The effects of nurse staffing on hospital financial performance: competitive versus less competitive markets.

ABSTRACT

BACKGROUND: Hospitals facing financial uncertainty have sought to reduce nurse staffing as a way to increase profitability. However, nurse staffing has been found to be important in terms of quality of patient care and nursing-related outcomes. Nurse staffing can provide a competitive advantage to hospitals and as a result of better financial performance, particularly in more competitive markets. PURPOSE: In this study, we build on the Resource-Based View of the Firm to determine the effect of nurse staffing on total profit margin in more competitive and less competitive hospital markets in Florida. METHODOLOGY/APPROACH: By combining a Florida statewide nursing survey with the American Hospital Association Annual Survey and the Area Resource File, three separate multivariate linear regression models were conducted to determine the effect of nurse staffing on financial performance while accounting for market competitiveness. The analysis was limited to acute care hospitals. FINDINGS: Nurse staffing levels had a positive association with financial performance (ß = 3.3, p = .02) in competitive hospital markets, but no significant association was found in less competitive hospital markets. PRACTICE IMPLICATIONS Hospitals in more competitive hospital markets should reconsider reducing nursing staff, as these cost-cutting measures may be inefficient and negatively affect financial performance.