“Nonetheless, the incremental cost-effectiveness did not exceed $136,000…per life saved.”

May 14, 2009 at 1:48 pm (By Maxwell James)

That’s from the abstract of this 2005 study of whether mandatory nurse-patient ratios, as recently implemented in California, are a cost-effective means of improving mortality rates in hospitals. I believe the methodology of the study is relatively sound, though I’m a layman and you can judge for yourself. But their conclusion – that increasing nurse-patient ratios up to 1:4 is cost-effective – is a good illustration of the tensions at the heart of the health care debate.

One such tension is whether a life saved is actually worth $136,000. Is that a no-brainer? It really depends on how we value a  life – and how much life is really left in the person living it. It’s worth pointing out that the study only measures mortality in 30-day increments, and if a year of life is worth $129,000 as that article argues, it’s possible that’s often not as good a trade-off as it seems to be.

As Dave Schuler has often pointed out, the dramatic rise in health care costs over the last decade or three is a matter of supply and demand. Demand for health care services – especially towards the end of life – has grown dramatically. And if another 40 million or so Americans are added to national insurance rosters, it will grow dramatically again.

Meanwhile, the supply of doctors (especially general practitioners) has remained essentially static for years. Moreover at least until very recently there existed a well-publicized nursing shortage in the US, which could still reach 500,000 positions by 2025 (That estimate is based on a projection of advertised vacancies, not on an stated nurse-patient ratio; studies based on the latter often project up to 1 million positions by 2020).

The law of supply and demand suggests that, if supply remains static while demand continually increases, the per-capita costs of healthcare in the US will continue to rise dramatically. In my next post on this topic I’ll look at some of the phenomena that have led to the supply of doctors and nurses being as constrained as it is.

~ Maxwell



  1. wj said,

    Dare anyone mention that a significant portion of the nurses that we do have are immigrants? And unless immigration policy gets seriously improved, the nursing shortage is only going to get worse. At the moment, we have demand (from us), we have supply (from, for example, Asia) . . . and then we have a quota system which ratchets up price by restricting the supply from reaching the demand. Brilliant!

  2. Maxwell said,

    wj: Exactly. It’s worth noting too that the nursing shortage is a global phenomenon – by importing an increasing proportion of our nurses from elsewhere, we simply decrease the supply for other nations. From what I’ve read, this is significantly more true of nurses than it is of doctors.

    It’s also worth noting that a major bottleneck in educating new nurses, at least in recent years, has been the capacity of the educational system. There simply aren’t enough nurse professors to train everyone who wants to become a nurse. Some of that may be a salary issue – according to various sources I’ve read, professors of nursing receive significantly less pay than those in other fields, and so few nurses see it as worthwhile to pursue that Ph.D.

  3. chickenlittle said,

    Something to keep in mind when considering the optimal nurse to patient level is that the ratio varies within a hospital depending on the unit. For example, in an intensive care unit the ratio may be 1 to 1 depending on the patient’s needs. At the next level down, an IMU, the ratio moves to 1:2 or 1:3, and so on down to 1:4 and beyond. So the average number is a bit fictional, like the “Economics Man” in a previous post.

    My wife recently graduated from the U of San Diego (RN, MSc) program and is thinking about a PhD after she gets some practical experience. She’s now working in an IMU unit at a local hospital with 2 to 3 patients per day on average.

  4. PatHMV said,

    I’m pretty sure that we can import an unlimited number of nurses via the H1B visa process. But Maxwell is correct, that merely benefits us to the detriment of other countries, which may not actually be in our best interests in the long run.

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