• San Francisco General Hospital uses higher cost registered nursing staff to back-fill vacant licensed vocational nurse and licensed psychiatric technician positions. By using registered nurses to back-fill these positions, San Francisco General Hospital incurs unnecessary costs of up to an estimated $434,000 annually.
  
  
• In FY 2001-2002, San Francisco General Hospital had 14 percent vacancies for licensed vocational nurses and 27 percent vacancies for licensed psychiatric technicians, compared to 12 percent vacancies for registered nurses. In FY 2001-2002, San Francisco General Hospital scheduled 8.5 percent more registered nurse staff and 13 percent less licensed vocational nurse staff than required by targeted staffing levels. To achieve targeted staffing levels and avoid excessive staffing costs, San Francisco General Hospital needs to aggressively recruit and retain licensed vocational nurses and licensed psychiatric technicians.

Nursing Budget and Nursing Expenditures

FY 2001-2002 Expenditures for Permanent, Per Diem and Overtime Staff

Salary and fringe benefits costs are the largest component of the San Francisco General Hospital budget, comprising more than 43 percent of the hospital’s operating budget. In FY 2001-2002, San Francisco General Hospital spent $48,923,790 for nursing staff to provide direct patient care services in the inpatient clinical units, which was $2,817,043 or 6 percent, more than the amount of $46,106,747 included in the FY 2001-2002 budget. The hospital spent more for overtime, per diem, and registry staff than anticipated in the FY 2001-2002 budget, as shown in Table 15.1.

Table 15.1

Comparison of FY 2001-2002 Actual Nursing Salary
Expenditures to FY 2001-2002 Budgeted Expenditures

Source: San Francisco General Hospital

Actual FY 2001-2002 Direct Patient Care Positions Compared to Budgeted Positions

In FY 2001-2002, actual per diem and overtime salary costs exceeded budgeted costs by more than 100 percent. San Francisco General Hospital used per diem registered nurses and registered nurse overtime to meet staffing requirements. The Hospital had inadequate permanent staff to meet staffing needs due to increased patient census and nursing position vacancies.

• Actual staffing in FY 2001-2002, including permanent, per diem and overtime staff, exceeded budgeted staffing by 2 percent. The staffing increase was less than the increase in actual average daily patient census of 10 percent.
  
  
• Overall, San Francisco General Hospital had approximately 51 fewer permanent full time equivalent positions than included in the FY 2001-2002 budget. This decrease in permanent positions was offset by increases in per diem, overtime, and registry staffing.

Table 15.2

Actual Direct Patient Care Staff Compared to Budgeted Staff in
FY 2001-2002

Source: San Francisco General Hospital. (Estimated registry FTEs are for all classifications and are not designated by specific nursing classifications).

Comparison of Hourly Pay Rates for Permanent, Overtime, and Per Diem Staff

Although registered nurse per diem and registered nurse overtime hourly pay rates are higher than permanent hourly pay rates, overall permanent registered nurse costs are higher, when fringe benefits and non-productive time are included.

Table 15.3

Comparison of Hourly Rates for Permanent, Overtime,
and Per Diem Nurse Staff

Source: FY 2002-2003 Annual Salary Ordinance

San Francisco General Hospital can use per diem registered nurses cost-effectively to meet staffing needs. However, use of overtime staff, even if not more expensive overall, is less efficient.

Overtime and Work Related Injuries and Patient Safety

Although the Hospital does not have increased direct registered nurse salary costs for overtime use, high use of overtime can result in hidden costs, including increased costs from work-related injuries and decreased patient safety (see Section 17).

Preliminary findings from the "National Longitudinal Study of Youth" indicate that occupational injury rates are approximately 16 to 21 percent higher for those working 45 or more hours per week and 33 percent higher for those working 12 or more hours per day. Additionally, the Federal Center for Disease Control has stated that "a recent U.S. government report indicates that the average nurse works more than 40 hours per week", and that "both shift work and overtime have been independently associated with increased health and safety risks".

Several studies have linked overtime hours with increased errors. The Economic Policy Institute published a briefing paper, which (Golden, L., and Jorgensen, H., "Time after Time: Mandatory Overtime in the U.S. Economy) cited three separate studies associating fatigue and overtime with increased patient error and infectious outbreaks.

Nurse Staffing Ratios

Hours per Patient Day and Staffing Ratios in the Memorandum of Understanding with the Service Employees International Union

The Memorandum of Understanding between the City and the Service Employees International Union defines the number of nursing staff required to provide patient care, based on the census and acuity level of each clinical unit. The Memorandum of Understanding establishes staffing ratios for the San Francisco General Hospital acute care and psychiatry clinical units, based on the number of hours per patient day (HPPD) required to care for the average patient in a given clinical unit.

Department of Nursing Staffing Matrix

The San Francisco General Hospital Department of Nursing has established a staffing matrix for each clinical unit, which allocates the number of staff required to care for the number of patients in the clinical unit. The staffing matrix incorporates the HPPD established by the Memorandum of Understanding for a given clinical unit, the average acuity for patients in the unit, and the patient census. Generally, the staffing matrix corresponds to the staffing ratios contained in the Memorandum of Understanding.

Under the Memorandum of Understanding, the actual HPPD and nurse to patient ratios are recorded on a daily basis and reviewed each week. A joint labor-management committee monitors the actual staffing levels to determine compliance with the staffing ratios in the Memorandum of Understanding. The Memorandum of Understanding outlines a dispute resolution procedure for disagreements between Hospital management and the SEIU regarding staffing levels.

California State Staffing Ratios

The California State Legislature adopted Assembly Bill 394 in October 1999, establishing statewide staffing ratios for acute care. AB 394 charged the State Department of Health Services with establishing minimum nurse-to-patient ratios for acute care hospitals, which would include both licensed vocational nurses and registered nurses. The Department of Health Services has completed drafting the staffing regulations, which are undergoing administrative review. These proposed staffing regulations have not yet been submitted for public review. According to the Department of Health Services, the staffing regulations are intended to establish minimum staffing ratios, with the expectation that most hospitals will exceed these minimum ratios. Table 15.4 compares the San Francisco General Hospital staffing ratios with the proposed statewide ratios. In all categories, San Francisco General Hospital currently exceeds the minimum staffing ratios required by AB 394.

Table 15.4

Comparison of San Francisco General Hospital Staffing Ratios to the Proposed Statewide Staffing Ratios Under AB 394
Number of Patients per Licensed Care Provider

Based on the One Staff staffing matrices and the proposed AB 394 staffing ratios presented by the Office of the Governor.

The State staffing ratios do not specify the number of registered nurses compared to the number of licensed vocational nurses or licensed psychiatric technicians. However, Title XX of the California Government Code of Regulations permits hospitals to use licensed vocational nurses for up to 50 percent of acute care staffing. The Memorandum of Understanding requires the Hospital to maintain at least 60 percent registered nurse staffing in the medical/ surgical units, 80 percent registered nurse staffing in the intermediate care unit (unit 4B) and in the birth center, and all registered nurse staffing in the critical care units, nursery, and recovery room.

Daily Staffing Procedures and Actual Staffing Levels

Daily Staffing and the Automated "One Staff" System

Clinical unit charge nurses and the nursing supervisors determine staffing for the on-coming shift. Each clinical unit schedules regularly-assigned nursing staff, but the actual need for staff can change each shift, depending upon the patient census and the acuity level. The clinical unit charge nurses and the nursing supervisors identify changes in the number of required staff to adjust for changes in patient census and acuity and to cover staff absences.

The Department of Nursing utilizes an automated staffing system, One Staff, to generate reports for each clinical unit. These reports provide:

• Number of scheduled staff,
• Staff status (such as sick pay),
• Targeted, or required, number of staff, based on census and acuity, and
• Difference between the number of scheduled staff and targeted staff.

The Department of Nursing staffing office prints the One Staff reports at the start of the shift and after the acuity data is entered. Once the staffing office has entered staffing data into the One Staff system, accounting for staff floated to another unit, use of registry staff, sick calls, and other staffing corrections, the final One Staff report is filed.

During the course of the shift, the nursing supervisor compares the census at the start of the shift, the admissions and discharges, and the estimated census at the end of the shift. The nursing supervisor estimates the staffing needs for the on-coming shift based on this information.

Each shift, the staff nurses complete the acuity tool for the patients and the average acuity level for the unit is determined. The staffing office enters the acuity information into the One Staff database and One Staff calculates the unit staffing needs. The staffing office staff fine-tunes the staffing needs at this point.

Some clinical units, such as the birth center, are responsible for staffing their own units. The nursing supervisor continues to be responsible for staffing levels on these units and works with the clinical unit nurse manager to identify staffing trends that are higher than other clinical units.

Targeted versus Actual Staffing Levels in Medical/Surgical Units

The Department of Nursing generally achieves the targeted staffing levels, without significant under- or over-staffing of the clinical units. In FY 2001-2002, the average actual staffing per shift for all clinical units was approximately 8 percent more than targeted staffing. However, this 8 percent increase in staffing equaled less than one position per clinical unit per shift. A random sample of 72 medical/ surgical unit shifts in FY 2001-2002 shows the following percentage increase or decrease of actual staffing per shift compared to targeted staffing.

Table 15.5

Average Percentage Variance in Average Actual Staffing per Shift Compared to Targeted Staffing based on the Staffing Matrix
FY 2001-2002

Based on a random sample of One Staff reports for 72 shifts in FY 2001-2002.

For the sample as a whole, actual registered nurse staffing was more than targeted staffing and actual licensed vocational nurse staffing was less than targeted staffing.

• For the sample as a whole, actual registered nurse staffing exceeded targeted staffing by 8.5 percent.
• Actual licensed vocational nurse staffing was 13 percent less than targeted staffing.

Adjusting Staffing to Meet Census Needs

San Francisco General Hospital is well staffed with registered nurses, although licensed vocational nurse staffing falls below its staffing targets. Because expenditures for nursing staff are a large component of Hospital operating expenditures, the Hospital should adjust its staffing to contain unwarranted spending increases.

Filling Licensed Vocational Nurse and Licensed Psychiatric Technician Vacancies

San Francisco General Hospital needs to aggressively recruit and retain licensed vocational nurses and licensed psychiatric technicians. The Hospital spends more than necessary for nursing staff because it uses registered nurse staff in lieu of licensed vocational nurse and psychiatric technician staff. San Francisco General Hospital incurs increased costs for using registered nurse staff to back-fill vacant licensed vocational nurse positions, ranging from an estimated $142,000 if the positions are back-filled with straight time to $434,000 if the positions are back-filled with overtime.

San Francisco General Hospital has a 14 percent vacancy rate among licensed vocational nurses, equal to 13 positions, and a 27 percent vacancy rate among license psychiatric technicians, equal to 12 positions. By filling vacant licensed vocational nurse and psychiatric technician positions, the Hospital could reduce expenditures without modifying staffing ratios.

Table 15.6

San Francisco General Hospital Vacancy Rate for
Nursing Positions in FY 2001-2002

Source: San Francisco General Hospital Department of Nursing

Turnover among Licensed Vocational Nurses and Licensed Psychiatric Technicians

According to San Francisco General Hospital, the turnover rate among licensed vocational nurses and licensed psychiatric technicians is approximately 13 to 14 percent, which is higher than the overall turnover rate of approximately 8 percent. Unlike vacancy rates, which can result from delays in hiring for existing and new positions, turnover rates can indicate problems in retaining nurses. San Francisco General Hospital does not have a consistent program for conducting exit interviews or for documenting the reasons for nursing staff resignations, and therefore, does not have a means to identify problems causing resignation or policies improving retention.

San Francisco General Hospital should develop a program for conducting exit interview, identifying factors that contribute to high turnover and developing programs to increase retention, especially among licensed vocational nurses and licensed psychiatric technicians. Also the Hospital should develop a formal program to recruit licensed vocational nurse and licensed psychiatric technician, including developing referral and recruitment strategies with Bay Area training programs and schools.

Approving Position Requisitions and Hiring Nurses

San Francisco General Hospital implemented a decentralized hiring system for nurses many years ago. Civil Service testing, lists, and certification have been streamlined to allow expedited hiring for permanent positions. Also, new Civil Service rules give greater protection to employees who are hired provisionally, prior to establishing a permanent Civil Service list. The length of time for hiring nursing staff for San Francisco General Hospital is comparable to private hospitals.

Approval of requisitions for patient care positions can be delayed if the hospital is over-expending for salaries. By Charter, the Controller is responsible for reviewing position requisitions. According to the Controller’s Office, the Controller does not have authority to approve position requisitions if the department is overspending. Positions approved by the Controller’s Office are forwarded to the Mayor’s Office. In FY 2001-2002, due to projected budget shortfalls, the Mayor’s Office implemented a "soft" hiring freeze, delaying approval of many positions. The Mayor’s Office approved 200 Department of Public Health position requisitions at the end of July 2002, which had been held due to budget considerations. Although the Controller and Mayor’s Office can identify nursing positions by job code, the position requisition does not differentiate between administrative and direct patient care positions within the job code.

To facilitate approval of these position requisitions, San Francisco General Hospital should identify direct patient care positions in the "notepad" section of People Soft for the job codes for registered nurse (2320), licensed vocational nurse (2312), and psychiatric technician (2305), and notify the Controller’s Office by telephone or email of direct patient care position requisitions. By identifying direct patient care positions, the Controller and Mayor’s Office can consider these positions separately and expedite their approval.

Tracking Daily Staffing Costs through One Staff

San Francisco General Hospital should monitor actual staffing costs by shift to continually track the impact of staffing decisions on expenditures. The One Staff automated system has the capacity to record staff pay rates, allowing nurse managers and nursing supervisors to identify and track staffing costs as they occur. San Francisco General Hospital should download payroll information from the Hospital’s HR 2000 payroll database into the One Staff system periodically. The HR 2000 payroll data, which includes actual hourly rates for each staff person, would be included in the One Staff reports. Download of the payroll data into One

Staff would allow nurse managers and supervisors to incorporate cost data into their staffing decisions.

By tracking actual staff costs by clinical unit and shift, the nurse manger would be able to identify costs resulting from overstaffing on one shift and adjust staffing for the next shift to offset the costs. Because the One Staff system has the capacity to incorporate payroll data, downloading HR 2000 data into the One Staff system would not result in new software costs. According to the Hospital Information Systems Department, existing staff resources could be used for developing data formatting, periodic reporting, and other implementation needs.

Effect of Increased Patient Census on Nursing Expenditures

Both staffing ratios and patient census drive expenditures for nursing. In the past two years, the average daily patient census has exceeded the number of beds funded in the San Francisco General Hospital budget, as shown in Table 15.7 below.

Table 15.7

Number of Medical/ Surgical Beds Funded in the San Francisco General Hospital Budget Compared to the Actual Average Daily Medical/ Surgical Census
FY 1997-1998 through FY 2001-2002

Source: San Francisco General Hospital

Nursing Staffing Model and the Nursing Budget

The annual budget for nursing and the number of nursing positions funded in the budget are based on the number of budgeted patient beds. The hospital does not adjust the number of funded nursing positions during the year if the patient census increases, and therefore, employs overtime, per diem, and registry staff to meet the demands of an increased census.

The nursing model, upon which San Francisco General Hospital builds the nursing budget, is determined by

• Staffing ratios and staffing mix for the clinical units, mandated by the Memorandum of Understanding,
• Fixed and variable staffing requirements for the clinical units, and
• Productive and non-productive time for clinical unit staff.

Each clinical unit has a certain number of fixed staff, such as the nurse manager or nurse educator, and variable staff. Variable staff is comprised of both permanent staff and flexible staff, which include per diem and registry. Permanent staff constitutes 93 percent of variable staffing to accommodate minimum census and flexible staff constitutes 7 percent to accommodate changes in census.

The nursing model and budget accounts for the non-productive and productive time. In FY 2001-2002, non-productive time for direct patient care was approximately 21 percent of a full time equivalent (FTE) position.

In FY 2002-2003, the Board of Supervisors approved 22 new budgeted beds at San Francisco General Hospital, resulting in increased personnel expenditures of $5,149,852. The 22 new beds increased the number of San Francisco General Hospital medical/surgical and skilled nursing beds from 198 to 220 to accommodate the increased inpatient census. The hospital included 42.4 new positions in the FY 2002-2003 budget to accommodate the new beds, including 23 new registered nurse positions, and projected increased patient revenue to offset the increased personnel expenditures.

Conclusions

San Francisco General Hospital has sufficient registered nurse staff to meet the Hospital’s patient care demands. The staffing ratios in the Memorandum of Understanding between the City and the Service Employees International Union exceed proposed minimum State staffing ratios, and require a larger percentage of registered nurse staffing than mandated by State law. On average, San Francisco General Hospital meets its targeted staffing levels, indicating that the hospital is adequately staffed to meet the patient census and acuity levels. However, San Francisco General Hospital uses a large number of per diem registered nurse staff and registered nurse overtime to meet its targeted staffing levels.

In FY 2001-2002, the Hospital spent nearly $49 million for direct patient care nursing costs, which exceeded the Hospital budget for these costs by $2.9 million or 6 percent. Included was spending for per diem staff and for overtime to accommodate a higher than expected patient census and to back-fill vacant positions. Overall, per diem and overtime staff cost less than regular staff, when fringe benefits and non-productive time are included. However, although use of per diem staff is cost-effective to meet staffing needs, use of overtime is less efficient. Use of overtime can result in hidden costs from increased work related injuries and decreased patient safety.

Because San Francisco General Hospital has a high vacancy and turnover rate among licensed vocational nurses and licensed psychiatric technicians, the Hospital uses higher cost registered nurses to replace licensed vocational nurses and licensed psychiatric technicians. In FY 2001-2002, the vacancy rate for licensed vocational nurses was 14 percent and for licensed psychiatric technicians was 27 percent. The vacancy rate for permanent registered nurse positions 12 percent. The Hospital back-filled these positions mostly with per diem registered nurses and with registered nurse overtime.

In FY 2001-2002, San Francisco General Hospital scheduled 8.5 percent more registered nurse staff and 13 percent less licensed vocational nurse staff than required by targeted staffing levels. Using registered nurses to replace licensed vocational nurses results in higher salary costs. The Hospital should aggressively recruit and retain licensed vocational nurses and licensed psychiatric technicians to avoid unnecessary staffing expenditures. The estimated increased cost to San Francisco General Hospital to back-fill vacant licensed vocational nurse positions with registered nurses, ranges from $142,000 for back-filling with straight time to $434,000 for back-filling with overtime.

In FY 2001-2002, the actual average daily patient census was 10 percent higher than the budgeted patient census. The Board of Supervisors approved 22 new medical/surgical and skilled nursing facility beds in the FY 2002-2003 budget, which included 23 new registered nurse positions. The Hospital needs to fill new and vacant nursing positions efficiently, and to retain current nursing staff. To expedite approval of direct patient care positions, the Hospital needs to flag direct patient care position requisitions and notify the Controller’s Office of which position requisitions are direct patient care. The Hospital also needs to identify reasons for resignations among nursing staff by developing a consistent program for conducting exit interviews.

Recommendations

The Department of Public Health should:

Costs and Benefits

Our recommendations would not result in new direct costs to the Hospital. These recommendations are designed to contain increases in nursing expenditures by closely identifying and adjusting staffing needs to meet the demands of increased and decreased patient census. By better recruiting and retaining of licensed vocational nurses and licenses psychiatric technicians, San Francisco General Hospital could save $434,000 annually.

1. On average, non-productive time for permanent registered nurse staff equals 21 percent of all budgeted hours. The hourly cost of productive time, therefore, equals $36.53 times 1/(1- 0.21) or $36.53 times 1.27.
2. Dembe, Allard E., "Relationship between stressful work schedules and occupational injuries: New findings from the National Longitudinal Survey of Youth", Center for Health Policy and Research, University of Massachusetts Medical School.
3. Stated in a proposal for public comment for data collection, Federal Center for Disease Control, June 2002.
4. Golden, L. and Jorgensen, H., "Time after Time: Mandatory Overtime in the U.S. Economy", Economic Policy Institute, January 2002.