Does Hospital Price Competition Influence
Nurse Staffing and Quality of Care?
Julie Sochalski, PhD1
R. Tamara Konetzka, PhD2
Jingsan Zhu, MBA1
Joanne Spetz, PhD3
Kevin Volpp, MD, PhD1,4
Academy Health
June, 2005
1
University of Pennsylvania
3 University of California at San Francisco
2
University of Chicago
4 Philadelphia VA Medical Center
Introduction
• Over past 20 years hospitals shift from competing on
quality/amenities
competing on price.
• Evidence that price competition rate of increase in
hospital costs, profits
efficiencies or lower quality?
• Examine impact of price competition on one feature
associated with hospital quality – nurse staffing.
Nurse Staffing – Patient Outcomes
Relationship
• Cross-sectional studies over 3 decades show higher nurse
staffing associated with reduced mortality.
• Mark et al (2004) found increases in RN staffing linked
to lower mortality, with diminishing returns.
• Most studies rely on hospital-wide measure of nurse
staffing which may obscure relationship.
Nurse-Staffing-Price Competition Relationship
• Hospital personnel increased from 1980s to early 1990s.
• RNs increased commensurate with volume and CMI
while other nursing personnel declined.
• Buerhaus & Staiger (1996) found slower growth in
hospital employment of RNs in states with higher statelevel HMO penetration.
• In California Spetz (1999) found HMO penetration was
not associated with RN staffing through early 1990s.
• Mark et al (2005) found higher nurse staffing
associated with lower mortality in markets with higher
HMO penetration.
In summary:
• Substantial gaps in understanding of nurse staffing—
quality relationship.
• Rely on crude staffing measures to explore relationship.
• Lack information on how hospitals respond to price
competition, and impact on quality.
• 1999 – California passes AB 394 to establish minimum
nurse staffing ratios.
Research Questions
• Are changes in nurse staffing levels associated
with patient outcomes?
• What hospital and market features are associated
with staffing changes and thereby outcomes?
Study Design
• California acute care hospitals, 1991-2001
– 1983 selective contracting legislation passed allowing
price competition
– 1990s represents maturing managed care market
– Administrative data has more refined measures of
nurse staffing.
Data
• California’s Office of Statewide Health Planning and
Development (OSHPD) discharge data from 1991-2001.
• OSHPD annual disclosure (financial) data 1991-2001
• State death certificates 1991-2001.
Key Study Variables
• Nurse staffing
– RN, LVN, Nurse Aide
– Nursing productive hours per patient day
– Acute medical-surgical units
• Market factors
– Managed care penetration for hospital market area (fixed
radius)
– Interaction between managed care penetration and market
competition
• Patient outcomes
– AHRQ inpatient quality indicators: 30-day mortality for
AMI, stroke, hip fracture
Sample
• Hospitals:
n = 421 short-term acute hospitals
(non-federal, non-Kaiser)
• Patients:
• AMI:
n = 352,536 (15.5%)
• Stroke:
n = 592,651 (14.1%)
• Hip fracture:
n = 276,628 (5.3%)
Control Variables
#1: Staffing-Outcomes Relationship
 Age
* Source of payment
 Gender
* Elixhauser comorbidities
 Race
* Hospital CMI
 Ethnicity
* Year dummy variables
#2: Staffing-Price Competition relationship
 All above + wages
Model
Generalized linear model with hospital-level fixed
effects + time fixed effects
Model 1
Pr( Death) pht   0 h   v Staffinght   wYeart  1HospitalCMI ht   x PatientSeverity pht 
 y PatientDemographics pht   z PaymentSource pht   pht
Model 2
RNhppd ht   0 h   v Staffinght   wYeart  1HospitalCM I ht   2 MCPht   3 MCP * COMPht   4WageIndexht 
 x PatientSeverityht   y PatientDemographics ht   z PaymentSourceht   ht
Hospital Summary Statistics
No. of hospitals:
Avg. # beds:
Urban:
Teaching:
Ownership:
Non-profit:
Government:
For-profit:
Avg. CMI
421
192
88%
18.7%
52.7%
20.7%
26.6%
1.114
Change in CM-adjusted RN medical-surgical hours
per patient day, 1991-2001
20.0%
15.0%
75th
10.0%
5.0%
0.0%
1992
1993
1994
1995
1996
-5.0%
25th
-10.0%
-15.0%
1997
1998
1999
2000
2001
Effects of nurse staffing on 30-day mortality
AMI
Stroke
Hip
Fracture
RN
-0.004*
(0.001)
-0.002*
(0.001)
0.002
(0.001)
LVN
-0.003
(0.002)
0.0004
(0.001)
0.0008
(0.001)
Aide
0.001
(0.001)
-0.0002
(0.0007)
-0.0001
(0.0007)
RN*baseline
0.0004†
(0.0002)
-0.0001
(0.0001)
-0.0004
(0.0003)
Model:
* p < .05
†
p < .1
Effects of price competition on nurse staffing
Managed care penetration
2.479** (0.696)
Managed care penetration x
Market competition
-3.192* (1.245)
** p < .001
* p < .01
Caveats/Limitations
• Changes over time in DRGs, coding, zip codes (but
smoothed/corrected to the extent possible)
• Limited to California – generalizable to other states?
• Limited to mortality– generalizable to other quality
measures?
• Are there thresholds to staffing-quality relationship?
Conclusions
• Extent to which changes in RN staffing levels are
associated with lower mortality varies by condition.
• Increasing managed care penetration is associated
with higher RN staffing except in most competitive
markets.
• Limiting the number of patients per nurse may
improve quality outcomes.