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Nov
8

One reason California hospital costs are rapidly increasing

Hospital costs are among the key drivers of medical inflation. In turn, one of the largest components of hospital costs is labor.
What may not be “new news” to many is the nationwide nursing shortage. This shortage is leading to closure of wings or departments, hospitals raiding each other for staff, importation of nurses from the Phillipines and other countries, and chronic overtime for the majority of nurses.
Nowhere is this shortage more acute than California, where the “rock” of the RN shortage has run into the “hard place” of the law. A 2003 California law requires all hospitals to maintain a staffing ratio of one nurse to each eight patients. It further limits the number of vocational nurses, and prohibits all but RNs from caring for critical trauma patients. That’s today.
California’s nursing shortage
In less than two months, hospitals will have to staff at a 1-to-5 standard. However, regulators are asking for, and will likely receive, a delay till 2008 for implementation of that standard. This looks like a foregone conclusion, which is certainly appropriate as many hospitals can’t meet the standard today. In fact, according to a piece on the California nursing shortage in California Healthline,
“A California Healthcare Association survey found that 85% of hospitals do not comply with the regulations, and a California Nurses’ Association survey found that 42% not do comply. ”
Here’s the link. Penalties for non-compliance are significant, and will likely be enforced with more alacrity in coming months. With state laws mandating more nurses, and few nurses to be found, the price elasticity rules of economics will come into play. Big demand for few nurses mean all nurses will make more money – probably a lot more.
The result – higher hospital costs in California, and, short of importing nurses, little any managed care firm, insurer, or employer can do about it.


Joe Paduda is the principal of Health Strategy Associates

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