To assess the economic impact of increased nursing hours of care on health outcomes in adult teaching hospitals in Perth, Western Australia. Advancing technology and increased availability of treatment interventions are increasing demand for health care while the downturn in world economies has increased demand for greater efficiency. Nurse managers must balance nurse staffing to optimize care and provide efficiencies. This longitudinal study involved the retrospective analysis of a cohort of multi-day stay patients admitted to adult teaching hospitals. Hospital morbidity and staffing data from September 2000 until June 2004, obtained in 2010 from a previous study, were used to analyse nursing-sensitive outcomes pre- and post-implementation of the Nurse Hours per Patient Day staffing method, which remains in place today. The cost of the intervention comprised increased nursing hours following implementation of the staffing method. The number of nursing-sensitive outcomes was 1357 less than expected post-implementation and included 155 fewer 'failure to rescue' events. The 1202 other nursing-sensitive outcomes prevented were 'surgical wound infection', 'pulmonary failure', 'ulcer, gastritis', 'upper gastrointestinal bleed', and 'cardiac arrest'. One outcome, pneumonia, showed an increase of 493. Analysis of life years gained was based on the failure to rescue events prevented and the total life years gained was 1088. The cost per life year gained was AUD$8907. The implementation of the Nurse Hours per Patient Day staffing method was cost-effective when compared with thresholds of interventions commonly accepted in Australia.