The cost of nursing care constitutes a high proportion of healthcare expenses, organizational budgeting, and staffing decisions. Understanding the costs of nursing activities is critical to appropriate management of these costs. The current practice of billing for inpatient healthcare services is based on the outdated and often impractical accounting system from the 1930s, wherein hospitals bill patients at a fixed daily room rate, and the costs of nursing services are included within this per-diem charge.1 Using a flat per-diem rate greatly understates the actual costs of nursing care and fails to address the high levels of variability within and across units. Further, per-diem rates do not differentiate between expenses associated with nursing-specific tasks, such as medication administration, from other patient care activities.2-5 Thus, nursing costs are included in overall department and organization summaries and are not itemized, devaluing the critically important role of the nurse in the delivery of direct and indirect patient care. The purpose of this pilot study was to combine an established methodology for coding nursing interventions and action types using the Clinical Care Classification (CCC) System with a reliable formula (relative value units [RVUs]) for costing nursing services.
COSTING NURSING CARE
Several strategies have been developed to evaluate the cost of nursing services, including cost per minute and cost per activity models.6 However, most studies evaluating the cost of nursing services have used retrospective analysis of total hospital costs to evaluate nurse staffing measures and patient length of stay,7-9 nurse staffing and costs,10 skill mix and costs,8,11 RN and costs,12-14 nursing intensity,15 and RN and length of stay.7,16 However, these studies fail to measure patient-specific resource use directly related to nursing care and can lead to false assumptions of the actual costs of care.17
Variability in nursing care costs on a per-unit basis was demonstrated by Pappas14 in a study linking actual patient-level clinical and outcome data. Findings in this study revealed that the cost per case of medication error varied based on the unit where the error took place. The cost of error was $334 in patients admitted to a medical unit compared with $545 for patients admitted to a surgical unit in the same hospital. The relationship between the time nurses spend with their patients and decreased mortality, adverse outcomes, and length of stay has been reported in numerous studies,7,10,14 suggesting that there is great opportunity to improve clinical outcomes while reducing costs. To capitalize on these opportunities, there is a need to understand the real cost of specific nursing care processes to determine where adjustments can and cannot be made.
CLINICAL CARE CLASSIFICATION SYSTEM
The CCC System was originally created to document nursing care in home health and ambulatory care settings, but research has shown that it could be used to code nursing care in acute-care settings.18 Specifically designed for clinical information systems, the CCC System facilitates nursing documentation at the point of care. The CCC System consists of two interrelated terminologies: the CCC Nursing Diagnoses and Outcomes and the CCC Nursing Interventions and Actions. The CCC System was developed empirically from a national research study through the examination of approximately 40 000 textual phrases representing nursing diagnoses/patient problems and 72 000 phrases depicting patient care services and/or actions. The CCC Nursing Interventions codes are combined with one of four action types to describe specific intervention focus. The four action types are monitor/assess (observing patient), perform/direct care (providing hands-on care), teach/instruct (providing knowledge or skill), and manage/refer (coordinating care).19 Each of the four action types provides a different focus and takes a different time to execute regardless of the nursing intervention. For example, the nursing intervention "intravenous care" could be combined with the action type "perform/direct" or the action type "teach/instruct" to describe two very different types of interventions.
The CCC System is the first named national nursing interoperability standard accepted for interoperability implementation or exchange of information in the healthcare information technology/electronic health record (EHR). It was selected because it (1) is based on research and empirical data; (2) is found usable in all healthcare settings; (3) has atomic-level concepts, each with a unique definition and identification number; (4) is free (requires no licensing fee); (5) is integrated in Metathesaurus of the UMLS (Unified Medical Language System) and SNOMED-CT; and (6) is designed for EHR Systems. The CCC System is also recognized by the American Nurses Association as a comprehensive, coded, nursing terminology that can be used to support the documenting of nursing practice via the EHR. The CCC System has been successfully implemented in nursing documentation systems in acute and ambulatory settings.20 Healthcare institutions that have implemented the CCC System include Southcoast Hospitals Group, Fall River, MA; Claxton-Hepburn Medical Center, Ogdensburg, NY; Orthon Orthopaedic Hospital, Helsinki, Finland; and Kupio Hospital, Kupio, Finland. Using a standardized intervention terminology with associated costs will enable costs of care to be calculated as a by-product of documentation in an electronic record, eliminating the need for additional data collection.
RELATIVE VALUE UNITS
The CCC System Costing Method combines the CCC System intervention codes and action types with RVUs to determine intervention costs. The RVUs were selected because they represent one of a very few measures that have been developed and tested by Relative Value Studies Inc. (RVS Inc) to address the actual cost of patient care for "pay for performance" for physician services to Medicaid patients. The RVS Inc developed RVUs through an agreement with Alternative Link Systems, Inc, and they are being used for the reimbursement of selected allied healthcare professionals. The RVU manual designed for clinicians includes selected nursing interventions and contains a user-friendly coded listing of integrative healthcare services, interventions, or procedures with unit values to indicate the relative effort of each service provided to patient.21,22
Relative value units were initially developed by RVS Inc founded by Painter and Fitzgerald in 1980 and were created to develop a relative value system that was both accurate and comprehensive that could be used to develop and update fee schedules primarily for physicians. RVS Inc conducted research using an experience-based system and survey consensus. The RVUs for the four action types used in this study were developed by grouping ABC codes by action type and nursing intervention. ABC codes were developed by ABC Coding Solutions as a method to describe more than 4500 healthcare services, remedies, and supply items for documentation and reimbursement purposes.22 These codes describe healthcare practices that are not included in traditional medical coding systems such as the Current Procedural Terminology. The values for these action types were then averaged to determine the values. Each value that was used was developed by survey of providers asking for a value for each action based on time, skill, risk to the patient, risk to the provider, and severity of illness. Each value had a different set of respondents.
The ABC costing method has been approved by Centers for Medicare & Medicaid Services (CMS) on a trial basis for reimbursement of claims for services provided by nonphysician providers who are eligible for physician payments. The ABC Coding Method also included nursing interventions, treatments, and services, but CMS does not provide direct reimbursement for the nursing interventions. However, CMS's methodology is in place, and costs for professional nursing services could be determined using the same method.
In this pilot study, we observed nurses performing commonly executed nursing interventions and recorded these into an electronic database by combining the corresponding CCC intervention and action-type codes. The durations of these observations were used to calculate intervention costs using RVU calculation formulas. The formulas included the RVU related to the specific intervention action type, the duration of the intervention action, and the hourly cost of nursing care at this institution. The observed intervention's CCC System action type determined which RVU calculation formula was applied to determine the intervention action cost. In this study, we selected 21 commonly executed CCC intervention codes that could be combined with one of the four action types to describe a possible 84 specific nursing interventions.23
The steps in calculating the intervention cost used in this study were to (1) record the actual time in minutes for each nursing intervention, (2) divide the actual time by 10 (minutes), (3) multiply by the action-type RVU (value adjustment), (4) calculate conversion factor (hourly rate of provider or average hourly rate of providers in unit divided by 6), and (5) multiply conversion factor by each action type/intervention value adjustment. For example, a patient physical assessment that takes 3.8 minutes in a unit where the average hourly nursing rate is $25.11 per hour would be cost out at $3.81 using this formula. The use of a provider or unit average hourly rate allows the cost of interventions to be locally determined based on geographic region, nationally or internationally.
Observations of nursing interventions were performed on a 30-bed medical nephrology nursing unit in a large metropolitan teaching hospital in the southeastern United States. Preliminary observations were conducted in the unit to determine the most frequently occurring interventions. To aid in always identifying the correct code describing nurses' interventions, a definition of each intervention code was also displayed on the data collection tool. These definitions were derived from those provided by the CCC System manual.23 Table 1 lists the interventions observed in this study, their corresponding CCC codes, and intervention descriptions.
Data Collection Tool
The electronic forms-based data collection tool used in this study was created in MS Access (Microsoft, Redmond, WA) and allowed an observer to enter data directly into a tablet PC database. The data collectors followed nurses during the course of patient care and each time they performed an action type with a Core Nursing Intervention and entered the corresponding action type and Core Nursing Intervention codes and the duration (length of time) of the service on the tablet PC data collection tool. Entering data directly into the electronic database at the point of observation decreases the error associated with data entry at a later time. In addition, the observation tool allowed data entry only through prescribed drop-down menus and radio buttons, ensuring uniformity and completeness of data collection. Duration of each action type for the Core Nursing Interventions was automatically calculated through a built-in stopwatch device. The data collector started the clock at the beginning of the action type with a Core Nursing Intervention and stopped the clock at the end, automatically recording and linking the duration of the action type with a Core Nursing Intervention, and the corresponding CCC codes were automatically entered into the database (Figure 1).
Ten RNs were observed over the course of approximately 22 hours, and their interventions recorded on the electronic data collection tool. A total of 251 interventions were observed, coded, and entered into the database. The data collector was an RN familiar with medical nursing and the CCC System intervention codes. She participated in the design and construction of the electronic data collection tool used in this study and practiced using the tool in sample observations prior to study data collection.
Protection of Human Subjects
No specific patient identifiers or information regarding patients were collected. No attempt was made to identify any subjects, and no information concerning a particular subject could be revealed through a review of the data. Prior to observation of nurses, their written consent to participate in the study was obtained. The study was approved by the institution's institutional review board.
The relatively small number of observations on one nursing unit limits the generalizability of the results of this study to other settings. However, we have shown that this method of cost analysis is feasible and warrants replication with greater numbers of subjects in other settings.
Data were collected on a total of 224 interventions. Combining the 21 selected intervention CCC codes with the four action types yielded 37 unique interventions within the 224 total interventions observed. In the interest of space, only data on the most frequently performed interventions are presented in this article. Five interventions represented almost half of all the interventions performed (49.7%). The most frequently observed intervention was "nursing care coordination/manage-refer" (15.6%), followed by "nursing status report/assess-monitor" (12%), "medication treatment/perform-direct" (11.6%), "physical examination/assess-monitor" (10.2%), and "universal precautions/perform-direct" (9.3%). Table 2 describes the duration and calculated cost of these most frequently performed interventions.
Each nursing intervention label was paired with a CCC System action type to compose intervention actions. Each CCC System action type was assigned a specific RVU that was used to calculate specific intervention costs. Table 3 describes the duration and calculated cost of the four CCC action types.
The small number of observations limited to only one unit precludes us from generalizing the resulting costs of interventions described in this study. To be able to confidently apply intervention costs in the future will require much larger studies across multiple nursing specialties and units. However, that all the interventions, except medication treatment, are less than 2 SDs from the mean is encouraging evidence that this method of costing nursing intervention actions could prove valid in the future. At the time of writing, there is a study under way to expand the examination of this method in a more diverse practice setting. For the purpose of this study, the same intervention code was used when nurses were administering one or multiple medications and multiple types of medications (ie, by mouth, intravenous, injection) simultaneously. This variation in medication type and number could account for the wider variation in calculated medication treatment costs and the wider variation in the action type "perform/direct."
These data do provide an interesting snapshot of nursing care on this unit. Although previous studies of nursing care have reported that nurses spend a great deal of time performing (physical exam) and documenting patient assessment data (nursing status report)24 and administering medications (medication treatment),25 these authors are not aware of other studies that have documented the high frequency of activities related to care coordination and universal precautions. In a study of nursing documentation, Moss et al26 did discover that nurses frequently use the noncoded narrative portion of an electronic record to describe care coordination. Care coordination, nursing reports, and interventions related to universal precautions are not reflected in the patient documentation at this institution, and this is probably more often than not the case elsewhere. Also, these are not items that are factored into current nursing workload and patient acuity systems, resulting in an underestimation of nursing time needed for patient care.
Costing Care Using Standardized Terminologies
Nursing terminology development has progressed to the point where it is possible to describe nursing care in electronic documentation systems through the use of standardized codes. Unfortunately, healthcare institutions and system vendors have been slow to incorporate these terminologies into documentation systems. In addition, nursing documentation does not always reflect what nurses actually do in practice.24,26,27
An accurate reflection of practice in documentation systems that is standardized and coded would allow for the determination of costs for care, the ability to use documentation data to develop patient-based evidence for practice, and for tracking patient outcomes. Using standardized terminologies for documentation would tie each intervention in the system to a predetermined code automatically. Costing nursing care through the documentation process would directly tie what nurses do to the cost of their practice in a way that eliminates the need for further data collection and added additional paperwork. The ability to accurately describe and cost nursing care has become especially relevant in our current pay-for-performance healthcare environment, where poor patient outcomes affect the institution's economic bottom line.
This pilot study demonstrated the feasibility of observing nurses performing interventions and applying a costing method to develop costs of routinely executed nursing interventions. Future studies in a variety of nursing specialties and units are needed to validate the RVUs developed for use with the CCC System as a method to cost nursing care. The five most commonly executed interventions on the study unit were nursing care coordination/manage-refer, nursing status report/assess-monitor, medication treatment/perform-direct, physical examination/assess-monitor, and universal precautions/perform-direct. Interventions related to care coordination, nursing reports, and universal precautions are generally not included in current measures designed to estimate nursing workload.
The authors thank all the nurses who graciously allowed them to observe their work; they also thank research assistants Pan Cao and Heather Sobko.
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