Cost to Practice to Employ an Advanced Practice Nurse

Introduction

As with any other business venture, medical practices need to evaluate the balance between the costs they incur in keeping one employee and the financial benefits they seek to gain from the services of the employee. In regards to a nurse practitioner, the practice always stands to gain in terms of improved quality of healthcare services offered, increased patient satisfaction; and offers the physician increased flexibility due to the technical support offered by the ANP.

In a situation where the healthcare system is facing a wider variety of challenges to efficacy and efficiency of service, advanced practice nursing is the new frontier whose aim is to counter these challenges with workable solutions. This involves critical thinking which questions the prevailing situation and leads to the development of new nursing information, knowledge and practices (Patterson & Haddad 1992, Davies and Hughes 1995, Elliott 1995, Sutton& Smith 1995). Therefore, there is no debate regarding the need to progressively develop advanced nursing practice (APN) for the future benefit of the population served by the healthcare sector.

The importance of Advanced Practice Nurses

Non-physician clinicians have seen a growth in their statute in the medical profession; in the United States, there was an estimated 240,000 advanced practice nurse in 2004. This number has increased, and this trend is expected to continue in the years to come. The importance of the ANP can be seen clearly from the fact that 23 states have allowed nurse practitioners to practice independent of supervision from a physician. Additionally, there has been an increase in the trend of specialization by nurse practitioners with training offered for a variety of practices including acute care; cardiovascular; pediatrics; advanced community health; family practice; and oncology.

Various industries in the world have been able to offer low-cost goods and/or services by increasing the population of less-skilled workers. This phenomenon is also taking place in medicine; this has allowed greater responsibility to be allocated to nurse practitioners thus giving the practice of medicine greater flexibility.

APN roles in the world

Many countries have had, in the last decade, to reevaluate their healthcare system and their ability to effectively serve their respective populations. One such area that has experienced increased activity is that of APN as there has been an unprecedented increase in the different types and their respective roles. Good examples of these include acute care nurse practitioners, advanced practice case managers, and clinical nurse specialists/nurse practitioners; these roles have not traditionally been part of the nursing practice or healthcare system at large.

A specific area that has particularly benefited from these developments in the nursing practice has been the acute care settings. This area has driven the demand for APN; this is expected to continue well into the 21st century with the development of similar roles in other sectors of healthcare including ambulatory services and community health management.

The roles of APN have however not been clearly defined; and there is a large variation in the appropriate titles, integration into professional education, regulatory mechanisms and process of evaluation of the practice (ICN 2001; Arcangelo et al, 1996).

The Cost to the Practice

The Practice

In this article, the practice seeks to employ one nurse practitioner and two support personnel, that is, one nurse assistant and one clerk. The drive to recruit has been fueled by an increase in the urban client base of the family practice in Houston, Texas; and the single attending physician seeks to divert some of the clinical responsibilities to another person without necessarily bringing in another physician; which may make the practice overstaffed. This is in the view that the practice already has two registered nurses but who are restricted by qualification to functioning within the nursing practice.

The costs

All businesses view employees as a cost of operations; and would like to reap maximum benefits from each of their workers while incurring minimum costs. Over the years, there has been a steady increase in the cost of healthcare in the United States; this has resulted in an increase in the premiums due to insurance companies and has put the federal government in the spotlight over the public financing of health services.

The passage of the Medicare and Medicaid legislation in 1965 saw an unprecedented increase in the demand for physician services across the United States; while the government tried to quench this demand by lowering the entry requirements for foreign-trained doctors, there was also a push to give non-physicians more power and responsibility so as to provide proper service coverage to the population. Medicare and Medicaid, which in combination account for approximately 50% of all the spending on healthcare services in America have compensated non-physician clinicians for a range of services rendered; within this range, there is a wide variation determined by the type of practice, location and the specialization of the nurse practitioner.

For the nurse practitioner, the source of Medicare compensation is in the 48% provision under overhead expenses as determined by the formula used for the allocation. In this case, the nurse is considered as support staff for the physician. However, experienced nurse practitioners, and who can operate with a significant amount of autonomy can demand to be (also) included in the 48% reimbursement for services provided by Medicare.

As such, a more qualified or experienced nurse would be a greater (net) drain of financial resources of a practice than a relatively less experienced one (Yucha & Witt, 2009; Lindeke & Chesney, 1999). However, it is also prudent to mention that a more experienced nurse would have greater autonomy; and would require less (or no) supervision from the attending physician; thus the practice would generally have an increased capacity and would serve more people thus increasing the base of income.

It would also be prudent to consider that the costs of purchasing malpractice insurance for the practice would be significantly reduced by hiring a nurse practitioner. Private malpractice insurers provide incentives for practices to improve the quality of services offered; such include discounts for practices that have a demonstratable low-risk record; or which used methods that have been shown to reduce medical errors.

In regards to nurse practitioners, evidence has shown that teams of medical professionals outclass individual practitioners; and there are better medical outcomes if a physician collaborates with a non-physician clinician than if the former was to operate alone (Arcangelo et al, 1996). This is an adequate basis for the reductions in the premiums due to malpractice insurers. In addition to this, the cost of insurance is further mitigated by the fact that Medicare provides reimbursement of 4% of the total claim by the practice.

Salary

The average pay -scale for a nurse practitioner in the United States is $85,000; this is about 38% higher than the average salary for all jobs in the country. The net salary of a nurse practitioner however depends on a number of factors including the location of the practice; the amount of specialization; and the level of care required in the different practices. For example, the average salary for a Critical Care Nurse is $110,000; $96,000 for a Neonatal Practitioner; $82,000 for a Family Nurse Practitioner; and $83,000 for a general Nurse Practitioner. On the other hand, different cities have different salary averages; for example; Houston has $75,090; New York 93,000; Phoenix $72,000; Los Angeles $90,566 (Kaplan & Brown, 2009).

It also may be necessary to hire staff to support the nurse; such would include clerical staff and nursing assistants. The salaries of this person should also be factored in as part of the cost of maintaining the nurse practitioner; since the staff would not have been hired if the nurse was not around. The average salary for a certified nurse assistant ranges between $30,000 and $55,000 depending also on the location and the type of practice. The average salary for Houston, Texas is $32,000 while that of Dallas, Texas is 33,157 (Loman & Shu-Ling, 2007).

Benefits

The nurse practitioner will enjoy all benefits of a salaried employee. Health insurance is one of these benefits; and the amount it will cost the practice will depend on the amount of cover the firm is willing to extend to the employee (family, dental, optical); and if the employee actually requires this cover. The employee will also be entitled to three weeks of paid vacation; and two weeks of paid sick leave in a year.

For a relatively nascent field like advanced practice nursing, the practice consensus is constantly changing as more information is churned out every day; and new protocols are agreed upon based on the innovations. It is very important for a nurse practitioner to stay on top of these issues, and to have up-to-date information regarding the accepted best practice. This would not only considerably reduce the risk associated with medical practice (and thus lower the costs of malpractice coverage due to a lower risk rating), but it would increase patient satisfaction and thus expand the client base of the firm.

Additionally, representation of the firm in some functions such as industry conferences can offer invaluable networking opportunities both for the firm and for the professionals working therein. It would therefore be prudent for the firm to invest in the continuing education and professional advancement of the nurse practitioner employee so as to reap these benefits. This may be in form of sponsoring the employee to attend conferences, workshops and lectures (with paid leave, travel and accommodation allowances).

The number which an employee can attend is determined by the size and scope of the practice; and the level of practice of the nurse; however, the employee should attend at least one national event in a year. Such would also determine the amount of money the practice will spend in financing this venture. Financial resources will also be channeled towards furnishing the practitioner with the current professional literature; including nurse practitioner journals and new reference books (Kaplan & Brown, 2009).

Other benefits which the practice would be obliged to offer the nurse include malpractice insurance cover; disability insurance; and contributions to the retirement schemes. During the period of employment, the practice is obliged to pay for the membership fee to a professional organization and for licensure of the nurse practitioner. Finally, the practice is obliged to pay for all travel expenses as they may arise; this includes expenses of giving a home visit. Additionally, the practice is obliged to pay for the purchase of new equipment, maintenance or upgrading of current equipment; and routine replacement of worn parts or tools.

While the salary may be more-or-less determined by the prevailing market situation, the benefits and the extent of their cover are significantly affected by the bargaining willingness and ability of the employee (Kaplan & Brown, 2009). As such, two different nurses with the same qualifications and job description may have different benefits in addition to the respective salary. In this light, professional organizations often advise their members to seek legal advice before entering into a contractual agreement with a potential employer; so as to benefit maximally from the package offered. Additionally, there are guidelines on the minimum benefits which a member should be willing to accept as reasonable compensation for services rendered; such would enable an inexperienced member to differentiate a good package from a bad one.

On the other hand, it is in the interest of the practice to withhold as many benefits as possible from an employee so as to reduce the costs of operation. However, there should be a balance between this drive to save money and provide a good working environment for the workers. Indeed, by extending some benefits such as funding of educational ventures, the firm stands to gain directly from improved services given by the respective employee; and the increase in client satisfaction and expansion of the firm.

Revenues

As mentioned before, the practice is a business venture; whose aim is to turn in a profit at the end of the day; such would require the net revenue to be higher than the total cost of running a certain venture. The sources of revenue from a nurse practitioner are primary from billing on services rendered; the amount of money collected from the patients would depend in part on the party footing the bill. This ranges from reimbursements for Medicare, commercial insurance or HMO; this will determine the ability of the various patients to pay for a wide range of services, and for newer methods of treatment or diagnosis, and the willingness of the insurer to pay for such services depending on the cover extended to the patient.

In this case, the nurse will be required to work on a full-time basis; and see approximately 20 patients per day. The nurse will be responsible for taking histories; performing complete examinations; ordering and/or performing diagnostic tests; interpreting the result; formulating a plan of treatment; collaborating with other professionals in the practice for the benefit of the patient, and referring the case appropriately to the next level of care. The nurse will also be required to make home visits as the need arises. The nurse will also be required to make hospital rounds or take calls as the need arises; for example, during periods of reduced capacity (holidays, etc.) and will be compensated appropriately thereafter both in time and financially.

The nurse practitioner will have worked for 49 weeks in the year (with three weeks of paid vacation and two of paid sick leave). During this period, all the activities will generate about $1,800 every day and $441,000 for the year. In a well-run practice, this amount is supposed to pay for all the costs of employing the nurse and turn in a profit at the end of the year.

The benefits of employing a nurse practitioner should be evaluated both for the short term and the long term period. This means that the practice should look at ways in which the nurse helped make the practice better through increased patient satisfaction and improved clinical outcomes. It therefore wouldn’t be prudent to make the decision to hire a nurse practitioner if not based solely on the evaluation of the direct revenues which the nurse brings in. Indeed, some of the revenues may not be from direct activities of the nurse; for example, a practice can turn in a profit from the balance between the money paid by healthcare financiers such as Medicare as reimbursement, and the money paid to the nurse practitioner as part of the contractual package. Such a revenue source is solely attributable to the mere presence of the nurse in the practice.

On the other hand, it would not be prudent for any business venture to enter into an endeavor whereby the net costs outstrip the net revenues. Business logic dictates that any venture has at least to break even if not make a good profit margin. It is therefore imperative for a firm to be very deliberate in determining the amount of money they spend on maintaining a nurse practitioner. As such, it would be very important to make a prior determination on whether the volume of work will keep the nurse optimally occupied so as to reap the maximum benefits of having (the nurse) around. The unfortunate situation would be to hire a nurse practitioner who spends a lot of the time without a sufficient amount of work.

As mentioned before, it may be necessary to hire support staff for the nurse practitioner; this is of particular importance in a practice that handles a large volume of patients, and that has a large administrative workload. Support staff such as clerks and nurse assistants would function to cushion the nurse practitioner from the inevitable pressure of practice administration, and allow them to concentrate more on actual clinical work. Indeed, an attempt to save money by denying a nurse practitioner the ideal personnel support would be to sabotage the venture if hiring (them) in the first place; since in due time s/he will find (them)self bogged down by administrative issues such as paperwork; and at the expense of patient diagnosis, treatment and care. However, as always, there must be a net financial gain for having these support personnel around so as to avoid unnecessary cost burdens on the firm.

Numerical Summary of Findings

Costs ($) Revenur ($)
Item Amount Item Amount
Salary 85,000 Direct earnings 441,000
Income tax 10,000 Indirect earnings (from reimbursements) 20,000
Social security 5,000
Sick pay 2,000
Vacation pay 2,000
Health insurance 5,000
Malpractice insurance 1,000
Continuing education and conferences; and subscriptions 3,000
Traveling allowance 1,000
Licensure and Professional affiliation 1,000
Support staff 60,000
Other expense 5,000
Total 180,000 461,000

References

Arcangelo Virginia, Michelle Fitzgerald, Debra Carroll and James D. Plumb (1996): Collaborative Care between Nurse Practitioners and Primary Care Physicians. Primary Care: Clinics in Office Practice, Volume 23, Issue 1, Pages 103-113.

Davies B. & Hughes A.M. (1995) Clarification of advanced nursing practice: characteristics and competencies. Clinical Nurse Specialist 9, 156–160.

Elliott P. (1995): The development of advanced nursing practice. British Journal of Nursing 4, 633–636.

ICN (2001) International Survey of Nurse Practitioner/Advanced Practice Nursing Roles: Submitted by the International Nurse Practitioner/Advanced Practice Nursing Network, Research Subgroup, International Council of Nurses. Web.

Kaplan Louise, Marie-Annette Brown (2009): State and Local APN Salary Data: The Best Evidence for Negotiations. The Journal for Nurse Practitioners, Volume 5, Issue 2, Pages 91-97.

Lindeke L. Linda and Mary L. Chesney (1999): Reimbursement realities of advanced nursing practice. Nursing Outlook, Volume 47, Issue 6, Pages 248-251.

Loman Deborah G. and Shu-Ling Hung (2007): Pediatric Nurse Practitioner Salary and Practice: Results of a Midwest Metropolitan Area Survey. Journal of Pediatric Health Care, Volume 21, Issue 5, Pages 299-306.

Patterson C. & Haddad B. (1992): The advanced nurse practitioner: common attributes. Canadian Journal of Nursing Administration, 18–22.

Sutton F. & Smith C. (1995) Advanced nursing practice: new ideas and new perspectives. Journal of Advanced Nursing 21, 1037–1043.

Yucha Carolyn B. and Rosemary Witt (2009): Leveraging Higher Salaries for Nursing Faculty. Journal of Professional Nursing, Volume 25, Issue 3, Pages 151-155.

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NerdyRoo. (2022, May 25). Cost to Practice to Employ an Advanced Practice Nurse. Retrieved from https://nerdyroo.com/cost-to-practice-to-employ-an-advanced-practice-nurse/

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