Hospital nurse staffing: Focusing on temporary employment

Hospital nurse staffing is influenced by the growth of managed care organizations. Previous literature has focused on the hospital adjustment through a reduction or an increase in employment of hospital nurses. Little is known about how managed care influences temporary nurse employment in the hospital industry. This paper examines whether HMO penetration increases the share or number of registry nurse hours. It also examines the differential impact of HMO penetration: whether the penetration effect is higher in the market where an HMO has a large market share than where the HMO competes with other plans. Since hospitals may use non-standard staffing as a substitute for regular staff during times of nurse shortage, this study examines how labor market condition influences demand for temporary nurses.;Data for empirical evidence come mainly from the California Annual Hospital Financial Disclosure Reports available through California's Office of Statewide Health Planning and Development (OSHPD, 1993 through 2002). Multivariate regression analysis was used and fixed effects were included to control for unobserved differences across hospitals.;Results show a significant increasing rate of in hospital use of temporary agency nurses over the 1990s. HMO penetration is not related to the increase in temporary staffing in this study. Competition among HMOs does not have any statistically significant effect on the relationship between penetration level and demand for temporary staffing. The level of patient demand variation is positively related to the use of temporary staffing. A high benefit expense is also associated with increase in both level and share of temporary nurses. Consistent with the view that temporary staffing is used as a substitute for regular staff during the years of RN shortage, this study found a significant increase in the demand for temporary agency nurses 1999 through 2002. During the years of RN surplus (1996 through 1998), the result did not show any significant change in the demand for agency nurses.