Magnet hospital status may offer financial benefits, UGA researcher finds

jayawardhana-jayani-webMagnet recognition is considered one of the highest credentials a hospital can receive for its nursing care. Yet achieving Magnet status can be expensive with investment costs reaching tens of thousands of dollars.

A recent University of Georgia study, led by Jayani Jayawardhana, a health economist in the College of Public Health, asked whether the investment was worth it. The answer, she found, is yes.

“Although the initial investment cost is high, hospitals do have a fiscal incentive to go through the Magnet designation process,” Jayawardhana said.

The results of the study were published in the early online edition of Medical Care. Jayawardhana’s collaborators on the research were John Welton, a professor in the University of Colorado Anschutz Medical Campus’s College of Nursing, and Richard Lindrooth, an associate professor in the University of Colorado Denver’s School of Public Health.

Developed by the American Nurses Credentialing Center, the Magnet Recognition Program recognizes healthcare organizations for quality patient care, nursing excellence and innovations in professional nursing practice. Studies have shown that Magnet hospitals show higher job satisfaction and lower odds of patient mortality than non-Magnet hospitals.

However, reaching Magnet status can take up to four and a half years of preparation and can require significant investment by hospitals to make the quality and process improvements needed, Jayawardhana said. Only about 7 percent of registered hospitals in the U.S. have achieved Magnet status, according to the ANCC website.

“However, we found that the revenue gains actually offset the investment costs of becoming a Magnet,” she said. “In about two to three years, these hospitals not only catch up with their investment budget, but begin making a profit.”

The study analyzed 141 Magnet hospitals and 2,541 non-Magnet hospitals from 1998 to 2006 by combining data from the American Nurses Credentialing Center, the American Hospital Association’s annual survey and Hospital Cost Report Information System reports collected by the Centers for Medicare and Medicaid Services.

Jayawardhana and her co-authors found that, on average, Magnet hospitals receive an adjusted net increase in inpatient income of $104.22 to $127.05 per discharge after becoming a Magnet. This translates to an additional $1.23 million to $1.26 million in income per year.

Investing in Magnet status also can have cost benefits when adopting measures to improve patient care. In a previous study, Jayawardhana and her team demonstrated that Magnet hospitals are more likely than non-Magnet hospitals to adopt National Quality Forum-approved patient safety practices.

Funding for both Magnet studies was provided by a grant from the Robert Wood Johnson Foundation Interdisciplinary Nursing Quality Research Initiative.

Read the press release at UGA News Services. Additional coverage on ASPPH Friday Letter, Athens Banner Herald.

– Rebecca Ayer

Posted March 28, 2014.