Nursing: On the Critical List

An acute shortage of RNs threatens to cripple U.S. hospitals

When nurse Sherri Stoddard finishes her shift at Sierra Vista Regional Medical Center in San Luis Obispo, Calif., she's routinely wracked with anxiety. Stoddard has so many patients in the maternity ward to look after that she often doesn't immediately notice when a fetal heart rate has slowed or an expectant mother has requested more pain medication. "It's a horrible feeling," she says.

Registered nurses such as Stoddard are finding their jobs so difficult that they're bailing out in droves. The current 26% turnover rate among nurses is the highest in decades. Some hospitals have resorted to offering sign-on bonuses up to $15,000 and finders' fees of $5,000.

The dissatisfaction among nurses could spiral into a crisis. Squeezed by skyrocketing drug costs and decreasing insurance reimbursement rates, hospitals have been skimping on RNs to the point where nurses complain they can barely do their jobs safely. Revolts are brewing. As many as 8,000 University of California RNs are poised to strike if administrators don't agree to improved working conditions. This would be one of the biggest strikes ever by the largest nurses' union in California, threatening such medical centers as the University of California facilities in Los Angeles and San Francisco.

Long aware of the nursing crisis, California is phasing in new nurse-patient ratios: one nurse for every six patients, down from patient loads of 10 to 20 per shift today. This could cost the state's hospitals more than $400 million per year, but it's a case of pay now or pay later. Without enough nurses, hospitals may be forced to close units or turn away patients, exacerbating the health-care crunch. Five other states are also considering the new ratios.

As it stands, recruiting is tough. Beyond the workload, the average RN struggles with mandatory overtime and reams of paperwork--not to mention the middling average annual pay of $47,000. Hospital executives have avoided buying new technology that would make administrative tasks easier so nurses could spend more time with patients. Almost half of acute-care nurses are so unhappy they say they will leave before they reach retirement age.

Demographic and economic factors coming into play threaten to make the situation worse. The average age of nurses has risen 7% since 1995, to 45, while nursing-school graduation rates have fallen 23%. Hiring nurses from foreign countries--a favorite tactic during past crunches--won't work now because shortages are a problem worldwide. And the recession has not driven nonpracticing nurses back into the profession, as many had hoped. At this rate, hospitals will be short 515,000 nurses by 2020--exactly the time most baby boomers will be pushing 70 and flooding the system.

Recruiting and retaining nurses will add yet another layer of expense to an industry that is already under strain. Net profit margins at hospitals have fallen from 5.5% in the late 1990s to 2% today. Paying more for nurses will drive up costs further. Those will get passed on to patients in the form of higher health-insurance premiums, which have jumped 11% in the past year alone.

Of course, no fix is cheap. In California, complying with the new ratios would cost about $200 per patient. But hospital operator Tenet Healthcare Corp. says that if it could reduce its RN turnover rate by just 1%, it would end up saving $12 million a year. If hospitals don't act fast, they will find themselves short of caregivers just when they need them most.

By Arlene Weintraub in Los Angeles

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