Nursing students provided the labor, and hospi-
tal administrators made no attempt to identify the
real cost of nursing care. As nursing education
moved away from the hospital setting to universi-
ties in the late 1950s and as the role of the student
nurse was reformed, hospital administrators began
to examine the actual cost and revenue of hospital
nursing care (Lynaugh & Fagin, 1988). However,
the retrospective reimbursement of Medicare
and Medicaid in 1965 allowed for hospital prof-
itability and the issue of nursing care costs was not
confronted.
During this era of retrospective reimbursement
(1965 to 1983), the actual cost of nursing care was
unknown because it was embedded in the daily
hospital room charge. However, acute care hospi-
tals had been under scrutiny because of the rapidly
escalating costs of health care. A 1976 report from
the National Council on Wage and Price Stability
reported that during the period of 1965 to 1976,
hospital costs and physicians’ fees rose more than
50 percent faster than the overall cost of living
(Walker, 1983). Hospital administrators were under
considerable pressure to control costs.
Nursing service represented the largest hospital
department and was singled out as a major cost in
operating expenditures (Porter-O’Grady, 1979). It
was assumed that the rising costs of health care
were due to nurses’ salaries and the number of reg-
istered nurses (Walker, 1983). Yet nursing costs as
a percent of hospital charges could not be identi-
fied, because historically they had been tied to the
room rate.
During the late 1970s and early 1980s, health-
care costs continued to rise and did not follow
traditional economic patterns. Cost-based reim-
bursement altered the forces of supply and de-
mand. In the traditional economic marketplace,
when the price of a product or service goes up, the
demand decreases and consumers seek alternatives
at lower prices (Mansfield, 1991). However, in the
health-care marketplace, consumers did not seek
an alternative as the price of hospital-based care
continued to rise (DiVestea, 1985). This imbalance
of the supply-and-demand curve occurred because
consumers paid little out-of-pocket expense for
health care. Government expenditure for the cost-
based reimbursement system was predicted to
bankrupt Social Security by 1985 unless changes
were made (Gapenski, 1993). In an attempt to con-
trol hospital costs, the government instituted a
prospective payment system based on DRGs.
As a result of the prospective payment system,
hospital administrators were pressured to increase
efficiency, reduce costs, and maintain quality.
Consequently, nursing administrators needed to
develop systems to gather information relative to
nursing costs and productivity. Research was con-
ducted in order to examine the costs associated
with nursing (Bargagliotti & Smith, 1985; Curtin,
1983; McCormick, 1986; Walker, 1983). Common
to all these studies was the use of a patient classifi-
cation system that was time-based and was a
predictor of the level of care needed for each
class of patient. Data derived from these studies
were used to calculate nursing costs per DRG to
predict expenditures and to determine nursing
productivity.
These studies identified the amount of time
nurses spent doing specific interventions but un-
derrepresented the wide variations and clinical
complexity of nursing care. This cost-accounting
process did not include the humanistic, caring
behaviors of nurses, so the costs associated with
the humanistic caring behaviors were not deter-
mined.
Foshay (1988) investigated 20 registered nurses’
perceptions of caring activities and the ability of
patient classification systems to measure these car-
ing activities. Findings from this study revealed that
patient classification systems could not address the
emotional needs of patients, the needs of the eld-
erly, or unpredictable events that required intensive
nursing interventions (Foshay, 1988). Specific car-
ing behaviors that could not be measured included
giving a reassuring presence, attentive listening, and
providing information.
Other research of this time period focused on
the cost and outcomes of all registered nurse
staffing patterns (Dahlen & Gregor, 1985; Glandon,
Colbert, & Thomasma, 1989; Halloran, 1983;
Minyard, Wall, & Turner, 1986). These studies
showed that nursing units staffed with more regis-
tered nurses had decreased costs per nursing diag-
nosis, increased patient satisfaction, and decreased
length of stay.
Helt and Jelinek (1988) examined registered
nurse staffing in five different hospitals over two
years. During this time period, the hospitals had in-
creased their nursing skill mix from 60 percent toCHAPTER 23 Applications of Marilyn Ray’s Theory of Bureaucratic Caring 371