Executive Summary
	The focus of our audit
	Nurses, including midwives, make up over 40 per cent of the staff employed by the public health sector in NSW with over 40,000 nurses working on any day.
	Hospitals need to attract and retain sufficient nurses to operate amidst a world-wide shortage. The ageing population, advances in medical treatments and technology and community expectations drive the demand for more hospital beds and consequently more nurses. At the same time the supply of nurses is constrained by the ageing workforce, the move to part-time work and the number of university places available for nursing.
	This audit examines how nursing resources are managed in ten general wards at four hospitals - Royal Prince Alfred (RPA), Bankstown, Tamworth and Scone. We looked at this sample of hospitals to find out if: § nursing resources are well managed § hospitals effectively attracted and retained nurses.
	We also wanted to find out how well the Department of Health was addressing the risk of a future shortage of nurses in public hospitals.
	Audit opinion
	The department has done well to attract and retain nurses. Between 2001-02 and 2005-06 the average number of nurses employed increased to 39,804 with the annual resignation rate falling from 16 to 14 per cent. Overall, the public health sector gained 5,588 nurses, representing an average annual increase of four per cent.
	The department advises that an additional 6,744 nurses were employed between January 2002 and September 2006.
	The department used a number of strategies to increase nurse numbers. The department improved nurses’ wages to make them the highest paid in Australia, recruited over 1,000 nurses from overseas and attracted nearly 1,500 ex-nurses back to the public health sector. The department has also improved the working conditions of nurses with more flexible rosters and greater access to professional development.
	The public health sector is working to better manage its nurses.
	In consultation with the Nurses’ Association, the department is moving to manage nurse workloads in a more transparent, consistent and consultative way. Hospitals are moving to determine the number of nurses on a ward according to the patient load.
	The department recognises the need for new models of patient care and changes in work practices. Hospitals are reviewing the work of nurses and employing more enrolled nurses to free up registered nurses for more complex tasks.
	These initiatives have increased the number of nurses in public health. But around 45 per cent of nurses work part-time and the department can not quantify the net gain in resources or judge whether we have enough nurses working in hospitals.
	Despite the gains, there are indicators that there may still not be enough nurses.
	Firstly, the public health sector used overtime and agency nurses to provide the equivalent of 1,217 full time nurses in 2005-06. This was an increase of 21 per cent from 2001-02.
	Secondly, we found instances where some of the hospitals visited had closed beds temporarily and deferred admissions for elective surgery because there were not enough nurses to provide appropriate care.
	The department is doing further work to assess the nature and extent of nurse shortages and develop strategies to address shortfalls. It is also working with the Commonwealth government on national strategies to increase the number of nurses entering the workforce.
	Recommendations
	We recommend that the Department of Health:
Assess and review the number of nurses needed	§ require all hospitals to use the general workload calculation tool to assess the number of nurses needed in appropriate wards by December 2007 (page 13) § encourage hospitals to review the quality and completeness of their workload monitoring (page 14) § encourage hospitals to consider staffing for patients who need more than expected levels of care (patient specials) when calculating whole of hospital nursing needs (page 21) § continue to encourage hospitals to increase the use of appropriately trained and supervised enrolled nurses (page 32) § expand its efforts to encourage and promote innovative nursing practices across the public health sector (page 32)
Monitor the impact of shortages	§ require hospitals to monitor bed closures and deferred elective surgery resulting from a shortage of nurses (page 21) § encourage hospitals to adopt patient care indicators, which are sensitive to nursing care, as a means of monitoring whether or not the number and skill mix of nurses in a ward are adequate (page 14)
Reduce hospital reliance on overtime and agency nurses	§ require hospitals to review the use and cost of overtime, casual and agency nurses (page 20) § encourage hospitals to review their systems for managing the performance of individual agency and casual nurses (page 13)
Further reduce resignations	§ monitor the number of nurses leaving the public health sector altogether (page 25) § encourage hospitals to analyse nurse resignation data, set targets and develop strategies to further reduce resignation rates (page 26)
Continue workforce planning	§ adopt a consistent definition of nurse full time equivalents (FTE) to be used by hospitals and the department to identify the size of the nurse workforce employed and needed (page 28) § review and report on current and projected nurse shortages in public hospitals by December 2007 (page 31) § expedite the development of workforce plans and strategies at a state and area level (page 31).
	Key audit findings
Chapter 1: How do hospitals manage nurses?	The four hospitals had an effective framework for the day-to-day management of nurses. The hospitals had centralised some aspects of nurse management to promote consistency and reduce the administrative load on ward managers. There is no one objective approach to determine nurse numbers, and different jurisdictions calculate how many nurses are needed in a variety of ways. The department’s reasonable workload approach is a positive step. It provides a consistent and transparent means of assessing the number of nurses required based on a ward’s patient load. The four hospitals have improved their monitoring of workloads and have better information to manage their nursing workforce. However, there is scope for further improvement.
Chapter 2: Are general wards adequately staffed?	All four hospitals continuously reviewed the adequacy of ward nursing levels. Two had implemented the new reasonable workload approach to determine the number of nurses needed and two were in the process of doing so. Generally the hospitals maintained ward operations in the face of day-to-day nurse shortages. But we found instances where shortages had caused some wards to temporarily close beds and defer admissions for elective surgery. The incidence of closures due to nurse shortages was not monitored. Shortages arise when positions are vacant, nurses are absent from the ward, patients need more care than usual or extra beds open. Hospitals manage these shortages by getting nurses on duty to cover the gap or by employing overtime, agency and casual nurses. The department used overtime and agency nurses to provide the equivalent of 1,217 full time nurses in 2005-06. This was an increase of 21 per cent from 2001-02. The total cost of overtime and agency nurses is not monitored. The department advises that it will introduce standard contracts and tendering processes to improve arrangements with nursing agencies. The use of agency nurses and overtime can be a cost-effective way to manage unanticipated absences and spikes in demand. But it is not a cost-effective way to meet ongoing increases in demand or predictable supply problems.
	The hospitals visited did not have adequate information on the reasons for using agency nurses and overtime. Nevertheless, three of the hospitals had reduced or maintained their use of agency nurses and overtime.
Chapter 3: Do hospitals effectively retain and attract nurses?	The department has reduced the nurse resignation rate and recruited more nurses. Over the last four financial years the average number of nurse employees increased by 5,588. The department advises that an additional 6,744 nurses were employed between January 2002 and September 2006. But nearly half the nurses work part-time and the department is not able to quantify the gain in nursing resources or assess whether it is adequate to meet demand. While the number of nurse vacancies fell by 13 per cent between 2001-02 and 2005-06, the use of overtime and agency nurses suggest that there may still not be enough nurses employed. The rising demand for nurses and the imminent retirement of many existing nurses has led to projections of a national shortage of 40,000 nurses by 2010. The NSW health workforce action plan supports the national strategic framework and recognises that doctors, nurses, allied health and support staff need to work together more effectively, change work practices and develop new models of care. In respect of nursing, the department has encouraged hospitals to review the work of nurses and extend the roles and functions of enrolled nurses, freeing up registered nurses to deliver more sophisticated nursing treatments. Some of the hospitals visited were using more enrolled nurses and some wards had moved to team-based nursing models. These are all positive initiatives, but it is too early to judge whether they will ensure that the nursing workforce in public hospitals will be adequate in the future. The provision of undergraduate training places affects the supply of health professionals and the department is working with the Commonwealth on strategies to increase the number of nurses entering the workforce.
	Response from NSW Health
	I am pleased that your performance audit on “Attracting, retaining and managing nurses in Hospitals” acknowledges that the Department of Health has done well to attract and retain nurses in the public health system in New South Wales.
	The task has not been an easy one. Like the rest of Australia’s workforce the profile of nurses working in both public and private health sectors is ageing. The supply of freshly trained nurses through the University system has not kept pace with the increasing demands of population growth and more complex medical conditions. I wish to acknowledge the efforts of all of those who have been engaged in developing and implementing recruitment and retention policies and practices across NSW Health that have seen our nursing numbers grow by an additional 6,744 nurses in the last four years to September 2006. This has been a commendable effort. Your recommendations encourage the Department to continue its efforts in specific areas, to expand some of its existing strategies and to urge hospitals to review and improve their nursing recruitment, retention and management practices.
	Your recommendations focus on: § spreading the use of the nursing workload tool already in use in many public hospitals. § continuing to monitor the impact of the demand for more nursing positions, now and into the future. § reducing reliance on overtime and agency nurses. § retaining our valued nurses in the system.
	In that context I am pleased to accept the thrust of your recommendations. There is no doubt that to meet the need for more nurses to provide more care into the future we need to increase our efforts, at a national, state and local level to enlarge our nursing workforce. I believe that we can meet that challenge. I would like to recognise those nurses who have joined us and stayed with us after their initial training, those who have served their hospitals and patients with great compassion for many years, and those who have come back to us to renew their care for the sick and injured.
	(signed) Robyn Kruk Director-General Dated: 5 December 2006