The impact of overtime extends far beyond finances. Overtime’s negative impact on patient safety is astounding, and our understanding of its influence on patient satisfaction continues to deepen. While the journey to a safer hospital with more satisfied patients can be challenging, the following analysis shows that controlling overtime provides a dominant strategy for creating safer, financially sustainable hospitals in uncertain times.

1. Sponsored by API Healthcare
Unveiling Overtime’s Total Costs
How OT May Be
Harming Your Business
and Your Patients

2. The collective challenge to build
a financially sustainable and safe
healthcare industry, one where
patient satisfaction is the norm, not
“an aspirant goal,” remains a top
priority, if not a mandate. Achieving
a new performance plane requires
solutions that can move the needle—
incremental approaches will fall short
with the frenetic pace of change. As
staff are the most important and
most expensive asset in healthcare,
transformation has no better ally than
its workforce.
The healthcare industry is in the throes
of arguably its most challenging period.
Payers, purchasers, consumers, and
regulators have all trained a laser
focus on driving better outcomes and
reducing spending. The facts lead to
an undeniable conclusion – without
marked improvement, healthcare will
continue to be the most expensive and
most dangerous US industry. In 1999,
the Institute of Medicine awakened
the industry to its safety issue by
proclaiming that 100,000 people are
killed unnecessarily each year by
medical errors. Today experts believe
that number to be more than four
times that—a staggering 440,000 (the
equivalent of nearly 900 fatal jumbo jet
accidents each year).1
From a financial
perspective, healthcare accounts
for 20% of the US economy, and is
approaching $3 trillion annually. Left
unabated, healthcare will continue its
outsized growth, doubling by 2040.2
As stakeholders actively seek solutions,
seemingly around every corner, to this
dangerous and expensive industry,
leaders should look first at the
workforce. More specifically, leaders
should zero in on overtime. Overtime’s
financial impact has long been self-
evident: premium pay hurts the
bottom line. However, the pernicious
impact of overtime extends far beyond
finances. Overtime’s negative impact
on patient safety is astounding, and
our understanding of its influence
on patient satisfaction continues
to deepen. The journey to a safer
hospital and satisfied patients can be
challenging. The following analysis will
demonstrate how controlling overtime
provides a dominant strategy for
cultivating safer, financially sustainable
hospitals.
Overtime’s Expensive and
Pervasive Challenge
Labor accounts for upwards of 55%
of a hospital’s expense.3
Nursing
is a core driver of this expense,
accounting for 18%-25% of operating
costs.4
Embedded in these figures are
the significant overruns for nursing
overtime. Unchecked, overtime can
reduce already fragile bottom lines at
a time when north of 50% of hospitals
have low single-digit margins, and
nearly a quarter have negative
operating margins.5
“Today
experts
believe that
the number
of medical
errors is
440,000 –
four times
that of
the 1999
Institute of
Medicine
number (the
equivalent of
nearly 990
fatal jumbo
jet accidents
each year).”
By Daniel D’Orazio, MBA, Patrick Ball, MBA, Christopher DeMarco, PhD, MBA

3. According to national studies, over 50%
of full-time nurses work overtime. And,
it’s not small amounts of incremental
overtime, but rather an average of
seven hours per nurse, per week.6
For many hospitals, nurse overtime
accounts for 7-10% of total hours
worked.7
While overtime has and will
continue to remain a solution for filling
open shifts, unmanaged overtime in the
10% range is costly, roughly $3 million
for a 300 bed hospital. By reducing
nurse overtime from 7.5% of total hours
to 2.5%, this same hospital can save
north of $1.2 million annually.8
However,
the return on managing nurse overtime
extends far beyond hard dollar savings.
The longer nurses work, the more they
become dissatisfied, they are more
prone to turnover, they have a marked
propensity for medical errors, and they
contribute to lower patient satisfaction
scores. Thus, measuring overtime solely
in dollars and cents fails to account for
true costs—medical errors and patient
safety must enter into the equation.
Are Truckers Safer than Nurses?
In July 2013 the Federal Motor
Carrier Safety Administration (FMCSA)
implemented new rules to limit the
amount of hours a truck driver could
work in a week by nearly 15%. The
Secretary of Transportation proclaimed
that “safety is our highest priority. These
rules are common sense and data-driven
changes to reduce truck driver fatigue
and improve safety for every traveler on
our highways and roads. ”The FMCSA
noted that “working long daily and
weekly hours on a continuing basis is
associated with chronic fatigue, a high
risk of crashes, and a number of serious
chronic health conditions in drivers.”9

4. Trucking and nursing share similar
risk factors, and numerous studies
demonstrate that when nurses
work long shifts or long work weeks,
overtime contributes to a significant
risk of more medical errors. At a time
when new research demonstrates the
gravity of medical errors is far greater
than the industry believed, healthcare
desperately needs solutions that will
reverse this endemic challenge. With
preventable medical errors resulting
in more than 1,000 deaths per day,
medical errors rank as the third leading
cause of death behind heart disease
and cancer.10
While regulation may not intercede on
a national level as it did in the trucking
industry, the question remains—how
will healthcare deal with the danger
of tired nurses? Sixteen states have
begun to address this through passed
and pending regulations that limit
mandatory overtime.11
Yet while there
is no national standard, groups like the
American Nurses Association (ANA) are
trumpeting reform. The ANA recently
updated its policy on this matter calling
for changes to nurse schedules such as
12-hour work shifts and limiting nurses
to 40 hours in a seven-day period.12
As
the industry grapples with solutions
to address medical errors and patient
safety, there is perhaps no greater
clarion call for improving patient safety
than controlling overtime. Consider the
following:
• The risk for making an error more
than doubled when nurses
worked 12.5 or more consecutive
hours.13
• Medication errors and hospital-
acquired infections are 3.71 and
3.39 times more likely respectively
when nurses work more than 40
hours per week.14
• Patient falls and pressure ulcers
are 3.36 and 3.50 times more likely
respectively when nurses work
voluntary overtime.15
“Patient
falls and
pressure
ulcers are
3.36 and
3.50 times
more likely
respectively
when
nurses
work
voluntary
overtime.”

5. Overtime will continue to play a role in
staffing, but when overtime becomes
part of a hospital’s fabric, executives
must reconcile the attendant threats.
These threats impact not only patients,
but also the system’s financial health.
Many of these errors are costly,
unreimbursable never events. For
example, MRSA, central line infections,
and pressure ulcers cost more than
$40,000 per incidence.16,17,18
While it is
unreasonable to think that healthcare’s
systemic workforce supply and demand
challenges will be resolved easily,
organizations do have the power to
proactively manage overtime and
diminish the exposure to medical errors.
Satisfied Staff + Satisfied
Patients=Financial Returns
A hospital’s business model increasingly
depends on satisfied patients. In many
markets, patients have a choice, their
financial responsibility is growing, and
they have access to a growing amount
of data that helps them to evaluate
hospital performance. In many ways,
consumerism has arrived, and not just
for individuals. Medicare shares similar
aims, and has instituted value-based
purchasing bonuses or penalties that
can impact up to 1.5% of a hospital’s
Medicare reimbursement. In recognition
of patients’ voices, Medicare derives
30% of these metrics from patient
satisfaction surveys called Hospital
Consumer Assessment of Healthcare
Providers and Systems (HCAHPS).19

6. Similar to its impact on medical errors,
nurse overtime hampers patient
satisfaction. With nurses spending 40%
of their shifts in direct patient care,
nurses arguably represent the most
visible interface with the patient. Yet
the longer nurses work, both in terms of
hours and shifts, the more dissatisfied
both they and their patients become.
Nurses working shifts of thirteen hours
or more are 2.7 times more likely to be
burnt out, 2.38 times more likely to be
dissatisfied in their jobs, and 2.57 times
more likely to intend to leave their job
in the next year than nurses who work
8-9 hours.20
Patients feel the impact of
long shifts too. Patients reported higher
satisfaction when higher proportions
of nurses worked eleven or fewer hours
and less satisfaction as nurse shifts
extended beyond thirteen hours.21
The connection between patient
satisfaction and the length of a nursing
shift can impact financial performance.
As nurses work more hours, patients
are more likely to rank hospitals 6
out of 10 or below in HCAHPS.22
JD
Power and Associates provides key
inputs to monetize the power of poor
HCAHPS scores. Patients who score
a hospital less than a 7 on HCAHPS
have a 38% likelihood of returning to
the hospital, whereas patients who
score the hospital with an 8 or higher
are more than twice as likely to return
(80%).23
This evidence is supported
by other studies demonstrating that
the percentage of patients who would
“definitely recommend” a hospital to
their loved ones decreased 2 percent
for every 10 percent of the nurses
who expressed dissatisfaction with
their jobs.24
These data sets reinforce
the power of staff satisfaction and its
contribution to satisfied patients.
Closing Thought
With healthcare changing almost daily,
executives face an extraordinary set
of challenges. The shorthand of this
mandate reads like this: Make the
hospital safer, do it cheaper, and keep
the “customer happy.” Moving the
proverbial needle will be difficult, but
controlling overtime can be a force
multiplier. Rare is the opportunity to
attack cost, patient safety, and patient
satisfaction with one metric. When
properly managed, overtime can deliver
on that promise.
“As nurses
work more
hours,
patients
are more
likely
to rank
hospitals
6 out of 10
or below in
HCAHPS.”

7. 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 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.
About the Authors
Dan D’Orazio, Pat Ball and Chris
DeMarco are executives with Sage
Growth Partners (SGP), a healthcare
strategy, technology, and marketing
services firm (www.sage-growth.com).
Mr. D’Orazio is a member of the
Professional Faculty of the Johns
Hopkins Carey Business School and
Mr. Ball is an Adjunct Instructor, The
Pennsylvania State University.

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
Allen, Marshall. “How Many Die from Medical Mistakes in U.S. Hospitals?” ProPublica September 19, 2013. http://www.propublica.org/article/
how-many-die-from-medical-mistakes-in-us-hospitals
2
Executive Office of the President Council of Economic Advisers. “The Economic Case for Healthcare Reform.” June 2009. http://www.whitehouse.gov/
assets/documents/CEA_Health_Care_Report.pdf
3
Massachusetts Hospital Association. “Hospital Costs in Context: A Transparent View of the Cost of Care” April 2010. Accessed July 3, 2014.
http://www.mhalink.org/AM/Template.cfm?Section=Home&Template=/CM/ContentDisplay.cfm&ContentID=11241
4
Welton, John. Hospital Nursing Workforce Costs, Wages, Occupational Mix, and Resource Utilization. The Journal of Nursing Administration, 41,
no. 7/8 (2011): 309-314.
5
Adamopoulos, Helen. “5 Things to Know about Hospital Margins.” Becker’s Hospital Review. http://www.beckershospitalreview.com/finance/5-things-
to-know-about-hospital-margins.html
6
Bae, Sung-Heui. “Nursing Overtime: Why, How Much, and Under What Working Conditions?” Nursing Economics, 30, no. 2 (March/April 2012): 60-71.
7
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
8
Sage Growth Partners Analysis.
9
James, John T. “A New, Evidence-based Estimate of Patient Harms Associated with Hospital Care.” Journal of Patient Safety. September 2013,
9, no. 3: 122-128. http:/journals.lww.com/journalpatientsafety/Fulltext/2013/09000/A_New,_Evidence_based_Estimate_of_Patient_Harms.2.aspx
10
Allen, Marshall. “How Many Die from Medical Mistakes in U.S. Hospitals?” ProPublica September 19, 2013. http://www.propublica.org/article/
how-many-die-from-medical-mistakes-in-us-hospitals
11
Bae, S.-H., Brewer, C. S., & Kovner, C. T. State mandatory overtime regulations and newly licensed nurses’ mandatory and voluntary overtime
and total work hours. Nursing Outlook (2011): 1-12.
12
American Nurses Association. http://www.nursingworld.org/MainMenuCategories/Policy-Advocacy/State/Legislative-Agenda-Reports/
MandatoryOvertime
13
Rogers, Ann, et al. The Working Hours Of Hospital Staff Nurses And Patient Safety. Health Affairs, 23, no.4 (2004):202-212.
14
Bae, Sung-Heui. Presence of Nurse Mandatory Overtime Regulations and Nurse And Patient Outcomes. Nursing Economics. March/April 2013; 31,
no. 2: 59-89.
15
Ibid.
16
Shorr, A., and T. P. Lodise, Jr. Burden of Methicillin-resistant Staphylococcus aureus on Healthcare Cost and Resource Utilization. International
Society of Microbial Resistance, 2006. PDF.
17
Centers for Disease Control and Prevention. The Direct Medical Costs of Healthcare-Associated Infections in U.S. Hospitals and the Benefits of
Prevention. By R. Douglass Scott, II. 2009. PDF.
18
Zaratkiewicz, Sunniva et al. Development and Implementation of a Hospital-Acquired Pressure Ulcer Incidence Tracking System and Algorithm.
Journal of Healthcare Quality. 2010, 32(6): 44–51.
19
Kaiser Health News. “Methodology: How Value-Based Purchasing Payments are Calculated.” Accessed December 22, 2014.
http://kaiserhealthnews.org/news/value-based-purchasing-medicare-methodology/
20
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.
21
Ibid.
22
Ibid.
23
JD Power and Associates cited in Sisneros, Dorothy M. Employee Focus in a Time of Change, Thunderbird Leadership Consulting and Leebov Golde
Group, May 12, 2012. http://www.lonestarhfma.org/files/file/Presentations/2012_05_Sisneros_Dorothy_CreatingAnEngagedWorkforce.pdf
24
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.