Question

• Contract labor is usually the most expensive man-hours. Why?
• What is a cost-to-charge ratio? Why should a nurse manager understand this ratio, and how would he or she use it?

Answer 1

Contract labor - is the use of independent contractor. If an individual is on your payroll and receive a steady paycheck , clearly that person is employee rather than independent contractor. Independent contractors usually operate under specific contract and invoice for work completed.

It is most expensive human hours. Because their work is not hourly as employee , independent contractors works mainly for projects which lasts for months to years. They spend more money. Independent contractors, charges more money as compared to employees. Independent contractor are not under any control. They work freely , not answerable .

Cost to charge ratio -- cost to charge ratio is the ratio between a hospital's expenses and what they charge .The closer the cost to charge ratio is 1 , less difference there is between the actual cost incurred and the hopitals charges.

It is important for the all the health professionals in hospital specially nurses. , if there are more number of nurses , then reduce their turnover, because it will improve nurse ,patient and system outcomes and save money of the hospital. If the ratio is more than one, then there are more expenses in hospital and income is less.

Nurses can use this cost to charge ratio by providing better health services .as this will help hospital earning.