The effects of managed care and prospective payment on the demand for hospital nurses: evidence from California.
OBJECTIVE
To examine the effects of managed care and the prospective payment system on the hospital employment of registered nurses (RNs), licensed practical nurses (LPNs), and aides.


METHODS
Hospital-level data from California's Office of Statewide Health Planning and Development (OSHPD) Hospital Disclosure Reports from 1976/1977 through 1994/1995. Additional information is extracted from OSHPD Patient Discharge Data.


METHODS
Multivariate regression equations are used to estimate demand for nurses as a function of wages, hospital output, technology level, and ownership. Separate equations are estimated for RNs, LPNs, and aides for all daily services and for medical-surgical units. Instrumental variables are used to correct for the endogeneity of wages, and fixed effects are included to control for unobserved differences across hospitals.


RESULTS
HMOs are associated with a lower use of LPNs and aides, and HMOs do not have a statistically significant effect on the demand for RNs. Managed care has a smaller effect on nurse staffing in medical-surgical units than in daily service units as a whole. The prospective payment system does not have a statistically significant effect on nurse staffing.


CONCLUSIONS
HMOs have affected nursing employment both because HMOs have reduced the number of discharges and because of a direct relationship between HMO penetration and the demand for LPNs and aides. Contrary to press reports, LPNs and aides have been affected more by HMOs than have registered nurses.
Spetz
J
J
Public Policy Institute of California, San Francisco 94111, USA.
D002140:California; D003363:Cost Control; D003953:Diagnosis-Related Groups; D006279:Health Maintenance Organizations; D006801:Humans; D008329:Managed Care Programs; D015999:Multivariate Analysis; D020380:Needs Assessment; D009728:Nursing Assistants; D009741:Nursing Staff, Hospital / Q000600:supply & distribution*; D009743:Nursing, Practical; D010561:Personnel Staffing and Scheduling / Q000191:economics*; D011243:Preferred Provider Organizations; D011445:Prospective Payment System; D011787:Quality of Health Care; D012044:Regression Analysis; D012456:Salaries and Fringe Benefits; D016526:Workload