article/PIIS0140-

6736(13)62631-8/abstract

Choi,J., & Boyle, D.K. (2013). RN Workgroup Job Satisfaction and Patient Falls in Acute Care

Hospital Units. Journal of Nursing Administration, 43(11), 586-591.

Hillman, L., & Foster, R. (2011). The impact of a nursing transitions programme on retention

and cost savings. Journal of Nursing Management, 19(1), 50-6.

North, N., Leung, W., Ashton, T., Rasmussen, E., Hughes, F., & Finlayson, M. (2013). Nurse

turnover in New Zealand: Costs and relationships with staffing practises and patient

outcomes. Journal of Nursing Management, 21(3), 419-428.

Nurse Staffing. (n.d.). Retrieved June 22, 2017, from http://www.nursingworld.org/nursestaffing

Sullivan, E., J. (2013). Effective leadership and management in nursing. Upper Saddle River,

NJ: Pearson Education, Inc.

I pledge to support the Honor System of Old Dominion University. I will refrain from any form
of academic dishonesty or deception, such as cheating or plagiarism. I am aware that as a
member of the academic community it is responsibility to turn in all suspected violators of the
Honor Code. I will report to a hearing if summoned.
Name: Allison Carlucci
Signature: Allison Carlucci
Date: June 24, 2017
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Grading Criteria % Comments Points

10
Scenario and paper introduced

15
Background provided

15
Business and Operational Impacts provided

20
Options and Cost/Benefit Analysis provided

8
Recommendation for a solution

Implementation Strategy and Review and 10

Approval Process provided
2
Conclusion

Correct grammar, essay writing, spelling and 10

punctuation
Correct use of APA format, including adherence
to page limit and four references from nursing or 10
business journals, attach grading rubric, include
honor code, submit through SafeAssign

Final Grade: 100