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The economics of nursing

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Since the federal budget sequester became a reality on April 1, there has not been an immediate effect on nursing and healthcare organizations. No hospitals or long-term care facilities reported nursing layoffs directly related to the cuts, according to state and national industry organizations.

But sequestration, which cuts about 5% from the U.S. Department of Health and Human Services’ budget and 2% from Medicare reimbursements to healthcare providers in an effort to reduce the federal budget deficit, comes on top of a recent recession and a spate of state and federal belt-tightening. It represents one more chip in a long-term erosion of government funding for research and nursing programs, said Bobbie Berkowitz, RN, PhD, FAAN, dean and professor at Columbia University School of Nursing and senior vice president at Columbia University Medical Center in New York City. And while they generally agree healthcare spending can’t be maintained at its current level, nurse executives and hospital administrators fear additional unexpected state and federal deficit reductions could strain even those facilities that are working to provide more efficient care.

“What do these cuts really mean to people?” Berkowitz said. “It’s not like you can say 50% of the nursing staff is going to be laid off. For some sectors, it’s more of what they’ve been experiencing all along.”

Healthcare organizations and providers say they will do their best to shield the public, nursing students and staff nurses from the effects of government budget reductions by finding creative ways to absorb the cuts, including alternative funding sources, more grant proposals and more efficient ways of providing care.

But resources can be stretched only so much and future reductions in government healthcare spending will most certainly affect nursing education, research, the nursing workforce. Each of these ultimately could have an effect on patient care, warn nurse executives, educators and researchers.

Education

Within nursing, education takes the most direct hit from sequester cuts, said Jan Towers, PhD, NP-C, CRNP, FAANP, FAAN, senior policy advisor advisor for the American Association of Nurse Practitioners.

The six nursing programs under HHS’s Health Resources and Services Administration, including those designed to encourage diversity, faculty growth and service to underserved areas, will likely lose about 5% of their funding, said Suzanne Miyamoto, RN, PhD, AACN, director of government affairs for the American Association of Colleges of Nursing in Washington. D.C.

Though funding for nursing education programs increased in recent years — from about $160 million in 2008 to $231 million before sequestration took effect — these increases have not come close to keeping pace with inflation, Miyamoto said. If programs were funded at 1970s levels and adjusted for inflation, they would be receiving about $1 billion for the current fiscal year, she said.

Fewer nurses will have financial support to become faculty members, and students will have fewer funding opportunities, Miyamoto said, which could mean fewer RNs and advanced practice nurses to care for patients during a time when many nurses are expected to retire, an aging population will need more care and newly insured people through ACA provisions will be seeking healthcare.

Teri A. Murray, RN, PhD, APHN-BC, FAAN, dean of the Saint Louis University School of Nursing, said there will be greater competition among nursing schools and other educational programs for funding like the HRSA’s grant that helps fund the school’s program to recruit and graduate more minority nursing students. Luckily, she said, the program is in its third year of funding and won’t be immediately affected, but the cuts could affect its chances for renewal. “It’s a four-year nursing program, so if the funds were cut for those in their junior year, it could really present a hardship to the students,” she said.

Donna Meyer, RN, MSN, dean of health sciences at Lewis and Clark Community College in Godfrey, Ill., and director of the Lewis and Clark Family Health Clinic, is in a similar situation. Her clinic, based at the southern Illinois school, did not get funded last year after six years of receiving grants though the HRSA nurse practice and retention program. The clinic is almost self-sufficient and has enough money to continue through next year, she said, but if the grant is denied again she will have to scramble for funds to make up the difference, as states, schools and foundations face their own budget woes.

Research

The sequester’s 5% decrease in money for the National Institutes of Health, which includes the National Institute of Nursing Research, comes on top of 10 years of flat funding for that research organization, said its director, Francis S. Collins, MD, PhD. The NIH, which used to accept one in three grants, now funds about one in six, a figure which is likely to go even lower as a result of sequester cuts, said Collins.

“When you cut funding to the NIH, benefits to people slow down,” he said. “You don’t want the public to feel an impact, but we know in research, in the long-term, they do.”

Nurse researchers will face more competition for grants to study issues specifically related to nursing and patient care, Berkowitz said, such as access to care, prevention of chronic illness, hospice care and patient-centered outcomes.

“Only a small fraction of grant proposals deemed meritorious by peer review were being funded before the sequester,” said nurse researcher Linda H. Aiken, RN, PhD, FRCN, FAAN, director of the Center for Health Outcomes and Policy Research at the University of Pennsylvania. “Any further reduction in newly funded research will have a devastating impact on advances in improving healthcare outcomes.”

Because grant proposals often take months and sometimes years to write, and because the process of getting them approved takes so long, researchers will not know the full effect of sequester cuts until they find out which grants are funded. Even then, they may not know if they were turned down because of lack of funding or for some other reason, Berkowitz said.

Nurse researchers already are looking at other sources of money for their proposals, Berkowitz said, including healthcare and education foundations and government programs not affected by sequester, such as the new Patient-Centered Outcomes Research Institute created through the ACA.

Workforce

Though Elizabeth Lietz, a spokeswoman for the American Hospital Association, said her organization has heard anecdotal information that some hospitals have cut staff and services in the wake of the sequester, several representatives from state and national hospital groups said they do not know whether these are attributable to budget cuts, the recession or other factors. At this point, healthcare administrators seem to be avoiding laying off clinical staff, partly to prepare for an expected influx of patients after more people get insurance coverage under the ACA, said Jan Emerson-Shea, vice president of external affairs for the California Hospital Association.

However, there is anticipated cost-cutting under healthcare reform, including reductions in safety-net funds, financial penalties from Medicare for readmissions and hospital-acquired infections, and lower provider reimbursements in exchange for more newly insured patients.

“The landscape is very unsettled right now,” Emerson-Shea said. “It’s not fully clear what the delivery system will be like in five years.”

Because of the 2% sequester cuts to Medicare, Day Kimball Healthcare, a community healthcare center in Northeast Connecticut, must find an extra $1 million over two years to cover the reduction in its budget, said Donald St. Onge, RN, MSW, senior vice president, COO and CNO. Day Kimball has been working to increase efficiency, including creating patient-centered medical homes and looking at ways to provide continuous care in a variety of settings, he said. “Overall healthcare needs to be more efficient,” he said. “[But] if these cuts continue, we cannot sustain our status as an independent community hospital.”

Long-term care providers are also facing challenges from cumulative Medicaid and Medicare reductions, including sequester cuts, said Irene Fleshner, RN, MHA, FACHE, senior vice president of strategic nursing initiatives for Genesis HealthCare, one of the largest skilled nursing and rehabilitation therapy providers in the country.

Many long-term care organizations, including Pennsylvania-based Genesis, are looking at ways to be more efficient, she said, including staffing according to patient census by using more part-time and float positions, which acute care facilities have been doing for some time. Administrators also are looking at how they use staff, such as making sure RNs focus on assessments, admissions and care planning. “RNs will be doing only what they are trained to do and what they like to do. I think that can be portrayed as a good thing.”

Though they will continue to lobby for funds, including an end to sequestration — which will continue if lawmakers cannot produce a budget for the coming year — nursing and healthcare representatives said they are bracing for a difficult scramble for a shrinking pool of funds.

“The whole thing is changing dramatically and it will continue to change,” Fleshner said. “We have to be agile and adapt to that change. Budget cuts are going to be part of life and we have to figure out how to manage them.”

Cathryn Domrose is a staff writer.

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