The Labor Market Effects of California s Minimum Nurse Staffing Law

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1 The Labor Market Effects of California s Minimum Nurse Staffing Law Elizabeth L. Munnich Department of Economics University of Notre Dame AcademyHealth ARM, June 2011

2 Motivation California Safe Hospital Staffing Law (AB 394) Mandated minimum licensed nurse/patient ratios Law passed in 1999, ratios effective January 1, 2004 Previous research on AB 394: Ratios increased, little conclusive evidence of improved patient outcomes (Donaldson et al. 2005, Bolton et al. 2007, Spetz et al. 2009, Cook et al. 2010) Survey responses on increased staffing and worker satisfaction (Aiken et al. 2010, Spetz and Herrera 2009) Little research on labor market effects (Mark, Harless, Spetz 2009) 1

3 Research Question How did California s mandated minimum staffing law affect employment and wages of hospital RNs? Better understand nursing labor market Ability of staffing laws to retain/attract nurses (nurse supply) Implications for patient care 2

4 Methods Hospital Unit Analysis Individual Employment Analysis Outcome RN to patient ratios Number of RNs, wages, hours Data Source Model OSHPD Annual Hospital Financial Data Difference in difference Comparison group: Quartile of hospital units with highest pre law ratios Include hospital fixed effects American Community Survey Current Population Survey Outgoing Rotation Groups Difference in difference Comparison group: RNs in states with similar growth rates in RN wages and working hours from Controls: age, race, gender, marital status, education, foreign born 3

5 Methods Hospital Unit Analysis Individual Employment Analysis Outcome RN to patient ratios Number of RNs, wages, hours Data Source Model OSHPD Annual Hospital Financial Data Difference in difference Comparison group: Quartile of hospital units with highest pre law ratios Include hospital fixed effects American Community Survey Current Population Survey Outgoing Rotation Groups Difference in difference Comparison group: RNs in states with similar growth rates in RN wages and working hours from Controls: age, race, gender, marital status, education, foreign born 3

6 Methods Hospital Unit Analysis Individual Employment Analysis Outcome RN to patient ratios Number of RNs, wages, hours Data Source Model OSHPD Annual Hospital Financial Data Difference in difference Comparison group: Quartile of hospital units with highest pre law ratios Include hospital fixed effects American Community Survey Current Population Survey Outgoing Rotation Groups Difference in difference Comparison group: RNs in states with similar growth rates in RN wages and working hours from Controls: age, race, gender, marital status, education, foreign born 3

7 Hospital Unit Results Growth in Registered Nurse Ratios in Medical/Surgical Units 4 th Quartile: highest number of nurses per patient 4

8 Hospital Unit Results Large increases in RN/patient ratios in medical/surgical, acute obstetric, and critical care units % annual growth in 75% of medical/surgical units Equivalent to change from 1:7 to 1:5 in lowest quartile Changes driven by increases in hours, not decrease in patient days or number of discharges LVN/patient ratios increased, but small part of hospital nursing staff 5

9 Methods Hospital Unit Analysis Individual Employment Analysis Outcome RN to patient ratios Number of RNs, wages, hours Data Source Model OSHPD Annual Hospital Financial Data Difference in difference Comparison group: Quartile of hospital units with highest pre law ratios Include hospital fixed effects American Community Survey Current Population Survey Outgoing Rotation Groups Difference in difference Comparison group: RNs in states with similar growth rates in RN wages and working hours from Controls: age, race, gender, marital status, education, foreign born 6

10 Methods Hospital Unit Analysis Individual Employment Analysis Outcome RN to patient ratios Number of RNs, wages, hours Data Source Model OSHPD Annual Hospital Financial Data Difference in difference Comparison group: Quartile of hospital units with highest pre law ratios Include hospital fixed effects American Community Survey Current Population Survey Outgoing Rotation Groups Difference in difference Comparison group: RNs in states with similar growth rates in RN wages and working hours from Controls: age, race, gender, marital status, education, foreign born 6

11 Methods Hospital Unit Analysis Individual Employment Analysis Outcome RN to patient ratios Number of RNs, wages, hours Data Source Model OSHPD Annual Hospital Financial Data Difference in difference Comparison group: Quartile of hospital units with highest pre law ratios Include hospital fixed effects American Community Survey Current Population Survey Outgoing Rotation Groups Difference in difference Comparison group: RNs in states with similar growth rates in RN wages and working hours from Controls: age, race, gender, marital status, education, foreign born 6

12 Individual Employment Results Growth in Total Number of Hospital RNs American Community Survey CPS Outgoing Rotation Group 7

13 Individual Employment Results Despite growth in RN to patient ratios in hospital units, little change in RN labor market No evidence of effect on wages or hours worked in ACS or CPS At most 3.4% increase (ACS), statistically insignificant Small decrease in probability of working <20 hours/week in CPS No change in probability of working <30 hours/week No change in over time 8

14 Possible Explanations 1. Hospitals closures American Hospital Association Centers for Medicare and Medicaid Services 9

15 Possible Explanations 1. Hospitals closures 7.4% drop in number of hospitals in CA after AB 394, relative to comparison states. (CMS Healthcare Cost Report Information System) 15 hospitals closed completely during period of study. Mostly in southern California 7 closed hospitals (47%) in LA County 39% of lowest quartile hospitals in LA County Back of the envelope calculation: total annual RN hours from closed hospitals in fiscal year represent 45% of change in hours due to AB

16 Possible Explanations 2. Shift RN work to direct patient care Rise in licensed nurse hours coincided with a decline in hours worked in management and supervision. Back of the envelope calculation: shift to direct patient care could explain up to 9 percent of annual increase in RN hours after the law. 11

17 Conclusions Mandated staffing ratios led to gradual increase in RN/patient ratios in lowest three quartiles of medical/surgical, critical care, and acute OB units Despite growth in RN to patient ratios in hospital units, little change in number of RNs employed by hospitals, hours, or wages Hospitals may have increased staffing by hiring nurses unemployed due to recent hospital closures and shifting work to direct patient care 12

18 Thank you!

19 Additional Slides

20 AB394 Minimum Nurse to Patient Ratios Unit Ratio Previous Ratio Intensive Care Unit 1:2 1:2 Neo Natal Intensive Care 1:2 1:2 Step Down 1:3 1:4 ER: ICU Patients 1:2 1:2 ER: Trauma Patients 1:1 ER 1:4 Operating Room 1:1 Labor and Delivery 1:2 Telemetry 1:4 Pediatrics 1:4 Medical/Surgical 1:5 Psychiatric 1:6 Source: California Code of Regulations, Title 22, Section (2003); Kravitz et al. (2002).

21 Growth in RN/Patient Ratios by Hospital Unit Hospital Unit (1) (2) (3) (4) Medical/ Surgical Critical Care Acute Obstetrics Acute Pediatrics AB 394 Ratio Trend*Quartile *** 0.047*** 0.089*** 0.042* (Lowest # nurses/patient) (0.012) (0.010) (0.024) (0.022) Trend*Quartile *** 0.026*** 0.052** (0.011) (0.010) (0.023) (0.023) Trend*Quartile *** 0.026*** (0.011) (0.010) (0.022) (0.020) Observations 2,079 2,105 1, R *** Significant at 1% Level, ** Significant at 5% Level, * Significant at 10% Level

22 Growth in RN/Patient Ratios by Hospital Unit Hospital Unit (1) (2) (3) (4) Medical/ Surgical Critical Care Acute Obstetrics Acute Pediatrics AB 394 Ratio Trend*Quartile *** 0.047*** 0.089*** 0.042* (Lowest # nurses/patient) (0.012) (0.010) (0.024) (0.022) Trend*Quartile *** 0.026*** 0.052** (0.011) (0.010) (0.023) (0.023) Trend*Quartile *** 0.026*** (0.011) (0.010) (0.022) (0.020) Observations 2,079 2,105 1, R *** Significant at 1% Level, ** Significant at 5% Level, * Significant at 10% Level

23 Log Wages and Hours American Community Survey CPS Merged Outgoing Rotation Groups Dependent Variable Log Hourly Wages Usual Weekly Hours Log Hourly Wages Usual Weekly Hours Hours Last Week CA*AB [0.102] [0.827] [0.795] [0.168] [0.406] N 27,946 27,946 3,551 4,124 4,194 R Clustered SE Yes Yes Yes Yes Yes * Significant at 10% level, p values from wild bootstrap procedure for cluster robust SE in brackets 8

24 Part Time and Overtime Work (Probit Marginal Effects) Dependent Variable American Community Survey CPS Merged Outgoing Rotation Groups <20 Hours >40 Hours <20 Hours >40 Hours CA*AB *** (0.006) (0.015) (0.012) (0.034) N 27,946 27,946 4,194 4,194 Clustered SE No No No No *** Significant at 1% level, robust SE in parentheses 9

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