Hiring More Nurses Generates Revenue for Hospitals

May 22, 2025

6 min

Diwas KCDonald Lee




Underfunding is driving an acute shortage of trained nurses in hospitals and care facilities in the United States. It is the worst such shortage in more than four decades. One estimate from the American Hospital Association puts the deficit north of one million. Meanwhile, a recent survey by recruitment specialist AMN Healthcare suggests that 900,000 more nurses will drop out of the workforce by 2027.


American nurses are quitting in droves, thanks to low pay and burnout as understaffing increases individual workload. This is bad news for patient outcomes. Nurses are estimated to have eight times more routine contact with patients than physicians. They shoulder the bulk of all responsibility in terms of diagnostic data collection, treatment plans, and clinical reporting. As a result, understaffing is linked to a slew of serious problems, among them increased wait times for patients in care, post-operative infections, readmission rates, and patient mortality—all of which are on the rise across the U.S.


Tackling this crisis is challenging because of how nursing services are reimbursed. Most hospitals operate a payment system where services are paid for separately. Physician services are billed as separate line items, making them a revenue generator for the hospitals that employ them. But under Medicare, nursing services are charged as part of a fixed room and board fee, meaning that hospitals charge the same fee regardless of how many nurses are employed in the patient’s care. In this model, nurses end up on the other side of hospitals’ balance sheets: a labor expense rather than a source of income.


For beleaguered administrators looking to sustain quality of care while minimizing costs (and maximizing profits), hiring and retaining nursing staff has arguably become something of a zero-sum game in the U.S.


The Hidden Costs of Nurse Understaffing


But might the balance sheet in fact be skewed in some way? Could there be potential financial losses attached to nurse understaffing that administrators should factor into their hiring and remuneration decisions?


Research by Goizueta Professors Diwas KC and Donald Lee, as well as recent Goizueta PhD graduates Hao Ding 24PhD (Auburn University) and Sokol Tushe 23PhD (Muma College of Business), would suggest there are. Their new peer-reviewed publication* finds that increasing a single nurse’s workload by just one patient creates a 17% service slowdown for all other patients under that nurse’s care. Looking at the data another way, having one additional nurse on duty during the busiest shift (typically between 7am and 7pm) speeds up emergency department work and frees up capacity to treat more patients such that hospitals could be looking at a major increase in revenue. The researchers calculate that this productivity gain could equate to a net increase of $470,000 per 10,000 patient visits—and savings to the tune of $160,000 in lost earnings for the same number of patients as wait times are reduced.


“A lot of the debate around nursing in the U.S. has focused on the loss of quality in care, which is hugely important,” says Diwas KC.


But looking at the crisis through a productivity lens means we’re also able to understand the very real economic value that nurses bring too: the revenue increases that come with capacity gains.
Diwas KC, Goizueta Foundation Term Professor of Information Systems & Operations Management


“Our findings challenge the predominant thinking around nursing as a cost,” adds Lee. “What we see is that investing in nursing staff more than pays for itself in downstream financial benefits for hospitals. It is effectively a win-win-win for patients, nurses, and healthcare providers.”


Nurse Load: the Biggest Impact on Productivity


To get to these findings, the researchers analyzed a high-resolution dataset on patient flow through a large U.S. teaching hospital. They looked at the real-time workloads of physicians and nurses working in the emergency department between April 2018 and March 2019, factoring in variables such as patient demographics and severity of complaint or illness. Tracking patients from admission to triage and on to treatment, the researchers were able to tease out the impact that the number of nurses and physicians on duty had on patient throughput. Using a novel machine learning technique developed at Goizueta by Lee, they were able to identify the effect of increasing or reducing the workforce. The contrast between physicians and nursing staff is stark, says Tushe.


“When you have fewer nurses on duty, capacity and patient throughput drops by an order of magnitude—far, far more than when reducing the number of doctors. Our results show that for every additional patient the nurse is responsible for, service speed falls by 17%. That compares to just 1.4% if you add one patient to the workload of an attending physician. In other words, nurses’ impact on productivity in the emergency department is more than eight times greater.”


Boosting Revenue Through Reduced Wait Times


Adding an additional nurse to the workforce, on the other hand, increases capacity appreciably. And as more patients are treated faster, hospitals can expect a concomitant uptick in revenue, says KC.


“It’s well documented that cutting down wait time equates to more patients treated and more income. Previous research shows that reducing service time by 15 minutes per 30,000 patient visits translates to $1.4 million in extra revenue for a hospital.”


In our study, we calculate that staffing one additional nurse in the 7am to 7pm emergency department shift reduces wait time by 23 minutes, so hospitals could be looking at an increase of $2.33 million per year.
Diwas KC


This far eclipses the costs associated with hiring one additional nurse, says Lee.


“According to 2022 U.S. Bureau of Labor Statistics, the average nursing salary in the U.S. is $83,000. Fringe benefits account for an additional 50% of the base salary. The total cost of adding one nurse during the 7am to 7pm shift is $310,000 (for 2.5 full-time employees). When you do the math, it is clear. The net hospital gain is $2 million for the hospital in our study. Or $470,000 per 10,000 patient visits.”


Incontrovertible Benefits to Hiring More Nurses


These findings should provide compelling food for thought both to healthcare administrators and U.S. policymakers. For too long, the latter have fixated on the upstream costs, without exploring the downstream benefits of nursing services, say the researchers. Their study, the first to quantify the economic value of nurses in the U.S., asks “better questions,” argues Tushe; exploiting newly available data and analytics to reveal incontrovertible financial benefits that attach to hiring—and compensating—more nurses in American hospitals.


We know that a lot of nurses are leaving the profession not just because of cuts and burnout, but also because of lower pay. We would say to administrators struggling to hire talented nurses to review current wage offers, because our analysis suggests that the economic surplus from hiring more nurses could be readily applied to retention pay rises also.

Sokol Tushe 23PhD, Muma College of Business


The Case for Mandated Ratios


For state-level decision makers, Lee has additional words of advice.


“In 2004, California mandated minimum nurse-to-patient ratios in hospitals. Since then, six more states have added some form of minimum ratio requirement. The evidence is that this has been beneficial to patient outcomes and nurse job satisfaction. Our research now adds an economic dimension to the list of benefits as well. Ipso facto, policymakers ought to consider wider adoption of minimum nurse-to-patient ratios.”


However, decision makers go about tackling the shortage of nurses in the U.S., they should go about it fast and soon, says KC.


“This is a healthcare crisis that is only set to become more acute in the near future. As our demographics shift and our population starts again out, demand for quality will increase. So too must the supply of care capacity. But what we are seeing is the nursing staffing situation in the U.S. moving in the opposite direction. All of this is manifesting in the emergency department. That’s where wait times are getting longer, mistakes are being made, and overworked nurses are quitting. It is creating a vicious cycle that needs to be broken.”


Diwas Diwas KC is a professor of information systems & operations management and Donald Lee is an associate professor of information systems & operations management. Both experts are available to speak about this important topic - simply click on either icon now to arrange an interview today.

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Diwas KC

Diwas KC

Professor of Information Systems & Operations Management

See my website for up-to-date research information: https://diwaskc.com

Workforce ProductivityTechnology Adoption Capacity ManagementQuality ManagementNew Models of Care Delivery
Donald Lee

Donald Lee

Associate Professor of Information Systems & Operations Management
Healthcare OperationsMedical outcomes evaluationStatistical machine learningCausal Inference
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Expert Insights: Want More Engagement? Eliminate the Barriers.

Anyone born in the 70’s or earlier will probably remember it well. Time was when playing any kind of video game meant physically disporting yourself to the local arcade—a twilight zone of flashing neon, electronic beeps and bops, and the clink of quarters hitting the slot. As technology advanced, the videogame came to you. Home consoles and TV stations rigged with joysticks duly became the mainstay of gaming. The Atari 2600 brought the arcade experience into dens all over the US; Pac-Man, Space Invaders, and Asteroids now at the fingertips of a generation of games who no longer needed to leave home to play. Fast forward to the era of smart phones and hi-tech, and gaming has evolved again. Today, Fortnite, Minecraft, and The Legend of Zelda can accompany you pretty much anywhere—onto a train or a bus, into the canteen at work or school, or under the covers at 2am. In our always-on, on-demand world, video gaming increasingly meets players where they are; a play-anywhere, digital user experience that empowers individuals to engage with their game of choice wherever they are, whenever it suits, and via whatever platform they prefer, desktop or mobile. For users, the benefits seem clear. But what about game producers? As availability expands to new channels and platforms, how does it change user behavior? Does it deepen engagement or does cross-platform continuity simply end up redistributing play—the addition of each new platform shifting players away from, and effectively cannibalizing, existing channels? It’s a conundrum, and not just for video game producers. Retailers, bankers, insurance firms, media, and hospitality providers—anyone with an online-first approach looking to meet their customers wherever they are—should also be cognizant of the potential downsides of channel expansion in the digital space. 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Why Shrinking the Pay Gap is a Question of Dollars, Not Percentages featured image

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Why Shrinking the Pay Gap is a Question of Dollars, Not Percentages

The gender wage gap shows no sign of improving any time soon. If anything, evidence suggests it’s growing in the United States. Recent stats show that for every dollar earned by men, women in the same job earn just 92 cents—that equates to one month of salary less in a given year. That gap widens even more for Black and other minority women. In the meantime, men’s wages are increasing—just shy of 4% in the last two years—while women’s income hasn’t budged. Organizations should take note, warn Goizueta’s Karl Schuhmacher and Kristy Towry. Wage inequity is an issue that undermines the concept of equal pay for equal work. It’s also bad for business. Employers that don’t pay or play fair with their workers stand to lose talent to competitors who offer better conditions, not to mention customers or investors who care about fairness. And that’s not all. 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The problem with this, argues Schuhmacher, is that percentage-based raises are tied to initial salaries. And if that baseline is biased from the start, handing out similar percentage raises will only compound the problem, and perpetuate inequities—whatever the intention. If women start out getting paid less than men for the same job, and your raise budgets are framed in percentages, you end up baking those gaps in more, even if you don’t mean to. Karl Schuhmacher, Assistant Professor of Accounting “That five percent raise you’re giving everyone for the same job well done sounds fair and effective,” says Schuhmacher. “But it’s only actually fair if the initial salary is equitable—if Jane has been making the same as John from the off. And if she hasn’t—if John is being overcompensated relative to Jane—then all you’re doing is perpetuating that gap.” Awarding similar percentage raises doesn’t recognize or acknowledge preexisting, unfair discrepancies in initial salaries. A better approach, he and Towry argue, is to reframe pay raise budgets in terms of absolute dollars. “Budgeting for raises in absolute terms—a $150,000 pool for all raises in a group, say, versus a budgeted pool of 5% per person—automatically unshackles raises from preexisting unfairness in people’s pay,” says Schuhmacher. “You reduce the risk of perpetuating pay gaps by giving managers a way of assessing and evaluating work and assigning a dollar value that recognizes that work. It’s a fairer, more meritocratic approach.” It also has the effect of “nudging the cognitive processes” that employers use. Percentages are a ubiquitous way of determining raise budgets because they feel fair and easy to use, says Towry. A five percent raise for employees sounds reasonable, equitable, and doesn’t tax managers cognitively, making it simple to implement again and again—a norm or procedural “anchor” within most organizations. Substituting dollars for percentages, however, should provide enough of a nudge that managers focus more on the actual value their employees contribute to the organization. And it shouldn’t require a major rehaul of the system: a win-win for employees and organizations looking to retain talent, says Towry, where the gains significantly outweigh the effort involved. Thinking in Dollars, Not Percentages To put this idea to the test, Towry, Schuhmacher, and Gunnell enlisted Goizueta MBA students to participate in a lab experiment, taking on the role of manager at a hypothetical bank. Participants were given the salary details of four high-performing employees—two male, two female—with gender discrepancies baked into initial pay. Importantly, in this setting, male and female employees do the same job and perform equally well. Participants were divided into two camps: the first instructed to hand out percentage raises, the second dollar raises. All participants had to allocate the same pay raise budget of $30,800—5% of total salaries—among the two male and two female employees, the sole difference being that one group received a percentage budget, while the other group received a dollar budget. The results support the theory, says Towry. When participants use percentages, the individual pay raises cluster around the 5% mark, meaning that existing pay gaps are perpetuated. Kristy Towry, Professor Emerita of Accounting “Our fictional male employees, Jason and Gary, walk away with higher overall raises than Martha and Sarah, because they are already earning more than the women,” says Towry. “And this happens even though our participants know about initial pay discrepancies, and women and men perform equally well in the same job.” When participants use absolute dollars, however, this clustering effect around the 5% mark disappears. Participants give pay raises that better reflect employees’ value contributions to the organization. As such, pay raises are less dependent on initial pay gaps. In some cases, participants even award more cash to the women than the men to counteract the initial gap. “Martha ends up with a higher raise than Gary, but their initial salaries are $116,000 and $192,000, respectively,” says Towry. “So, what we’re seeing here is that our managers are asked to take out the percentage and think in dollars, they effectively redress the balance. The preexisting pay gap is reduced in recognition of equal merit.” Reproducing this in real-word settings shouldn’t be difficult for organizations. And at a time when gaps are becoming more entrenched and progress on equitable pay is stagnating in the United States, there is a clear imperative ahead of employers interested in sending clear signals to existing and future male and female talent, says Schuhmacher. Pay that reflects performance fairly is inherently meritocratic and we know that being a meritocracy is attractive to employees—to your existing workforce and to the workforce that you want to attract. Karl Schuhmacher “When people know they’re being evaluated based on their results, regardless of their gender or background, they are more motivated to work hard,” says Schumacher. “The beauty of this solution is that it supports a more meritocratic way of rewarding talent. It’s also easy to implement—easier than interventions like bias training or organizational audits that consume time and resources. Using dollars instead of percentages is something that organizations can do that translates into real impact. And it’s something that they can do in a day. Our advice: start tomorrow!”

Expert Insight: The Hidden Costs of Staying Neutral featured image

7 min

Expert Insight: The Hidden Costs of Staying Neutral

Considering the number of hot-button issues and divisiveness in American culture, choosing a middle-of-the-road attitude might be seen as the best way to navigate an often volatile environment. But what about those individuals who choose neutrality as a means of staying below the radar and, thereby, avoiding the need to take any action? This is the question that Laura Wallace, assistant professor of organization and management at Emory’s Goizueta Business School, and coauthors ask in their new paper, The Preference for Attitude Neutrality. Published in the Journal of Experimental Psychology: General, the researchers explore individuals with a preference for neutrality and how their uncompromising commitment to neutral opinions, not only discourages rigorous debate but could have a deleterious impact on society. Emory Business recently caught up with Wallace to discuss her research. Emory Business: What sparked your interest in the preference for neutrality? Wallace: When we think about the problems in the world, often people point to too many extreme opinions as the source of much social ill, and, of course, they can be. But, when I thought about a lot of the issues that I cared about, like addressing climate change or gun violence, I felt that sometimes the issue was too much neutrality in the face of issues that were themselves pretty extreme. When I talk about this work, people can often picture someone who seems like a “Pref Neutral,” as we have affectionately nick-named them, that is someone who in the face of information suggesting that there is an extreme problem is not moved to address the issue. I could think of people in my life who had these reactions, and I was interested in understanding more about them. Emory Business: How did you identify these individuals? Wallace: We developed a scale to assess the extent to which people view neutrality as truer, more socially desirable, and more moral. For example, we ask people how much they agree with items like, “If you have all the facts about a topic, your opinion will generally end up somewhere neutral” and “There is something noble about remaining in the middle about controversial topics.” The more someone agrees with these items, the more we would say they have a preference for neutrality. Emory Business: How does this study fit in with your larger body of work? Wallace: I generally think of my program of research as studying the “psychology of social change.” Within that broad category, I study 1) how to change minds and build trust and 2) how to address societal disadvantage. I view this work as fitting in the first bucket about how we change people’s minds. What interests me about people who are high in the preference for neutrality is the fact that they seem to NOT change their minds in the face of extreme information suggesting that they should. These individuals represent a significant barrier to our ability to address pressing issues, so I view this work as very much tied into the overarching goal of my research program to understand social change (or the lack thereof). Laura Wallace is an assistant professor of organization and management at Emory University’s Goizueta Business School. Wallace studies how to build trust with implications for addressing societal disadvantage, changing minds, and fostering growth. View her profile Emory Business: Would you describe a preference for neutrality to be a mindset, strategy, or attitude/value? Wallace: I think of the preference for neutrality like an ideology or value system that guides people’s reactions across many issues and situations. Emory Business: Talk about the study design. It’s quite detailed and multilayered, with eight hypotheses and six different measures to account for potential bias that were then randomized to create different questionnaires given to a large pool of individuals. How did the coauthors agree on the structure? Wallace: First, I should take the opportunity to shout out Thomas Vaughan-Johnston, who led this work. He is a faculty member at Cardiff University and is just a very thoughtful, interesting researcher, and he’s great to work with. Second, there are a number of studies in the paper. For each, our research team worked together to design and interpret the studies. The paper paints a relatively negative view of Pref Neutrals. We did take measures to resist bias in our design. For instance, we didn’t just ask people how much they dislike extremists (which would have been biased towards making those with a preference for neutrality look bad), but also asked about attitudes towards neutrals (where those with a preference for neutrality may seem like “the nice people”). We are now starting research on contexts where a preference for neutrality can offer some advantages, hopefully without artificially striking a false balance. For instance, we are considering whether they can help reduce group polarization effects, especially where groups drift towards radicalism in conversation. Also, we have some preliminary data where they seem to be a bit more accurate when detecting neutral emotions and attitudes in others, which is a remarkable plus side. Basically, we think the preference for neutrality is a social concern, but we are trying to be fair-minded when considering why they think this about neutrality and when this trait is useful for the world. Emory Business: In the study, you note that preference for neutrality can be a sign of arrogance and that Pref Neutrals are uninterested in learning more or changing their stance. How is this arrogance exhibited? Wallace: I would say that they are more close-minded than arrogant and that they don’t seem to be particularly thoughtful. One way we have assessed this is by measuring their “intellectual humility,” which essentially captures how much people recognize the limits of their own perspectives and are open to changing their minds. Pref Neutrals tend to score low on intellectual humility. They also score a little low on the “need for cognition,” which captures how much people like to think. Emory Business: In one section it reads: “preference for neutrality (preference for extremity) should relate to seeing other people as moral, competent, and likeable, when those individuals have generally neutral (extreme) opinions.” Does this mean that they align with people who have their same opinion structure? Wallace: We find that people who score high on the preference for neutrality scale tend to have more favorable impressions of others who are more neutral and tend to be more persuaded by others who are labeled as holding neutral attitude positions. Emory Business: How would one identify this trait in a person, particularly, when the research shows they tend to self-censor? Wallace: In general, they are really hesitant to take stances on issues or they tend to avoid taking sides or expressing strong positions. And yes, they tend to self-censor, meaning they often avoid sharing their opinion at all. Emory Business: How does this preference for neutrality play out in a political sense? Specifically, if they are averse to extremes would they vote based on their values? Wallace: We have a lot of evidence that Pref Neutrals tend to be political centrists. We don’t have evidence for this, but I suspect that they sit out a lot of elections, and to the extent that they do vote, they favor more moderate candidates. They probably would not vote for a position or individual with an extreme view unless it was framed as neutral. This may sound like a silly, cerebral point, but I actually think it’s critical to the point we are making, as what is viewed as “extreme” in a given time is often socially determined. For example, now it would be viewed as an extreme stance to support slavery. However, in the early 1800s in the U.S., it would have been viewed as an extreme stance to oppose slavery. I imagine at the time, many Pref Neutrals were supportive of slavery as a means of being politically moderate. Emory Business: What was the most interesting result in this study for you? Wallace: We find that if you give Pref Neutrals the exact same information but label it as extreme or neutral, they are more persuaded by the exact same information when it is labeled as neutral. This results in a kind of ironic effect where they actually end up with a more extreme opinion when information has been labeled as neutral. Emory Business: Research wise, what’s next for you? Wallace: There are a few ways that we are following up on our work that I am excited about: First, we’re trying to understand more about how Pref Neutrals maintain neutral opinions in the face of extreme information. So, we are giving Pref Neutrals true, extreme facts, and then examining their thoughts to determine how they resist taking the extreme positions information would suggest that they should. Second, we thought that Pref Neutrals would be particularly likely to trivialize social issues, to say they are unimportant. We are actually finding that they rate all social issues as extremely important, which we are trying to understand more about. We suspect they might do this as a strategy to avoid taking action on social issues. If stubbed toes and human trafficking are both “extremely” important, then there are just too many issues to take action on, and so they are able to justify a lack of action. Third, we are interested in understanding what it is like to make decisions in a group with a Pref Neutral. There is a lot of evidence that groups tend to make bad decisions because people want to agree with each other. This might actually be an area where Pref Neutrals would shine – the fact that they don’t want to take a stance may force groups they are a part of to really think things through and make better decisions. This is all super preliminary, but it reflects the exciting work ahead and that there is much more to understand about these folks!

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