Code Blue

As hospitals nationwide struggle with a physician shortage, states are debating if nurse practitioners (NPs) can fill the gap. But a new study by researchers at Haas and the University of Illinois Chicago prescribes a different remedy. 

Study co-author David Chan, a professor of economic analysis and policy and a physician, suggests a team-based model that takes advantage of each profession’s strengths.

“The question isn’t whether nurse practitioners should practice independently. It’s which patients they should see and how they work in broader teams,” says Chan, the Mark and Stephanie Robinson Chancellor’s Chair and faculty director of the Robinson Life Science, Business, and Entrepreneurship Program. “The data show that how you deploy your workforce matters just as much as who they are.”

The study, forthcoming in American Economic Review, analyzed 1.1 million emergency department (ED) visits at the Veterans Health Administration, where NPs have been allowed to practice independently in EDs since 2016. It was one of the most rigorous attempts to measure whether the nation’s growing reliance on NPs comes at a cost to patients or the healthcare system.

On average, patients treated by NPs experienced 11% longer ED stays and a 20% increase in preventable hospitalizations within 30 days. NPs ordered more diagnostic tests and specialist consultations—patterns consistent with responding to greater diagnostic uncertainty—resulting in 7% higher spending. Critically, however, the researchers found no statistically significant difference in 30-day mortality rates between patients treated by NPs and those treated by doctors. 

“It would be wrong to say it’s more costly to hire a doctor on average, despite the fact that they have almost double the salaries of NPs, because doctors have expertise and make decisions that save the system a lot of money,” says Chan.

Becoming a physician requires four years of medical school plus three to seven years of residency. NPs complete a nursing degree and a graduate program of one to four years with no residency requirement. 

However, the researchers’ most striking finding may be that the difference in the cost of patient care between a high- and a low-performing doctor is several times greater than the average difference between doctors and NPs. Yet hospitals appear to match tasks and pay almost entirely along professional lines rather than for individual performance.

“Professional title turns out to be a very coarse signal of productivity,” says Chan. 

The study also found that a substantial share of NPs performs at or above the level of some physicians, at least for the patients who could have been treated by either of them.  A randomly selected NP was found to be more productive than a randomly selected doctor in about 38% of pairwise comparisons.

Additionally, the NP–physician disparity shrinks as NPs gain experience, suggesting that much of the gap is driven by training differences. 

Demand for healthcare has outstripped doctor supply for decades, and the NP workforce has grown to more than one-third the size of the physician workforce nationwide, according to the study. About 13% of ED visits are now handled by NPs.

Chan suggests that hospitals and health organizations could close some of the gap between physicians and NPs with help from systems that aid decision-making, such as AI. Administrators could also use AI to identify the types of patients best suited for care by NPs or by physicians.

Policymakers could accelerate that change, he adds, by paying healthcare systems for improving patient outcomes rather than just billing for procedures.

“Such a change may shift the emphasis from turf battles between physicians and NPs on who can bill procedures and turn attention to how they can work together to provide the best care,” Chan says. “I think that would automatically lead the healthcare systems to start innovating in terms of how to design their teams.”