The Business Case for Transition-to-Practice Programs

Background: In 2012, U.S. health care spending increased to $2.8 trillion or $8,915 per person (Centers for Medicare and Medicaid Services [CMS], 2013). The increase in aging population, medical technology advances, and increased healthcare utilization, health care expenditures are forecasted to be19.9% of GDP by 2022(CMS, 2012). With the passing of the Patient Protection and Affordable Care Act (P-PACA, US Congress, 2010), the United States strives for improved quality and a reduction in healthcare cost. National organizations have identified the need for nursing residencies to support “transition-to-practice” and offer additional skill development commonly seen with complex clinical population. However, with workforce shortages increasing within nursing and primary medicine, nurses, as administrators and providers, need to provide both cost and effectiveness evidence of the value of nursing interventions to leverage innovation design feature of PPACA.

Purpose: Although evidence of the benefit of nursing residencies exist, very few address the unique needs at the advanced practice level and associated implementation costs. The aim of this review is to introduce key “upfront” costs for nurse residency programs and to conduct cost benefit analysis utilizing program costs and organization gains.

Methods: A cataloged review of all costs associated with program startup was conducted.  An analysis of the costs and benefits were performed at the end of the first year of the program. Costs associated with the programs viability were divided between direct costs and indirect costs. Direct costs included salaries and benefits (resident, preceptors), program director, scholarship (presentation and travel). Indirect costs included educational didactic costs. Additionally, a post start up (Year 2 and Year 3) analysis was conducted to assess the return on initial investment. Return on investment (ROI) compared the cost in dollars of the program to the net benefit of the program.

Results: The initial start up for residency programs can be a costly; however, the return on investment is noted by year 3 of program operations with the program experiencing cost neutral gains year 2.

Conclusions: Nurse practitioner residency programs are a vital innovation to advance practice. Yet the startup costs can be a deciding factor for most organizations. The preliminary data of this reviews demonstrates the fiscal benefit of these programs.