8.5 Budgets and Staffing
Economics and health care reimbursement models impact health care institutional budgets that ultimately impact nurse staffing. A budget is an estimate of revenue and expenses over a specified period of time, usually over a year. There are two basic types of health care budgets that affect nursing: capital and operating budgets. Capital budgets are used to plan investments and upgrades to tangible assets that lose or gain value over time. Capital is something that can be touched, such as buildings or computers. Operating budgets include personnel costs and annual facility operating costs.[1] Typically 40% of the operating budgets of health care agencies are dedicated to nursing staffing. As a result, nursing is often targeted for reduced hours and other cutbacks.[2]
What is the value of a nurse? Nurses are priceless to the clients, families, and communities they serve, but health care organizations are tasked with calculating the cost of delivering safe, high-quality nursing care using affordable staffing models. All members of the health care team must understand the relationship between economics, resources, budgeting, and staffing, and how these issues affect their ability to provide safe, quality care to their clients.
As health care agencies continue to adapt to meet “Pay for Performance” reimbursement models and deliver cost-effective care to an aging population with complex health needs, many nurses are experiencing changes in staffing models.[3] Strategies implemented by agencies to facilitate cost-effective nurse staffing include acuity-based staffing, team nursing, mandatory overtime, floating, on call, and off with benefits. Agencies may also use agency nurses when nurse shortages occur.
Acuity-Based Staffing
Historically, inpatient staffing patterns focused on “nurse-to-client ratios” where a specific number of clients were assigned to each registered nurse during a shift. Acuity-based staffing is a client assignment model that takes into account the level of client care required based on the severity of a client’s illness or condition. As a result of acuity-based staffing, the number of clients a nurse cares for often varies from shift to shift as the needs of the clients change. Acuity-based staffing promotes efficient use of resources by ensuring nurses have adequate time to care for complex clients. Read more information about acuity-based staffing in the “Prioritization” chapter.
Team Nursing
Team nursing is a common staffing pattern that uses a combination of Registered Nurses (RNs), Licensed Practical/Vocational Nurses (LPN/VNs), and Unlicensed Assistive Personnel (UAP) to care for a group of clients. The RN is the leader of a nursing team, making assignments and delegating nursing care to other members of the team with appropriate supervision. Team nursing is an example of allocating human resources wisely to provide quality and cost-effective care. In order for team nursing to be successful, team members must use effective communication and organize their shift as a team. Read more about team nursing in the “Delegation and Supervision” chapter of this book.
Mandatory Overtime
When client numbers and acuity levels exceed the number of staff scheduled for a shift, nurses may experience mandatory overtime as an agency staffing tool. Mandatory overtime requires a nurse to stay and care for clients beyond their scheduled shift when there is a lack of nursing staff (often referred to as short staffing). The American Nurses Association recognizes mandatory overtime as a dangerous staffing practice because of client safety concerns related to overtired staff. Depending on state laws, nurses can be held liable for client abandonment or neglect charges for refusing to stay when mandated. Nurses should be aware of state and organizational policies related to mandatory overtime.[4]
Read more about ANA’s advocacy for adequate nurse staffing.
Floating
Floating is a common agency staffing strategy that asks nurses to temporarily work on a different unit to help cover a short-staffed shift. Floating can reduce personnel costs by reducing overtime payments for staff. It can also reduce nurse burnout occurring from working in an environment without enough personnel.
Nurses must be aware of their rights and responsibilities when asked to float because they are still held accountable for providing safe client care according to their state’s Nurse Practice Act and professional standards of care. Before accepting a floating assignment, nurses should ensure the assignment is aligned with their skill set and they receive orientation to the new environment before caring for clients. If an error occurs and the nurse is held liable, the fact they received a floating assignment does not justify the error. As the ANA states, nurses don’t just have the right to refuse a floating client assignment; they have the obligation to do so if it is unsafe.[5] The ANA has developed several questions to guide nurses through the decision process of accepting client assignments. Review these questions in the following box.
ANA’s Suggested Questions When Deciding on Accepting a Client Assignment[6]
- What is the assignment? Clarify what is expected; do not assume. Be certain about the details.
- What are the characteristics of the clients being assigned? Don’t just respond to the number of clients assigned. Make a critical assessment of the needs of each client and their complexity and stability. Be aware of the resources available to meet those needs.
- Do you have the expertise to care for the clients? Always ask yourself if you are familiar with caring for the types of clients assigned? If this is a “float assignment,” are you cross-trained to care for these clients? Is there a “buddy system” in place with staff who are familiar with the unit? If there is no cross-training or “buddy system,” has the client load been modified accordingly?
- Do you have the experience and knowledge to manage the clients for whom you are being assigned care? If the answer to the question is “No,” you have an obligation to articulate your limitations. Limitations in experience and knowledge may not require refusal of the assignment, but rather an agreement regarding supervision or a modification of the assignment to ensure client safety. If no accommodation for limitations is considered, the nurse has an obligation to refuse an assignment for which they lack education or experience.
- What is the geography of the assignment? Are you being asked to care for clients who are in close proximity for efficient management, or are the clients at opposite ends of the hall or in different units? If there are geographic difficulties, what resources are available to manage the situation? If the clients are in more than one unit and you must go to another unit to provide care, who will monitor clients out of your immediate attention?
- Is this a temporary assignment? When other staff are located for assistance, will you be relieved? If the assignment is temporary, it may be possible to accept a difficult assignment knowing that there will soon be reinforcements. Is there a pattern of short staffing at this agency, or is this truly an emergency?
- Is this a crisis or an ongoing staffing pattern? If the assignment is being made because of an immediate need or crisis in the unit, the decision to accept the assignment may be based on that immediate need. However, if the staffing pattern is an ongoing problem, you have the obligation to identify unmet standards of care that are occurring as a result of ongoing staffing inadequacies. This may result in a formal request for peer review using the appropriate channels.
- Can you take the assignment in good faith? If not, you will need to have the assignment modified or refuse the assignment. Consult your state’s Nurse Practice Act regarding clarification of accepting an assignment in good faith.
On Call and Off With Benefits
When staffing projected for a shift exceeds the number of clients admitted and their acuity, agencies often decrease staffing due to operating budget limitations. Two common approaches that agencies use to reduce staffing on a shift-to-shift basis are placing nurses “on call” or “off with benefits.”
On Call
On call is an agency staffing strategy when a nurse is not immediately needed for their scheduled shift. The nurse may have the options to report to work and do work-related education or stay home. When a nurse is on call, they typically receive a reduced hourly wage and have a required response time. A required response time means if a nurse who is on call is needed later in the shift, they need to be able to report and assume client care in a designated amount of time.
Off With Benefits
A nurse may be placed “off with benefits” when not needed for their scheduled shift. When a nurse is placed off with benefits, they typically do not receive an hourly wage and are not expected to report to work or be on call, but still accrue benefits such as insurance and paid time off.
Agency Nursing
Agency nursing is an industry in health care that provides nurses to hospitals and health care facilities in need of staff. Nurse agencies employ nurses to work on an as-needed basis and place them in facilities that have staffing shortages.
Advocacy by the ANA for Appropriate Nurse Staffing
According to the ANA, there is significant evidence showing appropriate nurse staffing contributes to improved client outcomes and greater satisfaction for both clients and staff. Appropriate staffing levels have multiple client benefits, including the following[7]:
- Reduced mortality rates
- Reduced length of client stays
- Reduced number of preventable events, such as falls and infections
Nurses also benefit from appropriate staffing. Appropriate workload allows nurses to utilize their full expertise, without the pressure of fatigue. A recent report suggested that staff levels should depend on the following factors[8]:
- Client complexity, acuity, or stability
- Number of admissions, discharges, and transfers
- Professional nurses’ and other staff members’ skill level and expertise
- Physical space and layout of the nursing unit
- Availability of technical support and other resources
Read more information about client acuity tools in the “Prioritization” chapter.
Visit ANA’s interactive Principles of Nurse Staffing infographic.
Cost-Effective Nursing Care
One of ANA’s Standards of Professional Performance is Resource Stewardship. The Resource Stewardship standard states, “The registered nurse utilizes appropriate resources to plan, provide, and sustain evidence-based nursing services that are safe, effective, financially responsible, and used judiciously.”[9] Nurses have a fiscal responsibility to demonstrate resource stewardship to the employing organization and payer of care. This responsibility extends beyond direct client care and encompasses a broader role in health care sustainability. By effectively managing resources, nurses help reduce unnecessary expenditures and ensure that funds are allocated where they are most needed. This can include everything from minimizing waste in the use of medical supplies to optimizing staffing levels to avoid both overworking and underutilizing nursing staff.
Nurses can help contain health care costs by advocating for clients and ensuring their care is received on time, the plan of care is appropriate and individualized to them, and clear documentation has been completed. These steps reduce waste, avoid repeated tests, and ensure timely treatments that promote positive client outcomes and reduce unnecessary spending. Nurses routinely incorporate these practices to provide cost-effective nursing care in their daily practice:
- Keeping supplies near the client’s room
- Preventing waste by only bringing needed supplies into a client’s room
- Avoiding prepackaged kits with unnecessary supplies
- Avoiding “Admission Bags” with unnecessary supplies
- Using financially-sound thinking
- Understanding health care costs and reimbursement models
- Charging out supplies and equipment according to agency policy
- Being Productive
- Organizing and prioritizing
- Using effective time management
- Grouping tasks when entering client rooms (i.e., clustering cares)
- Assigning and delegating nursing care to the nursing team according to the state Nurse Practice Act and agency policy
- Using effective team communication to avoid duplication of tasks and request assistance when needed
- Updating and individualizing clients’ nursing care plans according to their current needs
- Documenting for continuity of client care that avoids duplication and focuses on effective interventions based on identified outcomes and goals
- American Nurses Association. (n.d.). Advocacy. https://www.nursingworld.org/practice-policy/advocacy/ ↵
- Kenton, W. (2024). Capital budgeting. Investopedia. https://www.investopedia.com/terms/c/capitalbudgeting.asp ↵
- American Nurses Association. (n.d.). Advocacy. https://www.nursingworld.org/practice-policy/nurse-staffing/ ↵
- American Nurses Association. (n.d.). Nurse staffing. https://www.nursingworld.org/practice-policy/nurse-staffing/#staffinfo ↵
- American Nurses Association. (n.d.) Top issues for staff nurses. https://www.nursingworld.org/practice-policy/nurse-staffing/ ↵
- American Nurses Association. Top issues for staff nurses. https://www.nursingworld.org/practice-policy/nurse-staffing/ ↵
- American Nurses Association. (n.d). Nurse staffing. https://www.nursingworld.org/practice-policy/nurse-staffing/ ↵
- American Nurses Association. (n.d.). Questions to ask in making the decision to accept a staffing assignment for nursing. https://www.nursingworld.org/practice-policy/nurse-staffing/questions-to-ask-in-making-the-decision-to-accept-a-staffing-assignment-for-nurses/ ↵
- American Nurses Association. (2021). Nursing: Scope and standards of practice (4th ed.). American Nurses Association. ↵
An estimate of revenue and expenses over a specified period of time, usually over a year.
Budgets used to plan and evaluate major projects and investments, such as new buildings or equipment.
Budgets including personnel costs and annual facility operating costs.
A patient assignment model that takes into account the level of patient care required based on the severity of a patient’s illness or condition.
A common staffing pattern that uses a combination of Registered Nurses (RNs), Licensed Practical/Vocational Nurses (LPN/VNs), and Assistive Personnel (APs) to care for a group of patients.
A requirement by agencies for nurses to stay and care for patients beyond their scheduled shift when short staffing occurs.
An agency strategy that asks nurses to temporarily work on a different unit to help cover a short-staffed shift.
An agency staffing strategy when a nurse is not immediately needed for their scheduled shift.
An agency staffing strategy when a nurse is not needed for their scheduled shift. The nurse does not typically receive an hourly wage and is not expected to report to work, but they still accrue benefits such as insurance and paid time off.