The white paper, “Adding It Up: Accounting for the Transformational Power of an Optimized Workforce,” sheds light on the growing body of evidence that supports workforce optimization’s impact on staff and patient satisfaction, increased revenue and quality of care.

1. Adding it Up - Accounting for the
Transformational Power of an
Optimized Workforce
From the Bottom Line to Patient Satisfaction and Beyond

2. Labor is--and will remain--the largest
expense for any healthcare delivery
organization. Despite the size of the
expenditure, it is not uncommon for
labor to be viewed primarily as a P&L
expense as opposed to a strategic
asset. In annual surveys of hospital
priorities, the workforce does not rank
among the most pressing needs facing
executives. Rather, issues such as
financial stability, patient safety and
satisfaction, mergers and acquisitions,
health reform, and regulation tend to
dominate the healthcare landscape.1
Compared with emerging needs,
perhaps the workforce is viewed as a
“known constant” hence, its failure to
“rank” high.
Yet, hospitals may be missing a golden
opportunity to drive actionable,
transformational change through their
greatest asset—the workforce. Labor’s
ability to impact a hospital’s success
extends far beyond the bounds of a
profit and loss statement. An optimized
workforce can be a force multiplier
for health systems—from lowering
standard, well-traveled measures such
as overtime to emerging, mission-
critical outcomes such as staff morale,
patient satisfaction, and quality of care.
Attributing optimized workforce
management to staff and patient
satisfaction, increased revenue and
quality of care may seem aspirational
for some and like common sense to
others. Increasingly, estimates and
opinion are giving way to fact. The
aim of this analysis is to elucidate the
growing body of evidence that supports
the power of such claims. The analysis
will have a particular focus on nurses
who are on the front lines of patient
care and whose efforts have been
shown to impact patient safety and
patient satisfaction.2
Overtime is the Rule
For most hospitals, nursing overtime is
the rule, not the exception. According
to industry surveys, more than 50%
of full-time nurses work an average
of 7 hours of overtime each week,
and 15% of part-time nurses work
an average of 5.4 hours of overtime
per week.3,4
Left unchecked, 41% of a
hospital’s nurses may work overtime—
an expensive proposition. Accounting
for up to 7%-10% of total worked
hours, nurse overtime for a 300-bed
hospital can cost some $3.7 million
annually.5
While sound reasons may
drive an “acceptable” amount of
overtime, executives should question
what amount of overtime falls within
acceptable bounds. For comparison,
consider, from an industry perspective,
that the 30th percentile performers
average roughly 2.5% of overtime as
a percentage of total work hours.6
A
hospital that can move overtime from
the 50th to the 30th percentile can reap
significant rewards.
“More than
50% of
full-time
nurses work
an average
of 7 hours
of overtime
each week.”

3. Overtime Accelerates Turnover
Similar to overtime, turnover has proven
to be a consistent and costly challenge.
While turnover is a multi-faceted issue,
studies have identified some powerful
indicators that link overtime and
turnover. More specifically, nurses that
work over 12 hours in a shift and 40
hours in a week are prone to increased
turnover and job dissatisfaction.
Additionally, nurses who work shifts
longer than 12 hours are 1.45 times
more likely to leave their position
within the year.7
Because shifts of 12 or
more hours have become part of the
norm, and with nearly 50% of full-time
nurses logging overtime, unmanaged
overtime can accelerate costly turnover.
Replacing a nurse is expensive: $82,000
per nurse which accounts for vacancy
costs, orientation and training costs,
newly hired nurse productivity costs,
and advertising and recruiting costs.8
With nurse turnover averaging 14%, the
average turnover expense for a 300-
bed hospital approaches $4.4 million
annually.9,10
Proactive efforts to reduce
both shift length and workweek length
provide best practices that can help
to reduce turnover and yield positive
financial returns.
Staff Injury and Overtime—An
Unhealthy Combination
Employees and employers have vested
interests in safe workplaces. Overtime
across industries has a negative
impact on injuries. Working in jobs with
overtime schedules was associated
with a 61% higher injury hazard rate
compared to jobs without overtime.11
Working at least 12 hours per day was
associated with a 37% increased injury
rate – and with 50% of the full time
nurses falling into overtime buckets,
hospital exposure to injuries increase.12

4. Healthcare is an industry with higher
injury rates than other settings – the
work is challenging, physical, and
occurs on a 24/7 365 perpetual cycle.
In fact, healthcare’s injury rates are
almost two times greater than the
norm.13
For an average hospital, the
cost of nurse injuries can climb to over
$400,000 annually.14
However, data
demonstrates that injuries contribute
to more than just a direct financial
expense. Nursing assistant injuries have
been shown to be associated with lower
employee satisfaction, increased desire
to leave their positions, and a decreased
likelihood to recommend the institution
either as an employer or for medical
care.15
Medical Errors: Overtime’s Powerful
Hidden Costs
Staffing shortages have become a way
of life for hospitals and health systems.
Matching supply and demand has
structural, long-term challenges. For
example, due to an insufficient number
of nursing educators, nursing schools
turn away tens of thousands of qualified
applicants each year.16
As such,
increasing nurse overtime has been a
natural response to filling this unmet
need. However, a deep body of literature
establishes a significant link between
overtime and patient safety.17,18
As nursing shifts lengthen so do the
chances of medical errors. An often-
cited breakthrough study found that the
odds of making an error are three times
higher when nurses work a shift of 12.5
hours or more.19
A multi-state study
confirmed the enhanced likelihood
of errors once nurses push beyond a
40-hour workweek (which occurs, on
average, for 50% of full time nurses).
Nurses working more than 40 hours
per week were 3.71 times more likely
to report medication errors and 3.39
times more likely to report nosocomial
infections.20
Nurses working voluntary
overtime were 3.36 times more likely to
report patient falls and 3.5 times more
likely to report pressure ulcers.21
The
degradation of care quality associated
with these incidents from a patient care
perspective is self-evident. While
perhaps less obvious or transparent
heretofore, the expense associated
with these errors is also gaining greater
awareness. The associated costs for these
errors, the likelihoods of which increase
with overtime, are shown in the table.
Errors and their Consequences
Reported Medication Errors Due to Overtime Average Cost
Average Cost
Average Cost
Average Cost
Reported Nosocomial Infections Due to Overtime
Reported Patient Falls Due to Overtime
Reported Pressure Ulcers Due to Overtime
3.71X More Likely
3.39X More Likely
3.36X More Likely
3.50X More Likely
$2,000
Up to $50,457
$13,000
$43,180
Based on average costs and incidence rates, the financial exposure for a 300-bed hospital resulting
from these medical errors runs upwards of $30 million, much of which may be unreimbursed.
“The odds
of making
an error
are three
times higher
when nurses
work a shift
of 12.5 hours
or more.”

5. Agency Nursing—Expensive when
Over Utilized
Like overtime, hospitals engage agency
nurses to fill gaps. Agency nurses
represent 5-10% of the entire nursing
force and can be paid 50% to 75%
more per hour than the average nurse’s
hourly pay.22,23
Annually, it is likely that
a 300-bed hospital can spend some
$4.5 million for agency staff.24
This is
a persistent and growing response
to filling open shifts. According to an
industry survey, 55% of hospitals report
agency use rising rapidly, up to 6%
growth per year through 2018.25
While
agencies fill a critical need for nursing
care, many organizations have been
able to dramatically reduce the use of
agency.
Satisfied Staff=Satisfied Patients:
Impacts on the Bottom Line
Patient satisfaction continues to
escalate in importance for all healthcare
constituents. Payers, purchasers,
and providers continue to aim for
improvement, while consumers
increasingly demand better overall
experiences. In many ways, the patient,
with high deductibles, should be
considered and treated as a “payer.”
Healthcare’s largest payer, Medicare,
has engaged value-based mechanisms
to incentivize better care. Central to
these efforts are the Hospital Consumer
Assessment of Healthcare Providers
and Systems (HCAHPS) that penalizes
or rewards hospitals through their
Medicare reimbursement (1.5% penalty
or award in 2015).26
Losses or gains from
this program can create a multi-million
dollar gain or loss for a hospital each
year. With patient satisfaction scores
accounting for 30% of the HCAHPS,
patient satisfaction must become a core
competency for hospitals.27
On the frontlines of patient satisfaction
lie nurses. They are often the most
visible representation of a hospital

6. to the patient, and research has
established a link between nurse
satisfaction and patient satisfaction.
A 2011 Health Affairs study found that
the percentage of patients who would
“definitely recommend” a hospital to
their loved ones decreased 2 percent
for every 10 percent of nurses who
expressed dissatisfaction with their
jobs.28
Additionally, nurses who are
more satisfied in their jobs are more
likely to have patients who report
having a better experience, and
hospitals where nurses work more than
13 hours per shift are more likely to
have patients who rate the hospital less
than 7 out of 10 on the HCAHPS survey.29
Drivers of this dissatisfaction, however,
are not permanent and can be positively
influenced. Key elements of nurse
dissatisfaction, which include a high
workload due to high patient acuity,
inadequate staffing configurations, and
inflexible schedules, can be addressed
with advanced solutions.
J.D. Power and Associates, the leader in
customer loyalty and retention, studied
the impact of patient satisfaction and
patient loyalty through the HCAHPS
program. Patients who score
a hospital with a 6 or 7
on HCAHPS express
that they want to
return only 37% of
the time. Conversely, patients that score
the hospital with a 9 or 10 report that
they want to return 80% of the time.30
As healthcare becomes increasingly
competitive and consumer-oriented, a
satisfied workforce will return dividends.
Maximizing Nurse Manager’s Impact
Scheduling is complex for nurses and
their managers. While ensuring that all
shifts are staffed is vitally important,
the process can be manual, time
consuming, and expensive. Reports
show that it is common for nurse
managers to spend upwards of an hour
a day or five hours a week managing
schedules.31
While an hour a day
may seem innocuous, scheduling can
consume at least 10% of a manager’s
time, time that competes with efforts to
raise quality, manage costs, and aid in
patient satisfaction endeavors.32
Across
a typical 300-bed hospital, liberating
nurse managers from an outdated
scheduling process can free up to
6,000 nurse manager hours annually.33
This is time that nurse managers can
repurpose for higher order aims such as
mentoring, teaching, and interfacing
with patients and their families.
Final Thought
As healthcare
executives seek solutions
to the myriad of strategic
issues confronting them,
overlooking the power of

7. attendance provider system for the
last 12 years (2002-2013) and the top
staffing and scheduling solution in 2012
and 2013.
About GE Healthcare
GE Healthcare provides
transformational medical technologies
and services to meet the demand for
increased access, enhanced quality
and more affordable healthcare
around the world. GE (NYSE: GE) works
on things that matter - great people
and technologies taking on tough
challenges. From medical imaging,
software & IT, patient monitoring
and diagnostics to drug discovery,
biopharmaceutical manufacturing
technologies and performance
improvement solutions, GE Healthcare
helps medical professionals deliver
great healthcare to their patients.
optimizing the workforce can be a
costly misstep. When automated
workforce management solutions
are coupled with best practices,
healthcare organizations can materially
drive down costs, improve employee
engagement and advance patient
satisfaction and safety. All told, the
strategic use cases explored in this
analysis can cost a 300 bed hospital
more than $12 million annually.34
With
the pace of change continuing its
unfettered march, executives can look
to their workforce to deliver returns.
About API Healthcare
API Healthcare (www.apihealthcare.
com) is focused on workforce
optimization solutions exclusively
for the healthcare industry. The
company’s staffing and scheduling,
patient classification, human resources,
talent management, payroll, time and
attendance, business analytics, and
staffing agency solutions are used by
more than 1,600 health systems and
staffing agencies. Founded in 1982,
API Healthcare has been rated
by KLAS in the Top 20 Best in KLAS
Awards Report
(www.KLASresearch.com)
as the top time and

8. © Copyright 2015 API Healthcare Corporation. All rights reserved.
© 2015 General Electric Company – All Rights Reserved. GE Healthcare, a division of General Electric Company.
1
American College of Healthcare Executives. “Top Issues Confronting Hospitals: 2013.” Accessed December 22, 2014. http://www.ache.org/pubs/re
search/ceoissues.cfm
2
Westbrooke, Johanna. “How Much Time do Nurses Have? A Longitudinal Study Quantifying Hospital Nurses’ Patterns of Task Time Distribution and
Interactions with Health Professionals.” BMC Health Services Research 2011, 11:319.
3
Health Resources and Services Administration. “The Registered Nurse Population. September 2010.” Accessed July 28, 2014. http://bhpr.hrsa.gov/
healthworkforce/rnsurveys/rnsurveyfinal.pdf, pgs. Xxviii, 3-27
4
Bae, Sung-Heui. “Nursing Overtime: Why, How Much, and Under What Working Conditions?” Nursing Economics, 30, no 2 (March/April 2012): pg. 64.
5
Sage Growth Partners Analysis.
6
The Advisory Board Company. “Data and Analytics Nursing Productivity Benchmark Generator.” Accessed July 2, 2014. http://fac.advisory.
com/2014_B_NUBI_BGFramework/Main/GetSession/?var=917910FF-D016-4149-BB43-DD6666801BC0
7
Stimpfel, Amy, et al. The Longer The Shifts For Hospital Nurses, The Higher The Levels Of Burnout And Patient Dissatisfaction. Health Affairs, 31, no.11
(2012):2501-2509.
8
Jones, CB. Revisiting Nurse Turnover Costs: Adjusting for Inflation. Journal of Nursing Administration, 38, no 1 (2008): 15.
9
KPMG. “KPMG’s 2011 U.S. Hospital Nursing Labor Costs Study”. Accessed July 2, 2014. http://natho.org/pdfs/KPMG_2011 _Nursing_LaborCostStudy.pdf
10
Sage Growth Partners Analysis.
11
Occup Environ Med. “The Impact of overtime and long work hours on occupational injuries and illnesses: new evidence from the United States.
2005;62:588-597” Accessed July 10, 2014.
12
Ibid.
13
OSHA “ Worker Safety in the Hospital - Know the facts” Sept 2013. OSHA - 3689. Accessed July 10, 2014
14
Sage Growth Partners Analysis.
15
McCaughey, Deirdre, et al. The relationship of positive work environments and workplace injury: Evidence from the National Nursing Assistant Survey.
Health Care Management Review. 39(1):75-88.
16
American Association of Colleges of Nursing. Nursing Faculty Shortage. Accessed December 22, 2014. http://www.aacn.nche.edu/media-relations/
fact-sheets/nursing-faculty-shortage
17
Linda Scott, et al. Effects of Critical Care Nurses’ Work Hours on Vigilance and Patients’ Safety. American Journal of Critical Care. January 2006,
Volume 15, No. 1: 30-37.
18
Danielle Olds and Sean Clarke, The Effect of Work Hours on Adverse Events and Errors in Health Care. J Safety Res. 2010 April ; 41(2): 153–162.
19
Ann E. Rogers, Wei-Ting Hwang, Linda D. Scott, Linda H. Aiken and David F. Dinges, The Working Hours Of Hospital Staff Nurses And Patient Safety.
Health Affairs, 23, no.4 (2004):202-212.
20
Bae, Sung-Heui, Presence of Nurse Mandatory Overtime Regulations and Nurse and Patient Outcomes. Nursing Economics V31 No 2 pg. 65.
21
Ibid.
22
KPMG. “KPMG’s 2011 U.S. Hospital Nursing Labor Costs Study”. Accessed July 2, 2014. http://natho.org/pdfs/KPMG_2011_Nursing_LaborCostStudy.pdf
23
US News and World Report. “Registered Nurses.” Accessed January 7, 2015. http://money.usnews.com/careers/best-jobs/registered-nurse/salary
24
Sage Growth Partners Analysis.
25
NSI Nursing Solutions. “Study Compares Travel Nurse Use to Hiring Nurses as ‘Your Employees.’ Accessed December 22, 2014. http://www.nsinursing
solutions.com/Files/assets/library/workforce/Travel%20NurseUse&CostStudy2014.pdf
26
Kaiser Health News. “Methodology: How Value-Based Purchasing Payments are Calculated.” Accessed December 22, 2014. http://kaiserhealthnews.
org/news/value-based-purchasing-medicare-methodology/
27
Ibid.
28
Mchugh, Matthew et al. “ Nurses’ Widespread Job Dissatisfaction, Burnout, And Frustration With Health Benefits Signal Problems For Patient Care. “
Health Affairs, 30, no.2 (2011): 202-210
29
Stimpfel, Amy, et al. The Longer The Shifts For Hospital Nurses, The Higher The Levels Of Burnout And Patient Dissatisfaction. Health Affairs, 31, no.11
(2012):2501-2509.
30
D. Power and Associates National Hospital Service Performance Study SM: (2005).
31
Valentine, N. et al. “Achieving Effective Staffing Through a Shared Decision Making Approach to Open-Shift management.” JONA July 2008, 38 no. 7/8
32
Health Resources and Services Administration. “The Registered Nurse Population. September 2010.” Accessed July 28, 2014. http://bhpr.hrsa.gov/
healthworkforce/rnsurveys/rnsurveyfinal.pdf
33
Sage Growth Partners Analysis.
34
Sage Growth Partners Analysis.