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I.T. Makes Bid to Curb Nursing Costs
January 2006
Rio Grande Regional Hospital, like many of its peers, has had problems filling nursing shifts with qualified staff. Again, like many other hospitals, it used contract nurses to fill the gaps in its nursing schedule. And, in another familiar scenario, using outside help was pummeling its bottom line-the hospital was spending $850,000 a quarter on contract nurses.
"Our contract labor dollars were just out of control," says Carol Heckenkemper, R.N., director of perioperative services at the McAllen, Texas-based hospital.
To try to control those costs, the 310-bed facility installed shift-bidding technology from Austin, Texas-based Decision Critical Inc. The Web-based system enables staff nurses to see available shifts and bid on them. Nurses can use the system to add extra hours.
The bidding works as a reverse auction with the lowest bidder eventually winning the shift. Though the lowest bidder wins, the pay is more than what the nurse would make during a normal shift and many times greater than what they would get paid for working overtime.
In the past few quarters, Rio Grande has been paying around $300,000 a quarter for contract nurses. Through the end of October, the hospital saved $561,000 on nursing costs, that's the difference between paying staff nurses and agency nurses.
Nursing shortages are a concern at hospitals nationwide, and having enough qualified and certified staff to fill every shift can be problematic. In 2001 Long Beach, Calif.-based First Consulting Group Inc. estimated that hospitals and other provider facilities were spending $71 million a year on agency and "travel" nurses.
Transparency
Some hospitals have started using online scheduling so nurses can see their schedule at any time through the Web. The software provides more transparency to scheduling and enables nurse managers to use automated tools to more effectively track scheduling trends and costs.
A portion of these facilities have taken the next step in online scheduling by using shift-bidding systems similar to the one used at Rio Grande. While the shift-bidding systems can raise troublesome workplace issues, some hospitals that have installed them say they've worked great.
"In addition to cutting staffing costs, it's boosted the morale of our nurses," Heckenkemper says. The staff nurses would often get upset when contract nurses were brought in because they were paid significantly more than employed nurses, she explains.
About 100 hospitals around the country are using various types of shift-bidding systems, experts estimate. Costs for these computer programs range from $3,000 to $9,000 a month for a 300-bed facility, plus a monthly fee based on how often the application is used, according to a study from First Consulting Group prepared for the California HealthCare Foundation.
But not everybody believes the systems are a cure-all. Rodney Shifflette, chief operating officer at Dallas-based Symbio Solutions, says the reverse bidding system can actually damage morale.
"It might create a hostile work environment and someone may hold a grudge for being outbid for a shift," he says. Symbio Solutions provides software that helps hospitals manage internal resources and staff scheduling. The company does not offer a shift-bidding program but plans on introducing one soon because its customers are asking for it, Shifflette says.
Walking a fine line
While the flexibility of online scheduling is attractive to many, the addition of shift-bidding may lead to hospitals losing full-time nursing staff, Shifflette adds. Nurses may realize that they can make more money working part time and bidding on open shifts than working their regular full-time shifts.
At Rio Grande Regional Hospital, however, staff nurses have embraced the system and morale has improved because they now have the opportunity to earn the same wage as agency nurses, Heckenkemper says.
Agencies charge as much as $50 to $75 an hour for a nurse, while the nurse is paid around $42 an hour. A staff nurse averages around $25 an hour. When shifts are posted bidding typically starts at what the agency nurse is paid and goes down in increments of 50 cents.
About 72% of the 500 nurses on staff participate in the shift-bidding program at Rio Grande. Nurses first need to log onto the system and fill out their qualifications and license information. Once that information is verified they are able to bid on shifts. Available shifts are posted six weeks before they are scheduled.
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