Staffing and Cost-Effectiveness in Health Care

Staffing is the process of determining and providing a certain number and mix of healthcare personnel to produce a certain level of patient care. While the crucial point of this process is the quality of the provided services that result in patient outcomes and satisfaction, costs remain the second determinant that affects staffing strategy. As current research has proven, the interdependence of staffing level and cost-effectiveness is not linear. It varies due to many factors; the most considerable of them is a care delivery model. In this essay, it will be argued that, while appropriate staffing in many cases contains costs, at some point and in some circumstances, it becomes a detriment to cost-control, illustrating the law of diminishing returns.

Staffing activities have two primary purposes: determining the acceptable number of healthcare staff and providing an appropriate mixture of the personnel to perform the required task. The whole process of staffing usually requires additional management staff concerned with employees’ recruitment, selection, placement and orientation, and training. Thus, staffing appears a cost-consuming and economically ineffective procedure for health care providers. However, at present, it became evident that a higher level of staffing ensures the improvement in health care service quality. Current research demonstrated that patient mortality decreases if staffing levels are met in terms of nurses’ number and educational level (Ashe, 2018). In turn, quality of care “improves patient outcomes, which, in turn, can lead to higher reimbursement” (Ashe, 2018, p. 7). Therefore, ultimately increasing staffing level leads to cost reduction instead of its elevating.

However, detailed analysis demonstrates that the dependence of cost on staffing levels is not linear. Moreover, the quality of care and service costs are affected in different ways as medical staffing changes. Park (2017) argues that when a low level of staffing is given, the quality level increases dramatically, while with initially higher staffing levels, the quality rises to some point and starts to decrease. At the same time, he discusses that “as the number of nurses increases, the total costs needed to warrant a certain level of a clinical outcome also increases” (Park, 2017, p. 4). Thus, while up to some point, quality improvement can ensure cost-effectiveness, after reaching the critical point, it fails to do so, which illustrates the law of diminishing returns.

The other factors, such as a care delivery model, also affect the interrelation of staffing levels and cost. To a large degree, this is why “specific recommendations as to what constitutes ‘safe nurse staffing’ continue to elude health care managers” (Baroni, 2019, p. 2). Current research does not compare the mechanism of staffing-cost relation in all the three care delivery and reimbursement models, that is, fee-for-service, capitation, and bundled payment. The research mentioned above (Ashe, 2018), was conducted in the hospital, where reimbursement was based on performance (most probably, bundled payment). Other cases observed in the literature, investigate the fee-for-service model. They argue that “the study results suggest that maintaining a high nurse staffing level could be a cost-effective strategy for government and insurers, as well as for patients” (Kim, Kim, & Ko, 2016, p. 473). However, while no special attention was given to the capitation model, it can be assumed that the law of diminishing returns would be the most notable within this scheme. The reason for it is that while other payment types are based on the number of services provided, whether each separate procedure or the whole treatment episode, capitation is based on the number of staff. Thus, increasing this number would straightly lead to raising the costs of its maintenance, and quality improvement would affect cost elevation less, comparing to other systems.

In conclusion, staffing in health care affects both the quality of services and costs. The relationship between care staffing, care quality, and costs is not linear. As demonstrated by research, the increase in staffing level appears cost-effective up to some point, after which the law of diminishing returns takes effect. It is manifested more evidently within the capitation payment model than within fee-for-service and bundled payment schemes.

References

Ashe, L. (2018). The importance of adequate staffing. Nursing Management, 49(12), p. 7.

Baroni, M. A. (2019). Nursing staffing revisited. Washington State Nurses Association. Web.

Kim, Y., Kim, S.-H., & Ko, Y. (2016). Effect of nurse staffing variation and hospital resource utilization. Nursing & Health Sciences, 18(4), 473–480.

Park, C. S.-Y. (2017). Optimizing staffing, quality, and cost in home healthcare nursing: Theory synthesis. Journal of Advanced Nursing, 73(8), 1838–1847.

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