KPMG: High cost could reduce full-time RN staff

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A KPMG survey conducted among 120 U.S. senior hospital executives showed that the average annual cost of a full-time registered nurse (RN) in the inpatient setting is $98,000, or $45 per hour. As a result, survey respondents indicated a possible future trend toward increases in traveling or per diem nurse staffing.

For the average RN, base wages represented 75 percent of fully loaded payroll, or 57 percent of the all-in costs, according to statistics from the survey. Among other factors that made up the total price of a full-time RN, the Amstelveen, Netherlands-based research firm noted that 11 percent was attributed to non-productivity hours by respondents.

These data are "important because many healthcare executives distill their decision criteria down to a simple comparison of hourly wages without contemplating the total cost of employment,” said Ralph Henderson, president of the nurse and allied division of AMN Healthcare in San Diego. “Other studies have shown the quality and patient outcomes using contingent RNs are similar to those of full-time RNs. Now, this KPMG study shows cost to be comparable as well, which calls into question whether full-time hiring is the best way to staff-up as demand for healthcare services rebounds along with the economy.”

Statistics indicated that the average base wage of a full-time RN is $56,000 per year, according to KPMG. That figure is slightly lower than the U.S. average estimated by the Bureau of Labor Statistics (BLS), at $67,000 per year. The firm noted that the difference might be attributable to older BLS data, margin of error, sample size or location and the length of work week used to calculate wages. On top of base wages—which made up 57 percent of the all-in cost—respondents said that other payroll costs, insurance costs, recruiting costs, non-productivity, and other costs made up the additional 43 percent of the total price of retaining an RN.

On average, full-time direct care registered nurses worked 41 hours per week, according to the KPMG survey, however, hours fluctuated from week to week and from nurse to nurse. A total of 78 percent of respondents stated that overtime for nurses was between one and 10 hours per week, according to the firm, but on an average week nurses worked four overtime hours. Among the “hidden costs” of nursing labor, 93 percent of respondents believed that up to 20 hours of labor were “non-productive” hours for RNs. Time spent on training, education or personal internet use was considered to be “non-productive hours."

The survey also reported that 65 percent of respondents currently make use of traveling or per diem nurses. Reasons included part-time employed staff, incentives to limit turnover and encourage working overtime, among other factors, according to the report. Of those surveyed, 41 percent stated they expected a future increase in the use of traveling or per diem nurses, while 59 percent expected no change at all. None of the respondents, however, expected a decrease in the use of traveling or per diem nurses. Also of importance, 63 percent responded that quality was the most important factor when considering a per diem or traveling nurse.

“The financial business case is only one aspect of the benefits of travel and contingent nurses,” said Henderson. “When it comes to quality outcomes, using supplemental nurses to reach optimum staffing levels reduces stress and attrition among full-time nurses, and improves nurse and patient satisfaction as well as outcomes.”

A total of 120 U.S. senior hospital executives participated in the survey, including CEOs, chief administrators, COOs, CFOs and directors of human resources, according to the firm. Respondent hospitals varied in size and location. The survey, conducted online, was executed between the end of 2010 and the start of 2011.