Findings from this study only partially support the hypothesis that hospitals that needed to increase nurse staffing hours the most in order to reach compliance with the minimum nurse staffing regulations reduced the amount of uncompensated care that they provide. As hypothesized, reductions in growth rates of uncompensated care were lower among hospitals that reported the lowest pre-regulation staffing levels; however, reductions in growth rates of uncompensated care were also found for hospitals in the third staffing quartile. Statistically significant results were limited to for-profit hospitals in both the transition and post-regulation periods and county hospitals in the transition period. The lack of statistically significant findings among hospitals in the second staffing quartile may reflect a lack of precision in these estimates due to a different distribution of hospital ownership including smaller numbers of county and for-profit hospitals in this quartile. Alternatively, these results may reflect different strategies for meeting the minimum nurse staffing requirements, for example, alterations to occupational mix to lower the cost of meeting the nurse staffing requirements. Descriptive findings revealed that in the post-regulation period staffing quartiles 1 and 2 had the largest increase in licensed nurse HPPD, but staffing quartile 3 had the largest increase in RN HPPD, thus indicating that staffing quartiles 1 and 2 relied to a greater extent on LVNs to meet the regulatory requirements.
The lack of statistically significant findings for not-for-profit and district hospitals suggests that these hospitals may have found ways of financing increases in nurse staffing costs through reserves, charitable donations, price increases or other reductions in operating costs in order to protect levels of uncompensated care. Increasing focus on not-for-profit hospitals’ accountability for their tax-exemptions may have motivated these hospitals to protect uncompensated care, a publicly visible community benefit activity.
Consistent with an objective to maximize profit for owners, for-profit hospitals in the first and third staffing quartiles displayed the greatest reductions in uncompensated care growth rates both during the transition and post-regulation periods. County hospitals had similar reductions in growth rates in uncompensated care during the transition period; however, these results were not statistically significant in the post-regulation period.
Although limited, findings from this study provide some support for public concerns that financial pressure on hospitals may challenge access to free and reduced price care for indigent patients. Since hospitals have historically used operating earnings to help finance uncompensated care (Hadley & Holahan, 2003
), policy actions that threaten hospital profitability may force trade-offs between compliance with regulations and community benefit, especially among for-profit hospitals that must show a return for shareholders and resource-constrained county hospitals that have traditionally served a high number of indigent patients (Conway, Tamara, Zhu, Volpp, & Sochalski, 2008
). Although reductions in uncompensated care growth rates did not persist in the post-regulation period for county hospitals, even short-term restrictions on uncompensated services by these safety-net hospitals could have a substantial detrimental effect on access for already vulnerable patients.
The finding of more persistent reductions in uncompensated care growth rates among for-profit hospitals raises the question of whether the reductions reflect declining access to care for vulnerable patients or a transfer of uncompensated care to neighboring hospitals. Data limitations precluded us from answering this question definitively; however, we did examine growth of uncompensated care over the study period in two HSAs with different juxtapositions of for-profit hospitals in the first and fourth staffing quartiles. The closest match included two HSAs, each with two hospitals; the first had a staffing quartile 1 for-profit hospital and a staffing quartile 4 not-for-profit hospital, while the second had a staffing quartile 4 for-profit hospital and a staffing quartile 2 not-for-profit hospital. The HSA-wide level of uncompensated care was similar in 2000, but the growth rates of uncompensated care were drastically different. In 2006, uncompensated care was only 5% higher than in 2000 in the first HSA while it was 130% higher in the second HSA. Hence, this example suggests declining access rather than a transfer of uncompensated care to neighboring hospitals. However, this is just one example using the closest match in our sample based on ownership type, staffing quartiles, and total uncompensated care in 2000. The example ignores all other differences between the two HSAs and thus should be considered cautiously. It is nonetheless suggestive of an approach for future studies that would consider effects on uncompensated care at the market level, including total amounts of care and possible shifting of uncompensated services among hospitals.
Findings from this study are particularly salient at a time when minimum nurse staffing legislation is being considered at both the state and federal levels (Keeler & Cramer, 2007
). Such legislation, intended to improve quality of care for patients and quality of life for nurses, may have unintended consequences for uninsured patients. This does not imply that minimum nurse staffing legislation and other quality improvement policies should not be considered. If these policies improve quality, safety and patient outcomes then the costs may be well-spent. The findings suggest, however, that legislators should consider whether there is a need to monitor access to uncompensated services for uninsured patients as hospitals transition to the new requirements. Reporting of uncompensated care may help identify any reductions in access to hospital services, transfers of uninsured patients to alternative settings, or needs for temporary funding mechanisms to support hospitals as they transition to the new requirements. Hospitals need time to strengthen fundraising programs, renegotiate reimbursement contracts, reengineer processes to cut operating costs, and/or reallocate funds to finance cost increases. Temporary funding mechanisms may be particularly important for county hospitals that provide the greatest proportion of uncompensated services, or for hospitals located in markets with substantial nursing shortages regardless of ownership.
This study has several limitations that should be noted. First, data limitations prevented ideal measurement of several important variables. The measure of nurse staffing surplus does not reflect the actual hours required for a hospital to come into compliance with the minimum nurse staffing regulations. The measure of staffing surplus was used to construct quartiles to indicate the extent of burden of staffing regulations on different hospitals; however, it likely understates hospitals’ needs to increase actual direct-care nursing hours. Similarly, the measure of demand for uncompensated care related to insurance status does not reflect the actual proportion of the population in the vicinity of the hospital without health insurance. Although we control for various population characteristics (per capita income, percent over 65, and the unemployment rate), this controls for demand for uncompensated care only to the extent that the measured population characteristics are correlated with insurance status. Lastly, the measure of growth rate in uncompensated care does not reflect the overall amount of uncompensated care provided by hospitals in California nor does it differentiate between the number of patients served and the intensity of services. It is possible lower growth rates in uncompensated care among hospitals in the lower staffing quartiles were partially offset by a redistribution of uncompensated care to hospitals less affected by the legislation. While such a phenomenon would theoretically maintain access, it could create financial pressure for hospitals experiencing growth in uncompensated services, as well as time and travel barriers for patients.
A second limitation is that this study was limited to hospitals in California. There is no control for national trends in uncompensated care. Nevertheless, the significance of findings among hospitals in the lower quartiles of nurse staffing shortfall/surplus combined with the expected negative sign on the majority of coefficients gives us confidence that the results of this study are not spurious.
Third, in addition to the nurse staffing legislation, other changes in California occurred during the study period that could have affected uncompensated care. Most importantly, in late 2005, California begin enacting a series of changes in Medicaid funding that, along with new changes in Medicare funding, would potentially decrease government transfers to safety net hospitals. Time trend variables were included to control for the effects of omitted elements such as reimbursement; however, the effects of omitted variables that could have affected nurse staffing and uncompensated care may not have been fully captured.
Fourth, qualitative research has suggested that some hospitals had sufficient market power to negotiate reimbursement increases from private insurance companies, with the ratio legislation as a justification for higher payment (Spetz et al., 2009
). Since there is some descriptive evidence to suggest that hospitals in the top quartile of staffing prior to the legislation may have had greater market power, our findings may reflect the negotiating power of these hospitals.
Although our findings did not show broad reductions in uncompensated care following the implementation of minimum nurse staffing legislation in California, apparent reductions among county and for-profit hospitals suggest the need for caution when considering minimum nurse staffing legislation and other quality improvement policies that directly increase operating expenses, and therefore threaten hospital profitability. Future research should explore the effects of minimum nurse staffing legislation on broader community benefit activities including education and outreach. Qualitative studies are also needed to understand the ways that hospital executives obtain and allocate resources in the face of cost-generating policy mandates.