How Nurse Practitioners Help Reduce Health Care Costs
Benefits managers and insurance agents understandably spend a lot of time brainstorming ways to reduce organizational costs related to employee benefits.
Conversations in this arena often center around the specifics of how a benefits plan is designed, but it’s important that we also make time to discuss whyhealth care in the U.S. is costing so much and changes that could have a positive impact.
One big component of that mission: the role of health care providers and related costs.
A National Institute for Healthcare Management study found that 18 percent of health care expenditure growth stems from physician costs – making it the second greatest contributor to overall health care cost increases. This clearly makes this an area of potential savings worth exploring.
A seemingly obvious solution for the physician cost dilemma has been around since the 1960s: nurse practitioners (NPs), whom provide a wide variety of health care services at a high level.
While NPs’ roles vary from state to state, common services these professionals provide include diagnosing and treating acute and chronic conditions; prescribing medications; ordering, performing, and/or interpreting diagnostic tests; managing a patient’s care; and promoting positive health and lifestyle choices through education and counseling.
The affordable care options offered by NPs, however, are sometimes taken for granted. Let’s dust off that component of NPs a bit, shall we?
NPs Come with Lower Education and Compensation Costs
Becoming an NP is no easy feat, but it is a more cost-effective one than becoming a physician. Nurse practitioners (NPs) must obtain a master’s degree or doctorate and are nationally certified in their specialty areas.
However, the American Association of Colleges of Nursing found that nurse practitioner tuition and training costs are 20 to 25 percent less than physician tuition costs. This allows advanced practice nurses to begin serving patients at a high level after receiving their degree with less debt than doctors on average.
It’s also important to note that most schools will require a nurse to have been working in their field for at least one to two years as a prerequisite to becoming an NP, meaning that these health care providers only reach this high level with practical experience under their belts.
For the time being, the lower cost of education and other employer-determined factors have resulted in NPs being compensated at a lower rate than physicians in a similar role and setting.
According to 2017 data from the Bureau of Labor Statistics, the average salary for a full-time NP was $107,480 ($51.68 per hour), whereas the average salary of family and general physicians was $208,560 ($100.27 per hour).
This lower compensation rate often results in lower patient expenses. On average, patients save 20 percent by visiting a NP compared to those that saw a physician, according to the National Nursing Centers Consortium.
NPs Provide High Quality of Care at Lower Cost
Based on the above, you might be thinking, “Sure, there are savings. But are nurse practitioners providing the same quality of service?” The short answer appears to be yes.
The first cost analysis of the nurse practitioner practice conducted by the Office of Technology Assessment (OTA) in 1981 found that NPs provided “equivalent or improved medical care at a lower cost” than physicians. The study also found NPs were able to lower patient visits by one-third, especially when NPs provided care to patients independently.
Those results have been validated by subsequent studies.
A systematic review of 37 studies in 2011 found that cost-related outcomes such as length of stay, emergency visits, and hospitalizations for NP care were equivalent to those of physicians. Based on those findings, it was estimated in 2012 that increasing the utilization of advanced practice registered nurses in Texas could result in $16.1 billion in savings, which would increase over time.
A 2015 Medicare claims study conducted by Brandeis University’s Heller School for Social Policy and Management, Mathematica Policy Research and Montana State University also found that NP primary care represented a cost savings of 11 to 29 percent compared to physician primary care with no decrease in care quality for patients.
“Because enrollment into the Medicare program will expand rapidly as the 78-million-strong baby boom generation ages, total Medicare spending will increase substantially. Providing access to care without bankrupting the Medicare program is a growing concern. Our study offers evidence that primary care provided by nurse practitioners can help address this concern,” said Jennifer Perloff, a researcher at the Heller School at Brandeis.
NPs Affordably Address the Care Provider Gap
Americans also need to face the grim reality that there simply aren’t enough doctors.
This situation seems bleaker still when you consider that the number of Americans over the age of 65 is expected to grow by 55 percent by 2030, which will likely result in increased health care needs.
Telemedicine and other solutions can help address the shortage, but the AAMC suggested that a team-based approach to health care is a necessary approach as well. Nurses and NPs would be crucial elements.
While the future doesn’t seem rosy in that light, a lack of physicians isn’t just a problem of the future; it’s a problem of the here-and-now, too. One study found that 40 percent of physicians in hospitals took on more patients than they could safely handle, putting patient safety in jeopardy. Additionally, this can lead to increased readmissions and need for additional care, which raises costs.
Enter the NPs. Physician-NP teams have been found to be 42 percent less costly for intermediate hospital stays when compared to physician-only teams, and 26 percent less costly for long-term stays.
These physician-NP teams also reduced the patient readmission rate and in-house complications when compared to physician-only teams.
This help patients’ wallets, but it also has financial benefits for hospitals as the Centers for Medicare and Medicaid Services (CMS) is required under the Affordable Care Act to reduce payments to inpatient prospective payment system (IPPS) hospitals with excess readmissions.
While the nursing profession is facing its own staffing challenges, leveraging the abilities of NPs to compliment those of time-strapped physicians seems to provide a cost-effective way of addressing the doctor shortage and allow patients to receive affordable, effective care.
NPs Help Patients Stay Out of Hospitals
Not only do NPs decrease the cost of hospital care, they can help keep patients out of hospitals altogether.
Thousands of nurse practitioners staff and often lead retail clinics, increasing consumers’ access to primary care at a lower cost than many doctors’ offices.
Studies have found that nurse-managed clinics in communities serve as alternatives to emergency rooms, urgent care centers, and hospitals. As a result, these clinics reduce the utilization of health care in these more expensive settings.
That outcome has been observed in a variety of other settings as well.
For instance, in a study that compared a NP-managed practice with a physician-managed practice within a managed care organization (MCO), the NP-managed practice produced 43 percent fewer emergency department visits and 38 percent fewer inpatient days.
NPs are also leading many school-based health centers (SBHCs). If you’re unfamiliar with SBHCs, picture a small retail clinic or doctor’s office housed in a school rather than Target or a pharmacy.
Researchers found SBHCs reduced student hospitalization, urgent care, and emergency visits. The SBHCs studied were projected to save four school districts $1,352,087 over the course of three years and expected to close the gap of lower health care cost for the African American children and adolescents treated. It was estimated the SBHCs were capable of saving Medicaid approximately $35 per student per year.
Not only does the reduction in hospitalization seen in these situations and many others directly relieve the financial burden placed on patients, institutions, and taxpayers, but it also comes with the added and substantial benefit of reducing the time and income lost from work and the impact that has on organizations’ productivity.
In the studies mentioned throughout this post, a consistent reason behind the cost savings observed was the holistic, patient-centric time nurse practitioners take when providing health care services.
Even something as simple as longer appointment times give NPs the opportunity to answer more patient questions and provider education and counseling, which has been shown to ultimately reduce unnecessary health care costs.
Professionals in the benefits industry must always continue to put plan designs under a microscope to determine where savings can be obtained without negatively impacting employees’ health and wellbeing.
But HR leaders, brokers, consultants, CFOs and the other stakeholders making benefits decisions need to also identify ways to enable consumers to make more informed, cost-conscious decisions.
Cleary NP-provided care is one element with the potential to ultimately help save the bottom line.
Disclaimer: ConnectYourCare does not provide tax or legal advice. This information is not intended and should not be taken as tax or legal advice. Any tax or legal information in this notice is merely a summary of ConnectYourCare’s understanding and interpretation of some of the current tax regulations and is not exhaustive. You should consult your tax advisor or legal counsel for advice and information concerning your particular situation before making any decisions.