Nurse Practitioners: A Cost-Saving Solution to Medical Care

It’s time to examine the cost of nurse practitioners as healthcare providers, and the financial benefits they can bring. In the United States, healthcare costs are growing at an unsustainable rate. In 1970, we spent $75 billion on healthcare. In 2010, we spent $2.6 trillion. By 2021, spending will reach $4.8 trillion, which is one-fifth of the U.S. economy.

This is a problem, to say the least. This issue is multi-faceted, encompassing rising hospital costs, medical technology, fraud and waste, an aging population, and unhealthy lifestyles. One particularly interesting facet is the direct impact that healthcare providers have on this problem.

Healthcare providers in the United States charge patients significantly higher prices than providers in Europe. In fact, a 2011 study conducted by the National Institute for Healthcare Management found that the second greatest contributor to rising costs was the increase in physician costs. These costs accounted for 18 percent of the total growth in healthcare expenditure.

An Obvious Solution

Nurse practitioners offer a cost-saving solution for this growing problem. Nurse practitioners are healthcare providers who assess, diagnose, and treat medical conditions. They prescribe medication, order and interpret diagnostic tests, and perform medical procedures. Their philosophy of care is holistic and emphasizes disease prevention and health promotion.

Nurse practitioners specialize and subspecialize in various areas of medicine including family practice, acute care, pediatrics, geriatrics, psychiatry, and women’s health. They can be found working all across the healthcare system, from clinics to hospitals, to homeless shelters, to prisons. Importantly, these innovative clinicians save their employers and the country lots of money.

Compensation Savings

Compared with physicians, nurse practitioners cost less from the beginning, because they are paid less. Studies have found that nurse practitioners are paid one-third to one-half the rate of a physician while providing the same services to patients.

For example, in 2010, the median total compensation for primary care physicians ranged from $208,658 to $219,500. Likewise, at that time, primary care nurse practitioners earned  $97,345. This drastic difference in compensation has remained unchanged for 30 years.

Better Patient Outcomes Lower Costs

Another method to save the healthcare system money is to improve cost-related outcomes such as length of stay, emergency visits and hospitalizations. A 2011 systematic review of 37 studies found that nurse practitioners provided care equivalent to physicians in all these measures.

Using this information, the Perryman Group analyzed the potential economic impact of using more nurse practitioners to provide medical care. Their study estimated a $16.1 billion in immediate savings, which would continue to increase over time.

Savings Across Practice Settings

In their report titled Nurse Practitioner Cost-Effectiveness, the American Association of Nurse Practitioners describes the impact of nurse practitioners on managed care organizations. For example, nurse practitioners in Tennessee’s managed care organization provided care at 23 percent lower costs than physicians, resulting in a 21 percent reduction in hospitalization rates.

Nurse practitioner care results in lower costs in acute care settings as well. A 2009 study published in Nursing Economics found that nurse practitioner provided care was associated with lower overall drug costs for patients.

Furthermore, a 2006 study compared nurse practitioner and physician management of hypercholesterolemia following revascularization. This study demonstrated that patients who were treated by nurse practitioners had lower drug costs and were more likely to achieve their goals and comply with their prescribed regimen.

To learn more about the cost-effectiveness of nurse practitioner care, check out these resources:

• The economic benefits of more fully utilizing advanced practice registered nurses in the provision of care in Texas by the Perryman Group
• Use of midlevel practitioners to achieve labor cost savings in the primary care practice of an MCO
• Estimating the cost of using non-physician providers in an HMO: where would the savings begin?
• Evaluation of a nurse practitioner-led care management model in reducing inpatient drug utilization and costs.

I originally wrote this article for Health eCareers. Read the article on their blog, and check out the latest nurse practitioner jobs and salary information on their website.