Critical condition: the nursing shortage is sparking new interest in nurses' liability insurance and maybe higher prices. (Property/Casualty).

A national nursing shortage that's nearing a critical level is increasing the responsibilities and liability risks nurses face.

An example of the growing number of medical-liability suits against nurses is a case involving a 78-year-old woman who was badly burned by a steam vaporizer. The nurse responsible for leaving the vaporizer by the woman's bedside was found negligent for failing to safeguard and protect her patient from foreseeable danger.

As the nursing shortage escalates, some industry experts believe that low staffing is leading to increased sales of nurses' and hospital liability policies and might be a factor in rising premiums.

Looming Problem

Although there are nearly 2.5 million registered nurses employed in the United States today, nearly 1.75 million more nurses will be needed to fill vacant positions by 2010.

Increased workloads and patient loads, burnout and stress, mediocre pay, an aging RN work force, a diminishing pipeline of new nursing students, a growing number of other career opportunities for women and decreasing nursing-school faculty all are driving the nursing shortage. Today, 30 states are affected by a nursing shortage, with 44 states expected to have shortages by 2020.

"There are generally three problems causing the crisis--nurses aren't coming into the profession, ones in the profession aren't staying long enough, and those who are in the profession aren't particularly happy," said Dorothy Berry, an RN and vice president of clinical risk management for GE Commercial Insurance. The once widely held view of nursing as a vocation is increasingly transforming into "just a job," and there's concern that the joy of work has been diminished by staffing issues and nurses not being able to perform the types of services they expected to do when they entered the profession, she added.

According to the U.S. Bureau of Labor Statistics, jobs for RNs will grow 23% by 2008--faster than the average for all other occupations. In addition, about one-half of the RN work force will reach retirement age in the next 15 years, and as they retire, the supply of working RNs is forecast to be 20% below requirements by 2020.

As baby boomers age and require more health-care services than ever before, the number of nurses entering the field isn't anticipated to meet the demand.

Increased Liability and Sales

Many experts believe the national nursing shortage is impacting liability coverage. Because nurses are required to assume more responsibility and care for more patients--particularly those who are critically ill--they face more risk. In addition, nurses' professional roles continue to expand, making them more vulnerable to the types of lawsuits that physicians face. The number of lawsuits against nurses is growing, particularly for those working with critical care, pediatric and obstetrics patients.

"We know that the nursing shortage certainly is contributing to loss experience, but we haven't had a claim with that specific allegation to date," said Julie Stafford, vice president of underwriting for Minneapolis-based Midwest Medical Insurance Holding Co. Most of the company's claims involving nurses result from medication errors, she said.

For insurers, the nursing shortage is causing a small spike in the number of nurse professional liability policies being sold. Advanced-level nurses, including certified nurse midwives, nurse practitioners, clinical nurse specialists and certified registered nurse anesthetists, are driving the largest number of these sales.

"For years, it was the mindset of nurses that if they had their own liability insurance they were more prone to get sued, but research shows that just isn't true," said Helen Wilson, interim executive director of the Alabama State Nurses Association.

Consequently, that mindset slowly is beginning to change, and more nurses are seeking their own coverage, even though the majority still rely on their employers' coverage. About 1% to 3% of nurses currently carry their own policies, according to Dr. James Carland, president and chief executive officer of Phoenix-based Mutual Insurance Company of Arizona, a leading writer of hospitals in Arizona.

"It used to be [believed] that if a nurse worked in a hospital or surgical-care center, then the facility paid the insurance and they would take care of you, but we're finding out that's not tree anymore, and nurses can be sued independently," said Wilson. She said she has noticed a recent upsurge in the number of nurses inquiring about liability coverage, in part because of staffing and benefit cutbacks and the increased number of nurses going to work for agencies that have them traveling among different facilities. The American Nurses Association offers members discounted professional-liability policies through Seabury & Smith Corp.

"Employers will protect nurses to some degree, but until action is actually deemed to be their responsibility, then they aren't there for nurses, which is something many nurses don't understand," said Kathryn Hall, executive director of the Maryland Nurses Association. "But as they begin to realize the level of their coverage protection, [nurses] will probably opt to seek out their own coverage." In addition, some hospital policies haven't kept up with nurses' changing roles, and nurses are unaware that an employer's policy might not cover nurses when they are off duty or volunteering in the community, according to an article in RN magazine titled "Legally Speaking. Keep Your Charting on Course" by G.H. Sullivan.

Rates on the Rise

Typically, an RN can purchase individual coverage of $1 million per event with a $3 million yearly cap for about $85 to $100 a year. Advanced-level nurses' policies range from about $5,000 to $12,500 a year for $1 million/$3 million, mature claims-made coverage for a certified registered nurse anesthetist, and $500 to $3,500 a year for $1 million/$3 million occurrence coverage for a registered nurse practitioner, depending on their specialty and where they work, said Fran O'Connell, vice president of professional medical liability for Deerfield, Ill.-based Shand Morahan & Co., which underwrites professional-liability coverage for physicians, hospitals, allied health professions and allied health facilities.

Like physician and hospital liability premiums, however, nursing liability coverage premiums are rising. The Alabama State Nurses Association, for example, has seen a $1,000-a-year spike in premiums over the past three years. In addition, the act of terrorism coverage included in policies is adding to these rising costs, Wilson said.

Whether or not rising premiums can be attributed to the nursing shortage remains unclear. "If the nursing shortage shows up as causing higher losses in a particular facility, I believe that ultimately would be borne out with higher premiums for the facility," said Frank O'Neil, a spokesman for ProAssurance, which predominantly writes professional-liability coverage for physicians and a small portion for hospitals.

And if some companies can attribute increased liability, including poorer quality of care and more patients getting injured, to rising severity of the staffing shortage, then premiums are likely to rise, said Stafford, adding that Midwest Medical Insurance hasn't noticed such a trend in the Midwest.

MICA took a 25% base rate increase for its hospital premiums in 2001 and a 24.1% increase in 2002. "I'm not sure the extent to which the nursing shortage is affecting losses and rates, but I believe it has had an impact," said Carland. Looking ahead, he said low staffing would continue to affect liability rates and risk, particularly as more studies show a correlation between a nursing shortage and liability. "Plaintiff attorneys will begin to look at that relationship and will begin to examine staffing ratios in specific hospitals and on specific units relative to patient acuity levels and will use the information as they have done so successfully in the nursing-home industry," he said. Patient acuity involves assessing the character and amount of care a patient needs and ensuring that staffing meets that need.

Naming Nurses

"Ten years ago, physicians and/or hospitals were sued and individual nurses being named in legal action was fairly limited. However, nurses are now getting caught up in these suits," Hall said.

The most frequent reasons for allegations of nurses' malpractice include medication errors, burns and patient falls. At least 44,000 to as high as 98,000 patients die each year because of medical errors by health-care professionals, according to The Institute of Medicine.

In addition to the growing number of drugs with similar names, increased workload or high patient-to-nurse ratios, and the increase in patient acuity levels, another reason for more errors is that nurses now face more diverse roles. "It's more than just bedside nursing anymore," said Wilson of the Alabama State Nurses Association.

The 1998 National Practitioner Data Bank Annual Report's statistics showed that 1,642 malpractice payments were made on behalf of RNs between Sept. 1, 1990, and Dec. 31, 1998.The most common malpractice reasons identified include medication problems, treatment and monitoring. In 1999, nurse malpractice payments totaled about $85.2 million, up from $47.8 million in 1994.

It's important for nurses to talk to their employers about their coverage, particularly for those working for agencies or outside the scope of employment, said GE Commercial Insurance's Berry. "The downside comes when a nurse is covered by one insurer and his or her employer is covered by another. It's important they make sure defense is cooperative so that he or she doesn't get into a situation where a plaintiff is able to create some negative feelings between defendants, which becomes a monetarily fruitful situation for the plaintiff."

Michael Shalhoub, a partner with the law firm of Heidell, Pittoni, Murphy and Bach, said it's uncommon for nurses in New York to get personally named in a suit because hospitals "tend to be bigger, have better insurance and may be brought into cases where not that much coverage is available to the attending defendant physician." Under New York law, hospitals are obligated to provide a level of service that other similarly situated hospitals would provide to patients, despite low staffing, he added. "The liability side is governed more by standard of care than by the number of nurses, and hospitals have the obligation to have enough nurses on duty to meet that standard of care," he said.

Diminishing Quality of Care

There's a clear link between nursing care and patient outcomes, and certain costs are being incurred as a result of patient complications, said Cheryl Peterson, senior policy fellow for health and economic policy at the American Nurses Association.

Inadequate nurse staffing was a factor in 24% of 1,609 cases involving death, injury or permanent loss of function reported since 1997, according to the Joint Commission on Accreditation of Healthcare Organizations. In addition, a recent study by the U.S. Department of Health and Human Services found that low nurse staffing directly impacted patient outcomes involving conditions ranging from urinary tract infections to shock and bleeding.

In addition, patient complications can result in substantial financial costs to hospitals and financial and psychological costs to patients and their families. Hospital costs are anticipated to escalate as the nursing shortage worsens. According to a recent report on "Drivers of Healthcare Costs--Hospital" by the Blue Cross Blue Shield Association, hospitals spent $71 million in 2001 using agency traveling nurses to fill vacant slots. In addition, each 1% increase in the gap between RN demand and supply leads to a 0.5% to 1% increase in hospital inpatient expenditures per capita.

Low staffing is driving some hospitals to close their doors or cut services. For example, a lack of nurses and open beds caused several hospitals around Las Vegas to reduce services and shut down facilities. In addition, a nursing shortage was a factor in causing long emergency-room waits in several of these hospitals, compromising patient care and delaying ambulance response times because paramedics were tied up at hospitals waiting to get patients into beds.

"We're definitely concerned about the effect on nursing stalling and liability," said GE Commercial Insurance's Berry."When a patient injury results in a claim, you have a systems failure, and nurses are a large part of that system."

GE Commercial Insurance points to three potential liability areas nurses face--monitoring and assessment; documentation; and "failure to rescue," or not recognizing a problem, getting the right kind of help and resolving the issue. In addition, procedural issues, such as preventing falls and medication errors, pose potential liability concerns. "The system is nut only failing patients but also nurses that don't have adequate substitutes for staff or other types of measures in place to prevent a situation from occurring," said Berry. GE Commercial Insurance is working with its risk-management consultants to evaluate hospitals' systems, processes and potential risk areas, in addition to using its own data to identify risk areas for excess claims and evaluate measures. The company also is providing informal education, conferences and online seminars to address liability concerns in high-risk areas.

Finding a Cure

While the nursing shortage is expected to worsen over the next six to eight years, some organizations and legislators are trying to change that. Scholarships and efforts to recruit more nurses and faculty into the field are some of the proposed solutions.

Earlier this year, Sen. Daniel Inouye (D-Hawaii) introduced the Registered Nurse Safe Staffing Act of 2003, which aims to ensure that patients receive safe, quality nursing care in hospitals and other health care institutions. The act mandates the development of staffing systems that require the input of direct-care RNs and provides whistle-blower protection for RNs who speak out about patient-care issues. It also establishes a requirement for minimum staffing ratios and amends the conditions of participation in the Medicare program.

In addition, President Bush signed the Nurse Reinvestment Act into law in 2002 to offer scholarships and loan repayments for nursing students, and to encourage public-service announcements to promote nursing as a career.

"Professionals need to tie everything back to quality of care--patients must be assured they will have a sufficient number of nurses to receive good outcome and a positive experience while in the hospital, which will ultimately save on a facility's bottom line by not having to pay out for complications or jury awards," said the American Nurses Association's Peterson.

Many insurers are addressing the ongoing shortage by looking at nursing ratios in their underwriting process. Midwest Medical Insurance looks at these ratios through its hospital surveys. In addition, the company publishes a newsletter for its hospital insureds that specially addresses patient safety during a staffing shortage.

"Unfortunately, the situation will probably get a little worse before it gets better," said Berry of GE Commercial Insurance. "Our underwriters will continue to look at new ways to underwrite new books of business and study drivers of nursing staffing and determine whether it should be factored into calculations and ratings."

Number of RNs Affects Inpatient Outcomes

The graph shows the change in adverse inpatient outcomes associated
with increasing the percentage of registered nurse hours compared to
the total hours of care by licensed nurses from the 25th percentile to
the 75th percentile.

Adverse Outcome (%)

Length of Stay                     -3.5%
Urinary Tract Infection            -9.0%
Upper Gastrointestinal Bleeding    -5.1%
Hospital-Acquired Pneumonia        -6.4%
Shock or Cardiac Arrest            -9.4%

Note: Table made from bar graph.

Source: Blue Cross Blue Shield Association

RELATED ARTICLE: Calling all nurses: tackling the shortage.

Anthem Blue Cross and Blue Shield is helping to recruit nurses and draw those who have left the field back into the work force.

In response to the growing shortage of nurses across the country, driven largely by increased workloads, changing roles, an aging registered nurse work force and mediocre pay, several Anthem affiliates are undertaking various initiatives to help remedy the situation. Two years ago, Anthem Blue Cross and Blue Shield in Maine joined forces with the Maine Hospital Association and community colleges across the state to develop 100 scholarships for students wishing to enroll in a two-year nursing program.

The health plan decided to undertake the effort after recognizing the critical need for more nurses in the state's hospitals and health-care institutions. In its report "Creating a Healthy Maine: The Challenge of Change," the company examined the drivers of escalating health-care costs, including recruiting and maintaining nurses and other allied health professionals. Anthem Blue Cross and Blue Shield of Maine has committed support to the scholarship program during a three-year period.

"In rural Maine, more than 95% of graduates of community colleges work within 60 miles of where they graduate, so this was a way to help both urban and rural areas across the state," said Bill Cohen, a company spokesperson. "And while this doesn't totally solve the nursing shortage problem in Maine, it certainly is a beginning and calls attention to the situation."

In 2001, Anthem Blue Cross and Blue Shield in Connecticut committed $150,000 to help establish a two-year nursing program at Gateway Community College in North Haven, Conn. The program has become especially attractive to nursing students who may not be able to afford to leave their jobs to go to school full time, said Carol Pompano, a company spokesperson.

"This is a creative, collaborative approach to addressing the critical shortage of nurses our provider partners--and all of us in the health-care industry--face," said Dan Fluke, vice president of health-care management for Anthem Blue Cross and Blue Shield."We also believe it's a concrete way to support and promote the nursing profession, which plays a key role in ensuring quality care for our members throughout the state."

In addition, the Blues plan was a premier sponsor of this year's Nightingale Awards for Excellence in Nursing, through which the Visiting Nurse Association held four concurrent ceremonies throughout the state to recognize and honor outstanding Connecticut nurses.

Anthem Blue Cross and Blue Shield in New Hampshire is also taking a hard look at ways to help recruit new nurses into the health-care field. The Blues plan recently partnered in a four-year commitment with Saint Anselm College in Manchester, N.H., to provide scholarship funds to nursing students. In addition, it is a governing board member of the Foundation for Healthy Communities, the nonprofit arm of the New Hampshire Hospital Association. The Foundation's two-pronged approach looks at how to improve the number of slots available in nursing education institutions across the state and to encourage nurses who left the work force to return to the field.

While recruiting more nurses into nursing school programs is a step in the right direction toward rectifying the staffing problem, Dr. John Robinson, medical director for Anthem Blue Cross and Blue Shield in New Hampshire, believes hospitals also need to play a large role. "We really need to defer to hospitals to figure out how they want to handle the situation because each hospital's situation is unique. It's not appropriate for payers to impose solutions, but rather to be aware of the issues hospitals face and try to help them address those concerns."

Nursing Shortage Facts and Figures

* Nursing is the nation's largest health-care profession.

* Of the estimated 2.7 million active licensed registered nurses in the United States, only 81.7%, or slightly more than 2.1 million, are employed in nursing.

* By 2020, an estimated 1.75 million RNs will be needed and only 635,000 will be available to fill the jobs.

* About half of the registered-nurse work force will reach retirement age in the next 15 years.

* The U.S. Bureau of Labor Statistics predicts that employment for registered nurses will grow faster than the average for all occupations through 2008.

* Nursing school enrollments have dropped 17% nationally for baccalaureate, masters and doctoral programs, indicating an additional shortage of nursing faculty.

* Nearly 6% of registered nurses employed in nursing are men.

* On Aug. 1, 2002, President Bush signed into law The Nurse Reinvestment Act, which authorizes provisions such as loan repayment programs and scholarships for nursing students, public service announcements to encourage more people to enter the nursing profession, and career ladder programs for those wishing to advance within the profession.

* Mandatory overtime bans have been passed in such states as New Jersey, Minnesota and Washington.

Source: Health Resources and Services Administration survey, American Association of Colleges of Nursing, American Nurses Association and NVNurses.com.