Study: Nurse Staffing Bill Could Save Illinois Hospitals $1.4 Billion

A new study by the Illinois Economic Policy Institute (ILEPI) says new legislation on nurse staffing levels, currently before the Illinois General Assembly, will save the state’s hospital industry almost $1.4 billion in nurse turnover, staff injury rates, and patient care costs.

The proposed legislation — House Bill (HB) 2604 and Senate Bill (SB) 1908 — seeks to establish limits on the number of patients that can be assigned to registered nurses (RNs); proponents argue that the legislation is meant to improve patient care outcomes and reduce occupational hazards that contribute to the state’s nursing shortage.

Where the savings will be made

In its analysis, ILEPI points out that the proposed legislation will reduce registered nurse turnover in Illinois, which would save state hospitals $401 million and decrease injury rates, which would translate to $7 million in savings. ILEPI further goes on to say the proposed legislation will improve patient health outcomes, translating to savings of $876 million from reduced care costs for hospitals and ultimately lower readmission rates within 30 days of discharge, saving hospitals $75 million.

However, critics of the bill argue that the proposed legislation would place a considerable financial burden on hospitals by increasing their labor costs, because they would have to hire more staff. ILEPI insists nothing could be further from the truth. It said said the potential $1.4 billion in savings alone would offset 75% of the cost of hiring the additional nurses.

ILEPI policy director, Frank Manzo IV optimistically said that if the safe patient limits in the bill are implemented, “the policy would mostly pay for itself.”

The research, titled “The Financial Impact of Safe Patients in Illinois” points out that over the longer term, safe patient limits could produce a brighter financial future for Illinois hospitals.

“Economic Census data reveals that Illinois’ hospitals currently lag national averages in terms of both  employment and revenue growth. California, the only state to have implemented safe patient limits for nurses, far exceeds national averages on both metrics. Overall, safe patient limits would promote better outcomes for patients, nurses, and the people of Illinois–at a net cost impact that amounts to 1 percent of total hospital spending and less than 15 percent of the gross operating surplus of hospitals in Illinois,” the research stated.

ILEPI pointed out that since enacting similar nurse staffing standards in 2004, California now has a registered nurse turnover rate that is 21% lower than that of  Illinois and has also lowered its hospital readmission rate, hospital mortality rate, and significantly reduced the average length of patient stays.

Deep dive into the proposed law

In testimony to the Illinois House Labor and Commerce Committee at the end of March, Manzo insisted their research had shown that safe patient limits save lives. Furthermore, he pointed out that nurses in Illinois suffered from overexertion, cuts, workplace violence, sexual harassment, psychological trauma, and other risks, leading to a higher staff turnover in the state.

“The injury and illness rate for Illinois nurses is the second highest in the Midwest. States with more nurses per capita have lower nurse injury rates than Illinois. High injury rates and insufficient staffing are barriers to retaining qualified nurses in Illinois,” Manzo testified.

In addition, Manzo said high patient-to-nurse ratios are associated with longer wait times, more medical errors, more infections, and more deaths. “Patient mortality rates have been found to be 17% lower in hospitals that have better staffing levels. And patients report greater satisfaction in hospitals with adequate staffing levels because they have more patient surveillance and better patient education.”

The proposed legislation states that there be no more than four patients to a registered nurse in any acute care setting; no more than two critical care patients to a registered nurse; and no more than three patients for every ER nurse.

The legislation also provides for fines for facilities that violate the safe patient limits, strongly deterring attempts to save money by skirting the limits. “The Act would not interfere with the ability of hospitals to maintain an acuity system to determine staffing levels based on acuity, so long as the specific safe patient limits in the Act are met,” the Illinois Nurses Association, which predictably supports the proposed legislation, said in a press statement.

Strong opposition to proposed legislation

The Illinois Health and Hospital Association (IHA) is opposed to the bill. Among other issues, the IHA argues that mandating nurse staffing ratios will create real barriers to hospitals and health systems as they work to best serve their patients and communities – without improving patient outcomes or quality of care.

“Nurse staffing mandates impose severe constraints on the ability of local hospitals to meet the wide variety of quickly changing patient care needs in their communities. One-size-fits all staffing mandates, imposed regardless of a hospital’s size, location or the individual needs of its patients, will result in longer wait times, reduced patient services and higher operating costs,” the IHA argues.

While ILEPI can point to successes of the safe patient limits in California, IHA hit back saying a study conducted by the Massachusetts Health Policy Commission “found there was no systematic improvement in patient outcomes in California, the only state in the country to implement nurse staffing ratios.” IHA added that a Massachusetts ballot measure to impose nurse staffing mandates in the 2018 election was defeated by a margin on 70 percent to 30 percent.

IHA said similar legislation has been proposed over the past 15 years, but these had been rejected by state legislators. The hospital lobby group said mandatory nurse staffing ratios are unnecessary, unworkable and do not improve quality of care or patient outcomes but would be very costly.

IHA said the state’s proposed nurse staffing legislation would require about 20,000 more nurses at a cost of nearly $2 billion.

But Manzo said: “IHA’s figures appear to include only the labor cost of hiring more nurses, but fail to account for the significant cost burdens that understaffing currently imposes on our hospitals. This includes hundreds of millions of dollars in staff turnover and injury costs, reduced Medicare reimbursements due to higher patient readmissions, and additional patient time in costly intensive care and surgical units. On these four metrics alone, safe patient limits could save Illinois hospitals over $1.4 billion.”

Illinois faces nurses shortage

It is projected that Illinois will have a deficit of 21,000 nurses by 2020, with a third of current RNs planning to retire in the next five years. Also, Illinois ranks 22nd nationwide among states for the average nurse’s income, “trailing not only neighboring states like Wisconsin and Minnesota, but even states that generally offer lower wages, such as Louisiana and Texas.”