By Marcia Faller, RN, MSN, Executive Vice President and Chief Clinical Officer, AMN Healthcare

Across the country I am hearing reports of hospitals experiencing census that is lower than expected. Even in the midst of flu season, which normally brings census to its peak, hospitals are finding themselves with fewer patients, lower nursing vacancies and lower turnover; all of which are likely early symptoms of the current degradation of the economy. Consumers are holding off from having elective or non-emergent health treatments, and there are more nurses available because they are more willing to go back to work full time, put in overtime, or postpone retirement and job changes because of the actual or potential reduction of their family’s income.   Among the first reactions by hospital administrators, in a situation that is producing lower than expected revenue, is the desire to reduce expenses. Usually that desire is pointed directly at reduction of temporary staff first.

While reducing the use of temporary staff may make sense on the surface, administrators should think carefully before taking the entire budget line for temporary nurses to the chopping block. The advantage of temporary staff is the fact that they are temporary. The commitment to a temporary nurse is minimal; perhaps a few weeks at most. Therefore, positions staffed by temporary nurses can be reduced more quickly and more cost efficiently than reducing permanent positions; and without the negative public relations messaging that may result from a reduction in force. So, to create maximum flexibility in an uncertain environment, it may make sense in the long-term to shave commitments to permanent positions in favor of temporary staff— preventing an over commitment to a census projection that is questionable.

For example:

A hospital has 285 RN full time equivalents (FTEs) to staff its hospital at 85 percent capacity. In recent months, the census has been running at 75 percent of capacity—a greater than 10 percent variance from plan. Ideally, the administration should staff at an expected census below capacity, and below peaks, in order to use more flexible options to staff up in times of peak census. Right-sizing the staff during times of census excess can be done quite easily by using temporary nurses.

However, what are the options in times of census dips? The first action is to begin calling off staff nurse shifts. While perhaps initially welcomed, persistent call offs begin to erode morale and may result in unwanted turnover. When vacancies occur, it is better to allow attrition as a means to reduce to the appropriate FTE level, (in this case by at least 10 percent). Now total FTEs are 257 and when the census pops back up to 85 percent, temporary nurses can be contracted, until it is determined that the census trend will remain at plan; at which time hiring for permanent positions can begin again.

The long-term costs associated with maintaining 285 permanent FTEs is considerably higher than carrying 257 FTEs  because the fixed cost of carrying the FTE (i.e. health benefits, vacation, etc) is avoided, even when staffing up occasionally with temporary nurses. In addition, the commitment is of short duration and does not expose the hospital to negative publicity when the temporary nurses are not renewed.

Nurse staffing should be managed at a committed level that covers no more than the average census and never at peak. It should also be constantly flexed such that the cost of carrying permanent staff is minimized by consistently reducing positions in relation to a negative census trend, and increasing positions in relation to an upward census trend. Be aware that a “trend” must be identified before making changes. Consider 3 months at minimum to identify that a trend exists.

Maintaining a nimble staffing strategy takes concerted effort and a dedicated review of the key metrics. Temporary nurses can be of benefit in times of peak and over peak census periods, but they can also be an effective resource in times of sub-plan census. Avoidance of unnecessary expense is critical to a healthy financial report, something that most hospital administrators are in search of during tough economic times. 

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