STUDY: Nurse Staffing Bill Could Save Illinois Hospitals $1.4 Billion

Savings from HR 2604/SB 1908 would offset 75% of cost of hiring more nurses

La Grange: Proposed legislation that would improve nurse staffing levels in Illinois would save the state’s hospital industry almost $1.4 billion in nurse turnover, staff injury rates, and patient care costs, according to new research by the Illinois Economic Policy Institute (ILEPI). These savings alone would offset 75% of the cost of hiring the additional nurses that hospital lobbyists say would be needed to implement safe patient limits in HR 2604 and SB 1908.

Click here to read the report, The Fiscal Impact of Safe Patient Limits in Illinois: Four Ways the Policy Would Improve Hospital Bottom Lines.

“While prior research has highlighted the fact that staffing standards would improve patient care and mitigate the occupational hazards that are driving about one-third of all new nurses out of the profession within their first three years, this subsequent research shows that the policy would mostly pay for itself,” said study author and ILEPI Policy Director Frank Manzo IV.

Illinois hospitals spent $40 billion in 2018 and collectively posted a $3 billion gross operating surplus. The Illinois Health and Hospital Association (IHA) has claimed the state’s proposed nurse staffing legislation would require about 20,000 more nurses at a cost of nearly $2 billion.

“IHA’s figures appear to include only the labor cost of hiring more nurses, but fail to account for the significant cost burdens that understaffing currently imposes on our hospitals,” Manzo added. “This includes hundreds of millions of dollars in staff turnover and injury costs, reduced Medicare reimbursements due to higher patient readmissions, and additional patient time in costly intensive care and surgical units. On these four metrics alone, safe patient limits could save Illinois hospitals over $1.4 billion.”

If HR 2604 and SB 1908 are approved by the General Assembly and Governor J.B. Pritzker, ILEPI estimates a net cost to Illinois hospitals of $465 million. This represents about 1% of total hospital spending in 2018, or less than 15% of the industry’s annual gross operating surplus.

Since enacting similar nurse staffing standards in 2004, California now has a registered nurse turnover rate that is 21% lower than Illinois. California has also lowered its hospital readmission rate, hospital mortality rate, and significantly reduced the average length of patient stays. Importantly, Economic Census data also reveals that between 2002 and 2012, both employment and revenue growth at California hospitals far exceeded the national average.

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“Safe patient limits have been a net positive for patients, nurses, and the bottom line of California’s hospital industry,” Manzo concluded. “In debating similar standards, Illinois legislators must not just consider the short-term cost of adding health care professionals, but the long-term benefits of better nurse retention and higher-quality care.”

The Illinois Economic Policy Institute (ILEPI) is a nonprofit research organization which uses advanced statistics and the latest forecasting models to develop timely and dynamic analyses of major policy issues affecting Illinois.