HEALTH CARE MARKETS AND HOSPITAL MAGNET STATUS

Objective:  Hospitals recognized for nursing excellence through Magnet designation currently account for one in fifteen US hospitals.  Magnet hospitals are able to attract and retain nurses through superior work environments and other commitments to nursing excellence.  Better nursing resources have been associated with higher quality patient care.  Hospitals must compete for patients based on the quality of patient care and technology.  Quality is increasingly being rewarded in payment systems.  The goal of this study is to study the role of market forces, both the competition for patients and the nurse labor supply on the Magnet adoption decision by hospitals.

Data and Methods:  The study sample consisted of 3456 short term general hospitals in metropolitan areas in 2009 using data from the American Hospital Association Annual Survey of Hospitals.  Magnet status was determined from the American Nurses Credentialing Center.  Hospital competition was measured as 1 minus the Herfindahl index.  Nurse labor supply per 1,000 population was measured from the 2005-2009 5 year American Community Survey.  Multivariate models were estimated of Magnet status as a function of hospital competition, nurse labor supply and hospital characteristics using logit estimation.

Results:  Magnet adoption is greater in more competitive hospital markets.  A shift from the 25^th to 75^th percentile of the hospital market competition index increased the likelihood of Magnet adoption by 1.3 percentage points.  Hospitals that were more technologically sophisticated were more likely to adopt Magnet status with a 3.5 percentage point change in the adoption likelihood associated with a shift from the 25^th to 75^thpercentile of the Saidin index of technology.  Hospitals with higher financial margins and those with a more complex mix of patients were also more likely to adopt Magnet status.  Nurse labor supply, however, was not a significant determinant of the Magnet adoption decision. 

 Conclusion:  Although Magnet adoption was originally driven by the need to compete for nurses in nurse labor markets, it is currently driven by competition for patients through quality and technology.  With the health insurance expansions under the Affordable Care Act, there will be newly insured patients without a substantial increase in the nurse supply.  Magnet accreditation will become increasingly important to attract and retain nurses.