Uncover the Black Box of Nurse Slack-Performance Relationship

Abstract

This research explores the fine-grained relationships between nurse slack and hospital operating performance with respect to care quality and operating costs. We also investigate the effect of competition in local hospital markets on these relationships. Our analyses lead to several important findings: First, nurse slack initially is associated with improved care quality (measured by 30-day readmission rates) until it reaches a turning point, beyond which nurse slack is associated with worse care quality, exhibiting a U-shaped relationship. Second, a similar pattern applies to the relationship between nurse slack and operating costs, although the turning point is at a much lower nurse slack level. Third, market competition moderates the relationship between nurse slack and care quality so that the turning point of nurse slack will be higher when the degree of competition is higher. This shift of turning point is also observed in the relationship between nurse slack and operating costs. Collectively, the study findings point to three ranges of nurse slack in which hospitals will likely experience simultaneous improvements, a tradeoff, or simultaneous decline of care quality and operating cost when investing in more nurse capacity.