HomeFeaturesAn NP’s Perspective: How Nurse Practitioners Can Decrease Healthcare Costs

An NP’s Perspective: How Nurse Practitioners Can Decrease Healthcare Costs

According to the American Association of Nurse Practitioners, nurse practitioners are a proven answer to the evolving movement towards preventative health care and wellness. Evidence has proven that NPs consistently provide cost-effective, high-quality care to patients. This has been exhibited in various healthcare settings, such as primary care, acute care, and long-term care.

In today’s economy, trillions of dollars are spent each year on healthcare costs alone. This is a multi-faceted problem. It encompasses an aging population, rising hospital costs, increased use of medical technology, and unhealthy lifestyle choices of the general public. Additionally, physicians in the USA make a significant income in comparison to physicians in other regions of the world, such as in Europe.

NPs achieve good patient outcomes at a lower cost by applying evidence-based medicine to daily practice. They offer a holistic approach and focus on the entire person. This factor leads to a reduction in healthcare costs which impacts patients, the community, and the overall healthcare system.

The Office of Technology Assessment piloted an extensive case analysis of NP practice in 1981. The research illustrated that NPs provide equivalent medical care to physicians, but at a lower total cost. In the clinic setting, NPs potentially decrease the cost of patient visits by as much as one-third. Recently, in 2020, Heller School’s Schneider Institute for Health Policy and Research determined that primary care provided by NPs is 34 percent less costly than care provided by physicians.

Nurse Practitioner Salaries

One of the reasons NPs decrease healthcare costs is by requiring drastically lower salaries than physicians. The hourly cost of an NP ranges from one-third to one-half that of a physician. The difference in compensation ratio has remained unchanged for the past 30 years. As a result, the provider labor cost per visit is lower in practices where NPs are used to a greater extent. NPs are high productivity providers with lower salaries in comparison to physicians, which leads to more cost-effectiveness.

According to the Bureau of Labor and Statistics, NPs make an average annual salary of $124,680, whereas physicians make an average annual salary of $225,270. Although specialty and state of practice can impact physician and NP pay, an NP’s salary is significantly less than a physician’s. This means that NPs can practice alongside a physician, provide the same direct patient care, such as initiating consults, prescribing medications, and evaluating test results for just half the cost.

NP salary is lower than physicians’ because they receive cost-efficient education and training. They start with a professional license as a registered nurse, then continue their studies in graduate education that focuses on a specialty area such as family practice. These programs require an additional two to three years of school. This is in direct contrast to medical school, where students do not have a prior healthcare background, and need to invest seven or more years in graduate education and training.

Cost-related Outcomes

NPs play an effective role in decreasing patient hospitalizations. By developing a trusting relationship with patients, NPs improve compliance with patients and their treatment plan. If patients feel like they have a primary care provider they can trust, they are more likely to reach out to them when they do not feel well, instead of waiting for symptoms to worsen and end up in the hospital.

A systematic review of 37 studies by Newhouse et al. (2011) found substantial evidence that NPs have cost-related outcomes equivalent to those of physicians. These outcomes include less need for hospitalizations, shorter hospital stays, and lower emergency room visits. Moreover, Perryman (2012) modeled the potential economic impact that would be associated with greater use of NPs and other APRNs. It projected over $16 billion in immediate healthcare savings that would increase over time by incorporating more of these graduate-trained professionals in healthcare practice.

Another study detailed by Jenkins and Torrisi (1995), compared a physician-managed family practice with an NP-managed practice. It found that the NP-managed practice had significantly less emergency department visits and inpatient days, and 50 percent total annualized per member monthly cost savings. This study showed that NP-provided care leads to substantial cost savings, less costly interventions, and fewer emergency room visits and hospitalizations.

In Buerhaus et al. (2008), a study of Medicare beneficiary data found that primary care NPs had lower hospital admissions, readmissions, and unnecessary emergency room use than their physician counterparts. The number one expense in healthcare in the USA is hospitalizations. This is especially true in patients covered by Medicare and in the elderly population, with more complex illnesses.

In short, decades of research have shown that when states allow NPs to practice without restrictions healthcare costs go down.

Increased Profits

NPs provide high quality patient care, while also reducing high cost burdens for both patients and the healthcare system. According to Burl, Bonner, and Rao (1994), adding an NP to a medical practice could double the typical panel of patients seen by a physician. As a result, both productivity and profitability would increase. This would surge revenue of nearly $1.65 million per 100,000 patients annually.

Furthermore, NPs are less likely to order superfluous labs and imaging than physicians. They also have lower drug costs while simultaneously being more likely to achieve health goals. This is especially true in the acute-care setting, where NPs are found to have a lower percentage of prescription orders. NPs avoid over prescribing by providing holistic care. They counsel patients on diet and exercise, in addition to assessing causes of various illnesses.

Physicians tend to prescribe more than NPs and are more likely to utilize expensive technologies. Collaborative NP-physician management was linked to decreased length of stay and costs with higher hospital net profit. In the long-term care setting, NPs focus on health promotion and safety in the aging population. This leads to less tertiary complications which in return, reduces healthcare costs.

Increased Efficiency

NPs can carry out many of the same tasks and procedures as physicians, but at a lower cost to their medical facility. They are qualified to perform physical exams, order tests, and diagnose illnesses.

In Sears et al. (2007), NPs were shown to be more efficient than physicians. This means that time lost from work was lower in NPs compared to physicians. With a background in nursing, NPs are comfortable multitasking and delegating. They are experienced in team care and thus can effectively mobilize the skills of their team members.

In some healthcare settings, NPs even see more patients per shift than physicians. They are able to complete their documentation in a timely manner. They can provide quality care and education in the allocated amount of time they have with the patient. NPs are able to spend more time with the patients while completing administrative tasks quickly.

Increasing Access to Care

NPs help decrease healthcare costs by filling voids in the healthcare system. There has consistently been a physician shortage in the primary care sector. NPs are able to fill these voids and increase access to primary care. As a result, this reduces healthcare costs by improving patient compliance, health outcomes, and decreasing unnecessary emergency room visits.

Depending on the state, NPs can work autonomously, allowing them to open their own practice. This is especially beneficial in rural communities where many residents do not have access to healthcare and as a result have poorer health outcomes. By NPs increasing access to care, patients can have a better quality of life and avoid hospitalizations.

Full practice authority states found that NP independence increases the frequency of routine checkups and quality of care. This leads to less administrative costs for physicians and decreased indirect expenses for patients accessing care. NPs provide high quality care to their communities at an affordable cost. They are often serving vulnerable patients with high risk of medical complications.

Conclusion: How NPs Can Decrease Healthcare Costs

In summary, NPs are able to reduce healthcare costs by addressing healthcare needs of patients holistically. This type of holistic care facilitates building patient to provider trust. As a result, patients are more likely to reach out to their primary care provider before going to the emergency room for acute illnesses. Patients are also more likely to be compliant in their treatment plan. These factors can considerably decrease overall healthcare costs.

Not only does the use of NPs lead to fewer preventable hospitalizations and readmissions, but research shows it also leads to increase in patient satisfaction. The utilization of NPs expands access to care and wellness, especially in rural communities. NPs require lower salaries in comparison to physicians, and avoid overprescribing and ordering unnecessary tests. They are often more efficient than physicians, and can help increase profit for a medical facility.

Sophia Khawly, MSN

Writer

Sophia Khawly is a traveling nurse practitioner from Miami, Florida. She has been a nurse for 14 years and has worked in nine different states. She likes to travel in her spare time and has visited over 40 countries.

Being a traveling nurse practitioner allows her to combine her love of learning, travel, and serving others. Learn more about Sophia at www.travelingNP.com.