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Why hide the revenue produced by perioperative nursing care?
AORN JOURNAL
JUNE 1984, VOL 39, NO 7
Editorial Why hide the revenue produced by perioperative nursing care?
T
he time has come for operating room nursing to be recognized as a source of revenue rather than just a cost center or an economic drain within a surgical facility. Patients pay for nursing care. Why hide it? Given the cost-containment environment of prospective reimbursement policies, hospital administrators are scrambling like never before to make certain they recognize and clearly document costs, expenses, and revenues for each service. If you believe, as I do, that perioperative nursing is a professional service, has inherent value, can be identified and measured, then its costs, and yes, the revenue it brings to the hospital must not be hidden in the operating room charge on the patient’s bill. No one would think of including medical care in the room rate, but nursing care has been for years. Surgical patients and third-party payers have a right to know what they are paying for-nursing care. The method for determining charges to the surgical patient precludes them from knowing nurses’ contributions to health care. It also prevents nursing service administrators from realizing their department’s revenue potential. Traditionally, hospital charges stem from averaging all operating costs- major equipment depreciation, specific supplies, laundry, housekeeping, overhead, and nursing care-and dividing the sum by the actual time the patient occupies the operating room. The figure, tempered with knowledge of local competitors’ prices and third-party reimbursement policies, results in an hourly or half-hourly room rate. Thus, the patient’s bill reflects one operating room charge,
and the professional nurse becomes a part of the overhead. This system has worked because short procedures usually involve patients who have fewer nursing requirements. It is easy to understand why the charge for a herniorrhaphy is less than a long neurological procedure. But this system depends on cost shifting-the common practice of sharing the burden of enormous costs among all patients. The patient who undergoes an appendectomy is charged extra to absorb some of the costs of open heart procedures done at the same hospital. Medicare and private insurers will no longer accept blatant cost shifting; actual costs have to be directly related to services rendered. Billing patients for the nursing care delivered would eradicate some of the inequities and restore nursing’s control over the use of their resources. In many cases, it would also save the consumer money. The concept of billing for nursing services rendered in a hospital is not new; the idea has been advocated by nursing leaders for years. If such a concept became universally accepted, the implications for professional nursing are clear. It would establish nursing as a revenue source as well as a cost center. Most reports about billing for nursing services have been applied to general nursing care and not specific nursing care in the operating room. Operating room charges remain deeply ingrained with the hourly rate mentality. St Luke’s Hospital and Medical Center in Phoenix and South Miami Hospital have initiated charges for nursing care.’ Their systems include variable billing procedures for nursing ser1121
vices in the operating room. Each system requires an extensive classifying procedure to identify patient acuity and nursing needs, and each system blends well with the hospital’s existing financial system. Nursing rates are based on patient acuity and the care received. Cost shifting is eliminated because patients pay for services rendered. For example, in July 1981, St Luke’s charge for Level One nursing care of the medical-surgical patient was $64 daily; the semiprivate room rate was $40. The Level Five patient was charged $193 daily for nursing care; the room rate of $40 remained the same.* Operating room charges and perioperative nursing rates can be considered in the same light. OR nursing needs to define levels of care, compute room charges based on supplies and equipment, and bill for nursing services separately.
New Editor Appointed for AORN Jourtinl
Pat Niessner Palmer
Pat Niessner Palmer, RN, MS, nurse editor of the Journal, has been promoted to editor. Since joining the Journal, Pat has written several articles and numerous editorials. Before becoming nurse editor, she had articles published in several nursing journals including Nursing Leudership, Dimensions of Criticcil Core Nursing, and Supervisor Nurse, and was an editorial consultant for
The states of Maryland and Maine have recently passed legislation requiring hospitals to list nursing as a separate item on patient’s bills. We must not wait for this to become another legislated mandate. We must develop billing systems based on professional nursing services contributions or be content with being considered an expensive part of the overhead. PAT NIESSNERPALMER,RN, MS EDITOR Notes 1. Nancy J Higgerson, Ann Van Slyck, “Variable billing for services: New fiscal directions for nursing,” The Journal of Nursing Administration (June 1982) 20-27. 2. Ann Van Slyck, “Model of practice: Variable charges for nursing care” in Professionalism and the Empowerment of Nursing (Kansas City: American Nurses Association, 1982) 47-57.
After graduating from the University of Colorado, Denver, with a master of science degree in nursing, Pat was the cardiovascular clinical specialist at Porter Memorial Hospital, Denver. She joined the Journal in March 1983. She has a BSN from Cornell University School of Nursing, New York City, and is a diploma graduate of Lenox Hill Hospital School of Nursing, New York City. In addition to her AORN membership, Pat belongs to the American Nurses’ Association, the American Association of Critical-Care Nurses, and Sigma Theta Tau. Of her goals as editor of the Journal, Pat says she would like all AORN members to feel that the Journal is their publication to share ideas and clinical expertise of operating room nurses. Now that her past position is vacant, Pat will be recruiting a clinical editor to join the staff. “We would like to have an RN who has experience both in the operating room and in writing for publication,” she said.
Dimensions of Critical Care Nursing. 1123
JUNE 1984, VOL 39, NO 7
Editorial Why hide the revenue produced by perioperative nursing care?
T
he time has come for operating room nursing to be recognized as a source of revenue rather than just a cost center or an economic drain within a surgical facility. Patients pay for nursing care. Why hide it? Given the cost-containment environment of prospective reimbursement policies, hospital administrators are scrambling like never before to make certain they recognize and clearly document costs, expenses, and revenues for each service. If you believe, as I do, that perioperative nursing is a professional service, has inherent value, can be identified and measured, then its costs, and yes, the revenue it brings to the hospital must not be hidden in the operating room charge on the patient’s bill. No one would think of including medical care in the room rate, but nursing care has been for years. Surgical patients and third-party payers have a right to know what they are paying for-nursing care. The method for determining charges to the surgical patient precludes them from knowing nurses’ contributions to health care. It also prevents nursing service administrators from realizing their department’s revenue potential. Traditionally, hospital charges stem from averaging all operating costs- major equipment depreciation, specific supplies, laundry, housekeeping, overhead, and nursing care-and dividing the sum by the actual time the patient occupies the operating room. The figure, tempered with knowledge of local competitors’ prices and third-party reimbursement policies, results in an hourly or half-hourly room rate. Thus, the patient’s bill reflects one operating room charge,
and the professional nurse becomes a part of the overhead. This system has worked because short procedures usually involve patients who have fewer nursing requirements. It is easy to understand why the charge for a herniorrhaphy is less than a long neurological procedure. But this system depends on cost shifting-the common practice of sharing the burden of enormous costs among all patients. The patient who undergoes an appendectomy is charged extra to absorb some of the costs of open heart procedures done at the same hospital. Medicare and private insurers will no longer accept blatant cost shifting; actual costs have to be directly related to services rendered. Billing patients for the nursing care delivered would eradicate some of the inequities and restore nursing’s control over the use of their resources. In many cases, it would also save the consumer money. The concept of billing for nursing services rendered in a hospital is not new; the idea has been advocated by nursing leaders for years. If such a concept became universally accepted, the implications for professional nursing are clear. It would establish nursing as a revenue source as well as a cost center. Most reports about billing for nursing services have been applied to general nursing care and not specific nursing care in the operating room. Operating room charges remain deeply ingrained with the hourly rate mentality. St Luke’s Hospital and Medical Center in Phoenix and South Miami Hospital have initiated charges for nursing care.’ Their systems include variable billing procedures for nursing ser1121
vices in the operating room. Each system requires an extensive classifying procedure to identify patient acuity and nursing needs, and each system blends well with the hospital’s existing financial system. Nursing rates are based on patient acuity and the care received. Cost shifting is eliminated because patients pay for services rendered. For example, in July 1981, St Luke’s charge for Level One nursing care of the medical-surgical patient was $64 daily; the semiprivate room rate was $40. The Level Five patient was charged $193 daily for nursing care; the room rate of $40 remained the same.* Operating room charges and perioperative nursing rates can be considered in the same light. OR nursing needs to define levels of care, compute room charges based on supplies and equipment, and bill for nursing services separately.
New Editor Appointed for AORN Jourtinl
Pat Niessner Palmer
Pat Niessner Palmer, RN, MS, nurse editor of the Journal, has been promoted to editor. Since joining the Journal, Pat has written several articles and numerous editorials. Before becoming nurse editor, she had articles published in several nursing journals including Nursing Leudership, Dimensions of Criticcil Core Nursing, and Supervisor Nurse, and was an editorial consultant for
The states of Maryland and Maine have recently passed legislation requiring hospitals to list nursing as a separate item on patient’s bills. We must not wait for this to become another legislated mandate. We must develop billing systems based on professional nursing services contributions or be content with being considered an expensive part of the overhead. PAT NIESSNERPALMER,RN, MS EDITOR Notes 1. Nancy J Higgerson, Ann Van Slyck, “Variable billing for services: New fiscal directions for nursing,” The Journal of Nursing Administration (June 1982) 20-27. 2. Ann Van Slyck, “Model of practice: Variable charges for nursing care” in Professionalism and the Empowerment of Nursing (Kansas City: American Nurses Association, 1982) 47-57.
After graduating from the University of Colorado, Denver, with a master of science degree in nursing, Pat was the cardiovascular clinical specialist at Porter Memorial Hospital, Denver. She joined the Journal in March 1983. She has a BSN from Cornell University School of Nursing, New York City, and is a diploma graduate of Lenox Hill Hospital School of Nursing, New York City. In addition to her AORN membership, Pat belongs to the American Nurses’ Association, the American Association of Critical-Care Nurses, and Sigma Theta Tau. Of her goals as editor of the Journal, Pat says she would like all AORN members to feel that the Journal is their publication to share ideas and clinical expertise of operating room nurses. Now that her past position is vacant, Pat will be recruiting a clinical editor to join the staff. “We would like to have an RN who has experience both in the operating room and in writing for publication,” she said.
Dimensions of Critical Care Nursing. 1123