NURSING COST PER ACUTE CARE EPISODE- EXPLORING RELATIONSHIPS USING PATIENT LEVEL DATA PEGGY ANN JENKINS

Transcription

1 NURSING COST PER ACUTE CARE EPISODE- EXPLORING RELATIONSHIPS USING PATIENT LEVEL DATA By PEGGY ANN JENKINS B.S., University of Colorado Health Sciences Center, 1992 M.S., University of Colorado Health Sciences Center, 1994 A thesis submitted to the Faculty of the Graduate School of the University of Colorado in partial fulfillment of the requirements for the degree of Doctor of Philosophy College of Nursing 2013

2 @ 2013 PEGGY ANN JENKINS ALL RIGHTS RESERVED

3 ii This thesis for the Doctor of Philosophy degree by Peggy Ann Jenkins has been approved for the College of Nursing By Joyce Verran, Chair Amy Barton, Advisor John Welton Jacqueline Jones Sharon Eck-Birmingham Date 11/21/2013

4 iii Jenkins, Peggy Ann (PH. D., Nursing) Nursing Cost per Acute Care Episode- Exploring Relationships Using Patient Level Data Thesis directed by Professor Amy Barton. ABSTRACT In an era of patient centered, value-based health care, the value of the largest labor sector in the hospital setting, the nurse, is unknown. Traditional methods of accounting for nursing services have included measuring nursing hours per patient day, which is a unit level measurement that does not include variability in nursing care at the patient level. The purpose of the study was 1) to explore the variability of nursing cost per acute care episode for patients with similar DRGs with or without major complications; 2) to investigate the relationship among patient characteristics, nurse characteristics, nursing intensity, and nursing cost as a patient outcome. A retrospective, exploratory, cost study using secondary patient level data was completed. The study site was one general medical surgical unit in a large academic medical center. De-identified data from three databases were merged into a single file and analyzed using Stata software. Correlation analysis and regression analysis were used to explore relationships among patient characteristics, nursing characteristics, and nursing cost per acute care episode. Microeconometric measurement was used to determine the elasticity of nursing characteristics on acuity and nursing cost. Key findings included 1) patients with the same diagnosis have large variability in nursing intensity and nursing cost by shift, day and acute care episode; 2) nurses may not be assigned patients based on experience and education level; 3) direct nursing cost per patient on the study unit was $96.48 on average per day, which was only % of the daily room and board charge.

5 iv The form and content of this abstract are approved. I recommend its publication. Approved: Amy Barton

6 v ACKNOWLEDGEMENTS I want to thank my esteemed committee for guiding my dissertation journey, always providing support and encouragement, leading me to build upon current nursing science while helping me stretch to achieve something new. The staff at the study site spent many hours to help this PhD student accomplish her dream. I am forever grateful to the nurse scientist, nursing administration, nursing IT, nurse manager of the unit, IT, nursing professor. My sincere appreciation goes to Kraig McKinley from Clairvia who organized the data query and helped me formulate variables. Thank you to Clairvia administration who approved resources to help obtain data. I am very appreciative of the Alpha Kappa Chapter of Sigma Theta Tau who supported this research with a grant. The wonderful women who walked beside me completing their own PhD journey provided motivation, intellectual stimulation, vision for nursing leadership, and camaraderie to keep me focused on finishing. I am grateful to all nurse scientists, educators, leaders who published wonderful studies and works that inspired my passion to contribute to expanding the science of nursing. My father, who passed away when I was 16, encouraged me to study nursing. Thank you, Dad, for choosing a wonderful profession for me. I am most grateful to my family, my children Jaime, Sean, Christopher, my grandchildren Lylie and Sydnie who always believed in me and constantly stated, You can do this, Mom. My special husband was my greatest support. His unconditional love and encouragement kept me going plus I thought frequently of his quote, If this were easy, there would be many more PhDs.

7 vi TABLE OF CONTENTS CHAPTER I. STATEMENT AND SIGNIFICANCE OF THE PROBLEM... 1 Introduction... 1 Nursing Cost Measurement... 1 Nurse Staffing and Assignment... 2 Purpose of the Study... 4 Specific Aims... 5 Research Questions... 5 Rationale and Definitions... 6 What is Nursing Cost?... 7 Nursing Intensity... 9 Nursing Sensitive Outcomes Systems Research Organizing Model Client Context Outcomes Mid- Range Nursing Theory Including Cost Emergent Model Measurement: Nursing Hours per Acute Care Episode Justification for the Emergence Model Selected Justification for Measuring at the Individual Level Microeconometrics Conclusion... 20

8 vii II. LITERATURE REVIEW Introduction Nursing Cost s s s Synopsis of Three Decades of Nursing Cost Research Nursing Intensity Time Applying Nursing Intensity Weights to DRGs Inconsistent Definitions of Nursing Intensity Moving Toward Patient Specific Measurement of Nursing Intensity Synopsis of Nursing Intensity Methods to Measure Nursing Cost Ratio of Cost- to- Charges Relative Value Units Nursing Intensity Weights Case Costing Extant Nursing Cost Studies Outcome Studies Economic Analyses Overview of Methods Synthesis... 41

9 viii III. METHODOLOGY AND RESEARCH DESIGN Introduction Research Design Measurement Data Source Variables Sample Setting Risk Adjustment Procedure for Handling Missing Data Data Analysis Project Timeline Dissemination Plan Summary IV. DATA ORGANIZATION Introduction Data Acquisition Data Management Process Planning Organization Computing Documentation Merging Data... 58

10 ix Inclusion Criteria- Determining Length of Stay (LOS) on Study Unit Merging Intensity Data and Included Patients Identifying Missing Days of Intensity Data Merging Human Resource Files Missing Employee Data Merging Human Resources file with Patient Data Constructing Nursing Cost Per Acute Care Episode Response Variable Conclusion V. RESULTS Introduction Description of Sample Nurse Characteristics Patient Characteristics Nursing Intensity and Nursing Wage Variables Research Question One DRG Data Variability in Nursing Cost for Similar DRGs ANOVA for Question One Logarithmic Transformation ANOVA Results Research Question Two Patients With No RN Cost Certification... 83

11 x Summary of Variables in RN Aggregated File Correlation Analysis Regression Analysis Research Question Three Regression Postestimation Commands Research Question Four Limitations Summary VI. SUMMARY, CONCLUSIONS, and RECOMMENDATIONS Introduction Major Findings Variability in Nursing Cost Nurse Years Experience Significantly Predicts Nursing Cost Nurse Assignment May Not be Based on Nursing Characteristics Direct Nursing Cost per Patient is a Small Percent of the Room and Board Charge Opportunity Cost Findings Related to the Literature Conclusions Implications for Nurse Administrators Recommendations for Further Research Concluding Remarks

12 xi REFERENCES APPENDIX A VARIABLES LIST B STATA CODE

13 1 CHAPTER I STATEMENT AND SIGNIFICANCE OF THE PROBLEM Introduction In an era of patient centered, value-based health care, the value of the largest labor sector in the hospital setting, the nurse, is unknown. To provide efficient and effective health care, the relationship between nursing care cost and patient outcomes should be well understood. Numerous nurse researchers spanning several decades constructed nursing science explicating the link between nursing cost and quality of patient care. A limitation for nurse scientists is lack of data in the acute care hospital setting measuring individual nursing time per patient and the skill level of the nurse delivering care to each patient. The problem of lack of a hospital data source linking the individual nurse to patient has not stopped nurse researchers (Caspers & Pickard, 2013; Pappas, 2013; Welton, 2011) from building nursing value models created from readily accessible data sources such as administrative databases, cost-to-charge ratios, and nursing classification systems among others. The sources of data used in nursing cost research to date have been divergent and inconsistent. A recurring theme noted in decades of nursing cost research is the importance of measuring variability of nursing cost at a patient level, though; there is no standardized measurement to accomplish this extremely important study today. Nursing Cost Measurement Nursing care accounts for a large percentage of overall hospital operating costs. A focus in American healthcare is on providing high quality healthcare at a reasonable cost. How does a nurse leader, hospital administrator, or consumer know if nursing care is being delivered at a reasonable cost?

14 2 Table 1 Comparison of Traditional and More Accurate Nursing Cost Measurement Traditional hospital accounting methods Place the cost of nursing care in the room and board charge Do not consider variable costs of nursing care More accurate measurement of nursing cost Includes variable nursing costs per patient Measures the acute care episode cost of nursing care Make a false assumption that all patients receive equal amounts of nursing care View daily cost savings as efficient Contributes better transparency of nursing cost Informs leadership and consumer decision making Data linking individual patients to individual nurses is needed in order to make evidence based decisions about assignment of nurses to impact favorable patient outcomes. Nurse Staffing and Assignment Staffing assignments have historically been completed by hunch and not by evidence. A growing body of knowledge is being constructed to provide nurse administrators and managers tools for effective decision-making. Some of the evidence today begins to answer questions such as-does a nurse with a bachelor s degree achieve better patient outcomes for surgical patients than a nurse with an associate degree? (Aiken, Clarke, Cheung, Sloane, & Silber, 2003) Other questions that might be studied include: Are there patients in particular diagnostic groups who have better outcomes when assigned to bachelor degree nurses? Do other nurse characteristics such as length of

15 3 service, age, and certification have a relationship with positive patient outcomes and nursing cost per acute care hospital episode? What relationship do individual nurse characteristics nested in nursing units nested in hospitals have on positive patient outcomes? The current study may add to the growing body of evidence aimed at providing knowledge to promote safe, effective, and efficient use of nursing resources. A contribution that the study makes to the literature related to nursing resource use and value of nursing is providing knowledge using patient level data. Findings from the study support the need to view nursing cost not only with short term accounting methodology, but also informed by econometrics and a view of nursing cost per patient episode of care. With advanced clinical information systems, it is possible today to extract patient level data and link nursing assignment and intensity to the patient. Nursing cost is still included in the room and board charge of most hospitals today, so benchmarking nursing cost is done using hospital or unit level data. The advancement of technology makes it possible to collect patient level data linking individual nurse to patient. If standardized methods for collecting patient level data are adopted across healthcare systems, metrics will be available for comparison of nursing cost using patient level data. Ultimately, the value of nursing can be explicated through study of nursing cost linked to quality outcomes. The purpose of this study is to use patient level data collected using automated staffing software to better understand variability in nursing cost for patients with similar diagnoses and the relationships among nurse characteristics and nursing cost per acute care episode. The methodology used in the study can be replicated and the future of

16 4 nursing cost and quality research completed with patient level data provides great potential. Purpose of the Study A paucity of evidence exists in which variable nursing costs are measured using patient level data. Most nursing cost research is conducted using nursing cost averages. This study evolved current research beyond using nursing cost per patient day averages to using data linking an individual nurse to individual patients, thus providing evidence on variable nursing cost per patient. The need to measure variable nursing cost has been noted in nursing cost research for decades (Chiang, 2009; Naylor, Munro, & Brooten, 1991; Sovie, 1988; Thompson & Diers, 1985; Wilson, Prescott, & Aleksandrowicz, 1988). Contemporary nurse staffing software provides a repository for data collected at the individual patient and nurse level. The patient specific data can be linked by common identifiers to other hospital databases thus providing a source useful for nurse scientists when studying variable nursing cost and relationships among contextual elements and patient outcomes. Recently, a protocol for measurement of daily nursing care variability was introduced (Radwin, Cabral, Chen, & Mowinski Jennings, 2010). In this model, nine custom patient and nurse databases were merged to create one patient-nurse database. Data collected for 18 months were used to investigate relationships among nursing interventions, nursing system characteristics, patient characteristics, and patient outcomes for cancer patients in one hospital setting. In the dissertation, a similar yet distinctive protocol for merging patient and nurse data was used. Variations in nursing intensity by patient as well as relationships among individual nurse characteristics and nursing costs

17 5 were explored. The purpose of the study was 1) to explore the variability of nursing cost per acute care episode for patients with similar DRGs without, with, and with major complications; 2) to investigate the relationships among patient characteristics, nurse characteristics, nursing intensity, and nursing cost as a patient outcome. Specific Aims There were four specific aims in the study. 1. To measure variability in nursing cost per acute care episode using data linking individual nurses to individual patients. 2. To explore reasons for variation in nursing cost per acute care episode for patients with similar DRGs. 3. To explore the relationships among nursing characteristics and nursing cost per acute episode of care for patients with same diagnosis with and without complications. 4. To measure the average nursing cost per day. Research Questions 1. What is the variation in nursing cost per acute care episode for patients with the same DRGs without complications, with complications, with major complications? 2. What are the relationships among nursing characteristics (years of service, educational degree) on nursing cost per acute care episode? 3. What are the characteristics of nurses assigned to patients with complications and major complications? 4. What is the average nursing cost per day measured at the patient level?

18 6 Rationale and Definitions Even though inpatient-nursing care contributes to more than 40% of hospital direct costs totaling $165 billion per year, nursing cost remains in the room and board charge (Welton & Dismuke, 2008). Value based healthcare is concerned with delivery of cost effective healthcare and employers purchasing healthcare are most concerned with cost (Agency for Healthcare Research and Quality, 2009). The government s value-based purchasing (VBP) goal is to foster joint clinical and financial accountability in the healthcare system. Centers for Medicare and Medicaid Services (CMS, 2009) are looking at pay for performance in which hospitals that provide higher quality care receive better reimbursement. A cornerstone of VBP is consensus-based clinical measures, effective resource utilization, and payment system redesign. Since nursing is the largest contributor to hospital case cost, the government should understand the true cost of nursing. A standardized nursing cost measurement, if collected by all hospitals, could be used by the government to better understand the value of nursing care. Consumers are very interested in valuable healthcare, and the movement to reform US healthcare starts with a clear understanding of current cost and quality indicators. Making nursing care invisible by locating nursing care in room and board charges does not promote transparency of nursing cost to consumers. To provide value-based healthcare, the value of the nurse should be understood. To date, there is not a standard measurement of nursing cost per acute care episode in the American healthcare system that the government, nursing administrators, or consumers can use to compare efficiency and effectiveness of nursing for an acute care episode of care.

19 7 What is Nursing Cost? Wilson et al. asked the question, What is nursing cost? in 1988 and to date there is not a clear definition within the nursing literature. Reviews of nursing cost literature completed in the last three decades show the inconsistency of nursing cost definitions and methods used in nursing cost studies and recommended 1) defining nursing cost, 2) describing the context of the study, 3) providing evidence of reliability/validity of all measures, 4) developing a nursing minimum data set (Chang & Henry, 1999; Chiang, 2009; Edwardson & Giovannetti, 1987). Nursing costs have historically been allocated in one of four ways: by day of service (per diem), diagnosis, relative intensity measures, or nursing workload unit (patient classification data). Definitions. Multiple definitions of nursing cost are found in the literature. Direct cost has been defined as 1. Salaries and benefits of all nurses on a unit which might include per diem nurses, graduates, clinical associates and rehabilitation nurse (Wilson, Prescott, & Aleksandowicz, 1988; Witzell, Ingersoll, Schultz, & Ryan, 1996). 2. Costs that can be traced to a patient through accounting systems (Chiang, 2009; Pappas, 2007). Indirect cost also has many definitions including 1. Administration plus education only which may include plant operations, finance, administration, and depreciation (Wilson, Prescott, & Aleksandowicz, 1988) 2. Salary and benefits of nurse manager, unit secretary, other administrative and educational costs (Witzell, Ingersoll, Schultz, & Ryan, 1996); 3) costs not traceable to the patient (Chiang, 2009; Pappas, 2007).

20 8 There is no standard definition of nursing cost in nursing scientific literature, so the definition of nursing cost for the dissertation is explained below. Definitions for Dissertation. 1. Nursing cost is a function of nursing intensity and nursing wage per shift. 2. Nursing intensity is the amount of assigned time nursing care personnel spends in direct care or care-related activities for a patient. 3. Nursing wage is a function of years of service, education level, certification measured by actual nursing hourly salary. 4. Nursing cost per acute care episode is the sum of RN and patient care associate (PCA) cost per shift for the patient episode of care. 5. Assigned RN nursing time is RN nursing intensity measured through patient assignment. 6. Assigned ancillary nursing time is time assigned by non-rn nursing staff (i.e. LPN, PCA) measured through patient assignment. 7. Indirect nursing cost includes all nursing time allocated to the patient that is not direct care time. Indirect nursing cost could include time for administrative staff, education resources, and specialty nurses assigned to the nursing budget. The method for allocating indirect nursing cost consists of summing the annual wage and benefits of all indirect nursing staff and dividing by the annual patient days. Since indirect nursing cost is a fixed cost, it was not used in this study. The method for setting up data collection to operationalize the conceptual definition of nursing cost will be explained in the methods section of the current study.

21 9 Nursing Intensity Patients are in the acute care hospital system because they require nursing care; so nursing care is a primary treatment in the acute care hospital. Understanding how much nursing care and what type of nursing care patients need has been the focus of nursing research for decades. A definition of nursing intensity given by Prescott (1991) included the amount and complexity of nursing care required by patients in the acute care hospital. There were four dimensions of nursing intensity 1) severity of illness, 2) patient dependency, 3) complexity of nursing care, 4) time. The first three dimensions have a direct relationship to the fourth dimension, patient assignable time, which included the amount of direct and indirect nursing care a patient received. A patient classification system, the Patient Intensity for Nursing Index (PINI) was developed based on the nursing intensity conceptual model. Total time delivered to patients for the shift was recorded at the end of the shift by nurse raters. The researcher reported it took only 1 or 2 minutes per patient for an experienced nurse to record nursing time delivered on the 10-item single page form. Reliability and validity of the measurement were studied over four years and found acceptable. Use of the PINI in studies conducted within the past 10 years could not be located in literature. Drivers of nursing intensity have been documented in the literature. Beglinger (2006) found shorter length of stay, age of patients, clinical conditions and interventions, ventilator days on intermediate units, and intensive care unit transports to imaging department were drivers of increased nursing intensity. Aiken (2008) noted decreased patient length of stay while hospitalized increases nursing care intensity.

22 10 John Thompson (1984) discussed variability of nursing intensity by patients and the inability to measure this accurately since data concerning amount of nursing care each patient receives are not collected by the hospital. Thompson stated a nursing intensity measure should include two components, volume of services and skill level of the nurse. He suggested a research strategy of creating nursing time estimates for the total length of hospitalization for each patient and adding nursing intensity measures to strengthen the DRG system. This approach was never implemented. Thompson advocated to include nursing intensity in a nursing minimum data set or standardized elements for defining nursing cost and quality of care (Thompson, 1988). Four standardized indicators Thompson wanted included in the hospital discharge abstract were nursing intensity, nursing diagnosis, nursing intervention, and nursing outcome. John Welton was influenced by Thompson s work and he has published several studies of nursing intensity including a nursing intensity billing method which resulted in a potential 32.2% increase in charges for 12 nursing units studied over room and board charges for nursing (Welton, Fischer, DeGrace, & Zone-Smith, 2006a). Welton s definition of nursing intensity is nursing care time spent with the patient. A nursing intensity database was used in which daily hours of care for patients was recorded and summed for 24 hours resulting in total nursing hours by day for individual patients. Nursing care costs were calculated using mean wages plus benefits. A comparison of room and board billing and nursing intensity billing was done. If the hospital had charged using nursing intensity billing it would have resulted in over $4 million in increased charges compared to traditional billing using daily room rates. The nursing intensity database (NID) was burdensome to manage, so a study was completed comparing the NID

23 11 to use of the nurse-patient assignment (NPA) to calculate nursing costs for each inpatient day (Welton, Zone-Smith, & Bandyopadhyay, 2009). Ordinary least squares regression was used on a data set of 11,582 patients on 18 units in one academic medical center. The NPA was found to be a feasible and robust measurement with much less user burden compared to nurses rating each patient (NPA day shift, r² = 0.772; Unit estimate, r² = 0.574; Hospital estimate, r² = 0.456). Building upon Thompson s work, the advantage of using nursing intensity as a standardized indicator of nursing care was explicated and reasons included nursing intensity was a continuous variable that could be summarized as a single mean for use in statistical analysis, stored as a single variable for billing, and used to measure direct cost by multiplying mean nursing wage by nursing intensity (Welton, Halloran, & Zone-Smith, 2006). The current dissertation was strongly grounded in the work of Welton et al. and the researcher used the method of measuring direct cost, however in this study actual nursing wage multiplied by nursing intensity was used as opposed to using a standard cost for nurse wage. Nursing Sensitive Outcomes Nursing is a unique profession contributing to specific patient outcomes during the course of hospitalization. Nurse researchers have focused on defining the unique aspects of a patient s care during a hospital stay to which professional nurses contribute. Informed by Donabedian s (2005) work, structures, processes, and outcomes of nursing care that distinguish care related to nursing from health care provided by other disciplines have been defined (American Nurses Association, 2010). Nursing structure includes nursing staffing, skill level, and education/certification. Nursing process includes assessment, planning, implementation, and evaluation of nursing care. Patient outcomes influenced by

24 12 nursing care include pressure ulcers, falls, hospital-acquired infections, intravenous infiltrations, and pain management. Nursing sensitive-indicators have been developed by the American Nurses Association (ANA) and a proprietary database, the National Database of Nursing Quality Indicators (NDNQI), stores data on nursing quality indicators. The National Quality Forum (NQF) has developed definitions of nursingsensitive quality indicators over the past few years. Patient outcomes sensitive to nursing have empirical evidence linking nursing structure and process to the outcome of care. Clarke (2011) reviewed research related to healthcare utilization with emphasis on nursing factors that decrease cost of healthcare. Clarke focused on research in which nursing care influenced appropriate utilization of resources and he articulated the importance of using healthcare utilization as a nurse-sensitive outcome. This dissertation focuses on understanding how use of nursing resources influences cost of the episode of care and builds upon extant nursing research. Systems Research Organizing Model A conceptual framework should guide the design of a research study aimed at measuring nursing cost. A conceptual framework reflects philosophical assumptions and is comprised of very broad constructs that help to explain the phenomena of interest (Burns & Grove, 2005). The conceptual framework used in the current study was a modification of the Systems Research Organizing Model (SROM, Figure 1). Systems theory underpins the SROM which is a model constructed to provide a conceptual framework to organize research on complex healthcare organizations (Brewer, Verran, & Stichler, 2008). A system s theory view places the research interest into an ever-changing structure in which all parts are interconnected and influencing each other. The SROM is parsimonious in that

25 13 it contains four constructs; client, context, action focus, and outcomes. The model focuses on the whole system, which distinguishes the SROM from other healthcare research models. It also includes components that make up the whole and includes interactions among all of the components. The model demonstrates non-linear interrelationships among all four constructs, thus it is a fully justified model because all variables affect other variables. Non-linear relationships distinguish the SROM, which was derived from the Quality Health Outcomes Model (Mitchell, Ferketich, & Jennings, 1998). In a linear model, structure affects process, which affects outcomes. The two-direction relationship between SROM constructs is a dynamic model suggesting client and contextual characteristics affect outcomes. Context can include nursing characteristics such as education and years of experience as well as unit characteristics, so research questions such as What are the characteristics of nurses caring for patients with major complications? can be specified and tested using the SROM. The SROM has flexibility in that phenomena being measured can fall into one of the four constructs at different times depending on the structure of the research design. Although there is not temporal order to the SROM constructs, they will be described in singular order to help the reader understand the meaning of each. The first construct, client, represents the system input. The client drives the model. The second are construct, context, represents elements in the environment that influence outcomes, but not the focus of the change. The third construct, outcomes, is the final result of care. The fourth construct, action focus, is the intervention. There was no action focus in the current study, so a modified SROM with three constructs framed the study.

26 14 It was appropriate to use the SROM for the dissertation because the focus was on organizational research and on understanding the relationship between multiple variables on the outcome variable, which is nursing cost per acute care episode. Direct nursing cost per episode of care was derived from patient level data. Nursing cost for the patient acute care episode was summed to construct a nursing cost per acute care episode variable. The relationship between client (patient), context (nursing and unit characteristics), and outcome (nursing cost) was measured. Context-Nursing Unit Type; Nurse intensity, wage, age, years of service Client-DRG, acuity level, age, gender Outcomes- Nursing Cost Per Acute Care Episode Figure 1. Modified SROM.

27 15 Client The client in the study was the patient. Patients with similar diagnoses measured by DRG assigned were the focus of the research project. Because random sampling was not feasible, patient characteristics were controlled by choosing patients with similar primary diagnoses, co-morbidities, and using acuity scores for risk adjustment to stabilize extraneous systematic variation. Context Hospital characteristics, unit characteristics, and nurse characteristics are contextual elements interacting as part of a whole system influencing nursing cost per acute care episode. In the hospital setting, it was not appropriate to control for these variables when conducting the research study. In lieu of unreasonable controls, the contextual elements were observed and patterns likely influencing the outcome of study were noted. While generalizability of the study results may not be appropriate beyond the contextual elements studied, the elements studied were similar to those influencing nursing cost in other hospital settings and may provide valuable insights for nursing administrators practicing outside the hospital being studied. Outcomes The final result of care or the outcome is the end result of the treatment. In traditional research, the dependent variable is affected by the manipulated variable. In outcomes research the criterion or outcome variable is the final observation affected by multiple variables interacting in real world settings. In the current study, the outcome measured was cumulative direct nursing cost per acute care episode. The interaction of SROM client and context elements impact the outcome element nursing cost per acute

28 16 care episode. In outcomes research, it is important for the researcher to have a clear understanding of factors most important to the outcome being studied (Kane, 2006). There is sufficient evidence to support that increased nurse staffing measured at the hospital level leads to more positive outcomes (Aiken, Clarke, & Sloane, 2002; Blegan, Goode, & Reed, 1998; Kane, Shamliyan, Mueller, Duval, & Wilt, 2007; Needleman, Buerhaus, Stewart, Zelevinsky, & Mattke, 2006). Studies using unit specific data provide evidence that nurse staffing influences patient safety (Blegen & Vaughn, 1998; Van den Heede et al., 2009). Nursing cost derived through multiplication of nursing intensity by actual nursing wage was the outcome measured in the current study. However, specifics of nursing intensity measured with patient level data and including the interplay of contextual elements such as nursing characteristics most appropriate to affect other nursing sensitive outcomes is an area for further study. Mid-Range Nursing Theory Including Cost Several nurse theorists including King, Levine, Neumann, and Orem have discussed the concept of nursing cost in grand and mid-range theory (Fawcett, 2005). Nurse theorists state cost effective care is important, yet, a clear definition of nursing cost is not found in nursing theory. Mid-range nursing theory considers multiple variables that are sensitive to nursing care, which impact patient health outcomes including cost as an outcome (Doran et al., 2006; Duffy & Hoskins, 2003; Irvine, Sidani, & McGillis, 1998; Sidani, Doran, & Mitchell, 2004). Emergent Model Measurement: Nursing Hours per Acute Care Episode Methodology of a research design is extremely important in generating findings consistent with the reality being measured. Multilevel research is complex and contains, as

29 17 the name implies, multiple levels of phenomena. Micro levels of phenomena are embedded in macro contexts and macro phenomena emerge through the interaction and dynamics of the lower level elements (Kozlowski & Klein, 2000). An understanding of the level of phenomena and the emergent model is necessary to choose accurate research methodologies. Use of the emergent model includes data that addresses variability of nursing care per patient versus assuming all patients receive the same amount of nursing care which is the assumption in most nursing cost methodologies that use average nursing hours per patient day. The study used data collected at the patient level. Measuring at the patient level allows for understanding of actual nursing time delivered to actual patients. Actual nursing wage multiplied by nursing time equals nursing cost. Assessing actual time and wages provided a method for understanding the variability in nursing time given to each patient, which is intuitively known, but has been difficult to build evidence for given the historic lack of data available in the hospital setting. Measuring the true cost of nursing care can inform nursing administration and staffing decisions, provide data to benchmark nursing cost, build science for efficient use of resources, and enlighten health policy makers. Justification for the Emergence Model Selected Emergence is a theoretical construct used to explain measurement models in multilevel theory (Kozlowski & Klein, 2000). Emergence is a bottom up process in which individual characteristics have emergent properties that manifest at a higher level. The emergent phenomenon is an amplification of collective individual data that cannot be reduced to lower-level elements. Measuring nursing costs at the individual patient level across a hospital stay provides cost data points. Aggregating the costs into a nursing cost

30 18 per acute care episode variable integrates the individual data points into a new variable that cannot be reduced to lower-level elements. Because nursing cost is comprised of a variety of individual data points, a compilation model of emergence was necessary. Compilation models of emergence assume discontinuity of lower level elements and emergent phenomena different from the lower level. Variability and configuration are hallmarks for compilation models. Configure properties originate in individual experiences and capture the variability of individual experience that emerges to form a distinct measure (Klein & Kozlowski, 2000). Configure properties have not been studied frequently, but the configure property model best explains the nursing cost per acute care episode indicator because individual patient nursing costs are highly variable and must be measured first and then aggregated to the emergent data indicator (nursing cost per acute care episode). Individual patient shift or daily cost provided a short-term measurement of nursing cost per hospitalization. The emergent measure was used to measure the cost of the entire patient acute care stay. Justification for Measuring at the Individual Level Methodology for measuring nursing cost in the hospital setting is traditionally based on accounting principles that average nursing salary expense across the patient population at a given point in time. Using averages to compute nursing costs assumes isomorphism or a convergence of similar lower level elements (Kozlowski & Klein, 2000). In other words, an assumption is made that nursing costs are similar for patients on a given unit and across nursing units. The assumption that nursing costs are similar for all patients on a unit and across nursing units is false (Chiang, 2009). Every patient with a certain diagnosis does not receive the same amount of nursing care within a specific

31 19 nursing unit. Patients with similar medical diagnoses receive variable amounts of nursing care during a hospital stay. Patients with similar diagnoses may be treated on different nursing units or a combination of varying nursing units. A model of costing nursing that accounts for variability in patient care costs by individual patient and across nursing units is needed to accurately measure the true cost of nursing care. Measuring nursing cost per acute care episode involves understanding the variable costs of nursing care measured at the individual patient level. To determine nursing cost per acute care episode measurement, all direct nursing costs for a given patient were measured for the entire hospital stay. Direct costs were defined as a product of nurse s salary and time spent with the patient. Direct costs were measured because they are variable costs. Indirect costs such as administration are fixed costs allocated over the entire patient population and thus are a constant. The focus of this study was to better understand the variability in nursing costs per patient, so only direct costs were used. Measuring costs at the individual patient level accounts for variability in nursing care provided to each patient. Since data for the study were only available on one unit, only patients admitted and discharged from the unit were included in the study. An area for future research is exploring nursing costs per patient summed across all units the patient resided on during the entire hospitalization. The emergent nursing cost per acute care episode indicator could then be used to measure variability in nursing cost across nursing units and could be used to benchmark nursing cost across hospitals. Microeconometrics Health care economics is concerned with understanding the resources needed and used to provide care to patients (Santerre & Neun, 2013). RN full time equivalents (FTEs)

32 20 comprise 28% of total hospital full time FTEs (American Hospital Association, 2012), so understanding the impact of effective use of nurses is very important in value-based health care. Production efficiency is an economic concept guiding questions such as what is the best use of nursing resources? Nurses are an input in the heath care system and understanding the best mix of inputs to provide maximum output is the premise of production efficiency. Traditionally, nursing cost is managed from an accounting perspective focused on explicit costs. The nursing hours per patient day metric, frequently used by nurse administrators, is an example of an easily quantified measurement informed from an accounting perspective. The study of cost is more complex when using an economic perspective versus an accounting perspective. Economists use both explicit and implicit costs to understand production. Implicit costs are opportunity costs or the cost of using the resource differently. Implicit costs are not recorded and difficult to measure. What is the cost of using an experienced nurse to care for less complicated patients? What is the cost of assigning a less experienced nurse to a patient with major complications? Does patient length of stay increase if nurses are assigned more patients? Questions such as these are difficult to answer because data is not readily available, yet the answers to such questions can inform better assignment of nurses. Patient level data can be used to begin to study the implicit or opportunity costs of the nursing assignment. Conclusion This chapter provides clarity to concepts, definitions, philosophical underpinnings, and the conceptual framework used in the dissertation study. The provision of high quality, cost effective nursing care is essential in the current healthcare climate of value based purchasing and healthcare reform focused on efficient and effective care.

33 21 Understanding best practices for providing efficient and effective care requires comparison across hospitals. Comparison of nursing cost per patient across hospitals has not been accomplished in nursing literature because standard methods to measure nursing cost per patient are absent. The difficulty in standardizing nursing cost per patient measurement is lack of hospital data linking individual patients to individual nurses. Data is now available in software systems that can link patients to nurses. The current study provided evidence supporting variability in nursing cost using patient level data. Applying principles of econometrics to nursing research helped to explicate the results of the study. Theory of emergence provided conceptual knowledge guiding measurement of variability. Chapter I provided an introduction to the study giving the purpose, rationale, definitions, conceptual framework, and theoretical justification for the study. A literature review focused on nursing research using nursing cost and nursing intensity as concepts will be reviewed in Chapter II and gaps in knowledge will be identified. Methods for the study will be explained in Chapter III, data organization in Chapter IV, results in Chapter V and interpretation in Chapter VI.

34 22 CHAPTER II LITERATURE REVIEW Introduction There is uncertainty today in American hospitals about the impact of government policy such as Value Based Healthcare and the Patient Protection and Affordable Care Act on hospital reimbursement and the longevity of the current hospital business model for providing patient care (Partnership for Sustainable, 2013). One certainty seems to be reimbursement to hospitals will not increase; so providing efficient and effective healthcare is paramount. Nursing has responded to similar historical political and economic trends such as implementation of diagnostic related groups (DRGs), managed care, and capitation by using the scientific process to provide evidence for improving structures, processes and outcomes of nursing care. A review of historical nursing research that uses the concept of nursing cost reveals research strategies that might be built upon today to solve questions related to understanding the value of nursing. Nursing is the largest labor segment in the hospital setting, so appreciating the value of nursing contributes to managing overall healthcare productivity and efficacy. The value of nursing is recognized through study of nursing cost and quality. To understand nursing cost as an outcome of patient care, evidence is examined, definitions and methods are comprehended, and gaps in the literature are noted. The following chapter was created through synthesis of historical nursing cost literature. Pertinent works related to the proposed research study are summarized. Extant nursing literature is also reviewed to explicate the state of science supporting nursing cost theory and measurement. Two concepts will be illuminated through the literature review 1) nursing cost, and 2) nursing

35 23 intensity that is a major component of nursing cost. Studies including nursing cost and nursing intensity concepts will be explored with a focus on definitions of the concepts, methodologies, and analysis strategies used in the literature. Gaps in the literature will be noted to provide justification for the proposed study. Nursing Cost The concept of nursing cost has been used frequently over many decades of nursing research. The definition of nursing cost varies in studies. The literature review of nursing cost is sectioned according to decades beginning with nursing research completed in the 1980 s, then 1990 s, and finally 2000 s. Variations in definitions of nursing cost and methods of research are highlighted s Leah Curtain published an article in 1983 focused on determining costs of nursing services per Diagnostic Related Groups (DRG). The United States government in the early 1980 s implemented the DRG system of payment. Patients in the acute care hospital were assigned to one of 356 DRGs based on medical diagnosis, age, and presence or absence of complications. Hospitals were reimbursed based on retrospective cost data using a methodology averaging cost of care given to the patient adjusted for inflation based on a market basket index plus one percent. Hospitals were paid the average cost times the number of patients discharged with a particular DRG. Nursing cost was included in the average cost. Curtain proposed nursing care categories should be generated to correlate with the 356 DRGs to reflect variable nursing time required by patients with the same DRG. Curtain advocated for a daily patient classification system measuring nursing time summing minutes needed for each nursing function and averaging the daily classification

36 24 over the patient s length of stay. Indirect care would be assigned by percentage based on the average length of stay classification. Cost would be assigned using average unit salary for nursing staff. Curtain noted a problem with the methodology was that nursing intensity could vary for reasons not associated with the medical diagnosis. Hence, averaging nursing costs for patients with certain DRGs is a less than perfect methodology. A plethora of nursing research was completed in the 1980 s spurned by the DRG legislation (Edwardson & Giovannetti 1987; Kirby 1986; Lagona & Stritzel 1984; Wilson, Prescott, & Aleksandrowicz, 1988). One example of a study using patients with similar DRGs and average nursing salary to determine costs follows. Lagona & Stritzel (1984) studied 35 patients with DRGs 121 and 122 (acute myocardial infarction with and without complications) to determine nursing care requirement. The data source was a patient classification system. The methodology used involved averaging hours of nursing care per day. Direct nursing cost was determined by multiplying the average hourly salary of nurses ($8.52) by average nursing hours consumed (DRG 121, 125 hours x $8.52 = $1065; DRG 122, 90 hours x $8.52 = $766.80). An implication stated by the authors was if nursing could articulate cost of nursing care, nursing might then charge for services and become a revenue center. While the vision was sound, the science for measuring nursing cost did not develop in a standard fashion. Numerous nurse researchers studied DRG 121 in the 1980 s and a review article highlighted the inconsistency in methodology used within the studies (Wilson, Prescott, and Aleksandrowicz, 1988). The definition of nursing cost varied in each study and there was often not enough detail to understand how cost was defined. Direct and indirect cost was often used; however direct cost might include salaries of all nurses on the unit,

37 25 salaries of nurses including the administrative nurse, or salary of unspecified staff. The authors used multiple methods to study 155 patients with DRG 121, 122, or 88 (COPD). Variability in nursing cost per DRG was found using different nursing intensity measures and diverse nursing cost definitions. To provide evidence that can be compared across hospitals it is very important to specify exact definitions of direct and indirect costs, to control for hospital and unit characteristics, and to use standard nursing intensity measures s Though the importance of using cost measurement in nursing studies that are comparable across hospitals was stressed in the literature, nursing cost studies in the 1990 s continued to show variability in methodology for measuring cost. A longitudinal study examining cost of primary and team nursing in one hospital setting used cost per patient day operationalized by dividing average monthly total staff salary by average monthly patient census (Gardner & Tilbury, 1991). Type of staff included was not explicated. Factors affecting the cost difference between models of nursing were measured using ratios comparing staff mix, patient days/fte, and agency nurse for each unit. The issue of measuring factors producing cost differences was recognized as a multivariate problem; however, multivariate analysis was not used. Patients with similar DRGs were used to compare unit costs and analysis was done using percentage of DRGs with higher nursing cost for primary or team nursing unit. Results of the study showed primary nursing had lower costs of $276,287 over 36 months. The study would be hard to replicate since clear definitions of nursing cost and methodologies were not explained.