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Does Technology Replace Nurses? Not necessarily...

Wednesday, May 15, 2019

Robot Nurse

Nurses have many duties, but none is more important than providing bedside care to patients. Even so, nurses have traditionally spent a large portion of their workdays on other tasks, including searching for supplies, filling out paperwork and ordering medicine.

In recent years, however, the adoption of technologies such as the computerized provider order entry (CPOE) has significantly eased the paperwork burden on nurses, giving them more time to spend on direct patient care. But information technology (IT)-enabled automation isn't always a boon to nurses. 

A research study co-authored by Susan F. Lu, associate professor of management in Purdue's Krannert School of Management, shows some nurses may lose their jobs when automation arrives at their workplaces. But the reverse may happen at other healthcare facilities: new technology may spark the hiring of more nurses.

It all depends on where the facility falls in the spectrum of quality. If it's already providing great care, it's more likely to cut nursing jobs when IT-enabled automation is adopted, but if it's on the lower end of the quality range, it's more likely to increase staffing.

Lu and her co-authors, Huaxia Rui and Abraham Seidmann of University of Rochester's Simon Business School, explain why this happens in their research study, entitled "Does Technology Substitute for Nurses? Staffing Decisions in Nursing Homes" and published in the April 2018 issue of Management Science.

Focusing their study on nursing homes and using IT data from 2006 to 2012, the researchers found that licensed-nurse staffing levels in high-end nursing homes decrease by an average of 5.8 percent after the adoption of CPOE, whereas at low-end nursing homes, they increase by an average of 7.6 percent.

The interplay of two competing effects – substitution and complementarity – determines whether a nursing home will hire more licensed nurses or reduce its staff. The substitution effect occurs when nursing labor is substituted by technology. The complementarity effect occurs when technology improves nurse productivity to such an extent that a nursing home can significantly boost its overall quality and market position by hiring more nurses. Technology magnifies the benefit of hiring even a single nurse.

In low-end nursing homes, the complementarity effect dominates the substitution effect.  

"The low-end nursing homes can use the advantage of technology adoption to improve their competitive advantage in the market," Lu says. "With the help of technology, their nurses are able to spend more time with patients at the bedside, which improves their care quality. Because of this, the quality of the nursing home improves and they can attract more patients, especially the profitable ones. As a result, they think that hiring more nurses is better for the development of the nursing home."

In high-end nursing homes, the complementarity effect isn't very strong, largely because their beds are already taken. "Even if they improve their quality, it doesn’t help them increase the number of lucrative patients," Lu says. "So they don't have great incentive to have higher quality than what they had before, because they're already at capacity."

With all their beds filled and little incentive to improve quality, these high-end nursing homes try to become more profitable by reducing costs. "They think they can reduce the number of nurses, but maintain their quality level with the help of technology," Lu says. "They have enough lucrative patients, so attracting more patients doesn't help them too much."

Not surprisingly, the researchers found that CPOE adoption increases the quality ratings of a nursing home by 6.9 percent. To make this determination, they used five-star quality ratings from 2008 to 2012 as their clinical quality measure. Developed by the Centers for Medicare & Medicaid Services (CMS), the ratings are based on 10 dimensions of resident clinical outcomes.

Another significant finding is that automation allows nursing homes to admit more Medicare and private-pay residents and fewer Medicaid residents. Medicare and private-pay residents are more profitable for nursing homes and expect higher quality care.

Using data from 2006 to 2012, the researchers determined that nursing homes with CPOE admitted 14.7 percent fewer Medicaid residents than nursing homes that hadn't yet adopted CPOE.

"When some nursing homes' quality improves, profitable patients will switch to high-quality homes," Lu says. "And less profitable patients will move to low-quality nursing homes. So in general, the market is in equilibrium."

CPOE adoption did not affect total admissions, only the assortment of residents at each nursing home. Finding beds in nursing homes has long been a challenge for Medicaid residents. Many have needed to put their names on waiting lists. Technology has not worsened this, Lu said. By improving the overall care quality in nursing homes, it has benefited Medicaid residents as well as others.




Lu, Susan Feng and Rui, Huaxia and Seidmann, Abraham Avi, "Does Technology Substitute for Nurses? Staffing Decisions in Nursing Homes" (September 12, 2016). Management Science, Forthcoming; Simon Business School Working Paper No. FR 17-02. Available at SSRN: