Episode 11 - How Much is a Nurse Worth?
Published: 10 October 2016
Published: 10 October 2016
Welcome to episode eleven of the new Ausmed Handover podcast: How Much is a Nurse Worth?
Welcome to episode eleven of the Ausmed Handover podcast. This episode is all about money. I’ll be calculating how much a nurse is worth at their most elemental level, how much a nurse actually costs to employ, how much a nurse can actually charge for their services, and, ultimately, what the cultural monetary value of a nurse actually is, which is the real question we should all be asking.
Hello, this is the Ausmed handover podcast, my name is Darren Wake and in this episode, I’ll be asking the question: how much are you really worth?
Listen up class… In this experiment we reduced two nurses down to their component elements. The first one was a clinical nurse, and we found that the total value of all of their constituent elements was just on $160, and most of this value represented in the potassium we found.
Here, in this second example, we reduced a middle manager down, and, rather surprisingly, we found their constituent elements to be valued at nearly $340.
SFX MUMBLES (00:05)
Why was that professor?
Well, we found that there was an extra 14 kilograms of lead in their backside.
Now, let’s look at senior healthcare management: we found a much higher proportion of toxic elements in those.
SFX CHALKBOARD (00:10)
In this episode, I really want to examine how much you are worth from a number of different perspectives, and I want to do this from the ground up, or, more accurately from the inside out, as you will hear.
We’ll especially be talking about the difference between value and cost, which is are separate concepts and this is often misunderstood by the public, healthcare managers and by nurses themselves.
First up, we’re going to look at how much you are worth from the most objective, fundamental perspective: that is, from the value of your basic ingredients, so to speak.
It’s a useful exercise, so bear with me.
Imagine that we took a regular, every day nurse and popped them in a lab, stuck them in a special machine, sucked out all the water and air in their body and then pulverised what was left into a fine powder. This powder would literally be all of the ingredients that an average nurse is made up of, and it would most likely be representative of any human being.
Now, there are researchers out there that have actually done this. Not specifically with nurses, I mean, (I hope) but they have taken the remains of a real human, desiccated them, pulverised them and then applied a mass spectrometer to the resultant dust to work out exactly what the elements are that make up an average human being, that is, what they are prior to the ‘just add water and sentient thought’ stage.
We know from this research that the average healthy 80kg human being is made up of around 60 different elements from the periodic table, with some subtle variations depending on your health, occupation and where you live or have lived in your life. We also know the amount of each of these elements, and from that, we can calculate their value based on current market prices.
I’m pleased to say that, on average, the elements that make up ‘you’ are valued at, in total, according the commodity market prices in August 2016, around $160 US dollars.
So that’s what you are worth in terms of the value of your ingredients, so to speak, and that’s interesting to know, because that’s the most objective, fundamental market value you can have as a human being: the value of your constituent elements on the world commodities market.
What we are interested in now is what you are worth if you were to be reconstituted and trained as a nurse, because the economic value we add to that original $160 is all down to pure intellect: what you know as a nurse, and how you use your body to apply it. And when you do that, you transmogrify those basic elements into an incredibly desirable economic commodity. And that has real dollar value.
But, what is that dollar value, because it changes depending on your perspective?
The monetary value of a nurse changes depending on the perspective from which it is perceived, and the first perspective we’ll examine is that of the employer.
Now, an employer views you as a skilled commodity: they hire you so you can apply your specific skillset to obtain an outcome that they desire. In the case of the public and charitable healthcare systems, they seek to deliver stable or better healthcare outcomes for their client demographic within a set budget. In the private system, and make no mistake about this, your absolute value is calculated in terms of what percentage of the business profit you bring about. That is, a private healthcare institution will always divide the annual profit by the number of staff employed and then seek to increase this figure the following year. Good healthcare outcomes are what the private system uses to attract clients: they are the means and not the end.
Essentially, both the private and the public system will try to bring about the desired outcomes with as few a staff as possible, for different reasons, so the business managers of both of these systems view a nurse as an expense, an operating cost, and the perspective they view a nurse from is…
How much does a nurse cost?
And this is something that’s interesting to calculate, and something virtually all nurses don’t really understand. What you get paid is not what you cost.
So let’s do it, let’s calculate how much the average nurse costs per year for an employer.
Now, worldwide, your average nurse has around 8 years’ experience and is a shift worker, so I’m going to use that as a starting point. And I’m going to calculate using Australian dollars.
So, let’s go.
The average nurse in Australia is paid $34 gross an hour base rate, and works around 76 hours a fortnight.
That’s 1976 hours a year, at a pre-tax base cost of around $67,184
On top of this, there are a number of what’s called on- costs. These vary slightly from state to state:
9.5% superannuation adds $6382
6.1% state payroll tax adds $4098
The public liability insurance premium adds $200
The vicarious Professional Indemnity Insurance premium adds about $600
The Workers compensation premium adds about $6000
Uniform costs add around $350
Shift work on average add 20% per annum or $13 437
Relief staff for 10 days of paid sick leave adds $2584
Relief staff for 5 days of paid education leave adds $1292
The shared cost of an educator adds roughly $2500 per staff member
Accrued long service leave adds $3100
Shift working relief staff for six weeks of paid annual leave adds $7752
Shift working relief staff for 3 days of paid carer’s leave adds $775
We won’t worry about public holiday pay, maternity leave or fringe benefits, because the sums are too hard for me to do.
In total, you average full time shift working clinical nurse costs their employer – in Australia – around $116, 254 per annum, or about $58.83 an hour.
Of course there’s variations on that, but on average, around the world, the real cost to an employer for your average nurse is about 35% to 75% above the rate the nurse is actually paid.
It’s less in the USA and the UK, and the highest in Australia, which pays for more holidays and benefits than anywhere else in the world.
So that’s what you cost an employer: what they are prepared to pay and have usually negotiated with a union, but is that what are you really worth? Is that a reflection of true market value?
The third perspective is yours: what do you think you are actually worth as a nurse? Do you think your employer should dictate your value? Do you think your employer is paying what the free market is prepared to offer for your services?
Well, I wondered this once. I sat in on an enterprise bargaining meeting, and realised that my colleagues and I were trading off all kinds of benefits for a 1.5% pay rise.
That is, we were arguing (and losing that argument) for a raise of 1.5 cents in the dollar.
So, I subsequently set out to do an experiment, and decided to start up my own nursing business and find out how much I was worth, and it was especially revealing.
At the time, I lived in a big city, and there were plenty of hospitals around, and not a lot of nurses. So I formed a business and started a one man nursing agency. I went to the nearest hospital and found the business manager and contracted to provide agency services to them for $40 an hour, which, at the time, seemed a bit more than I was getting from my previous employer as an hourly rate.
I was snapped up and almost immediately was inundated with work. I thought I was a star, but one day, about three months into this exercise I ran into that same manager and I asked him if he was pleased with my business.
He was, but he went on to explain that I was charging about 40% less than their own nurses, in fact about the same as a cleaner or a kitchen hand, and equally politely told me all about the mystery of on-costs.
That wasn’t problem though, I could up my rate and try another hospital.
I increased my base hourly charge to $50, and to my surprise, I got a contract at the very next hospital I approached.
The ease that I was getting these contracts made me cocky, so I really pushed my luck and decided that I would find out just what I was really worth as a bog standard coal face clinical nurse.
I wanted to know what my value was on the free market.
My strategy was simple: I would continue to canvas the local hospitals for contracts, but with each new hospital I would push my base hourly charge up by $10.
And off I went.
Soon, I was contacting out at
and, incredibly, $100 an hour for weekday day shifts, rising to around $150 an hour for Saturdays, and $175 an hour for Sundays.
I couldn’t believe it, but unfortunately the experiment ended at that point when I fell in love and ran off to do all those things that people in love do.
The fact is, I got to a point of charging a base rate of $100 an hour and no one was batting an eyelid: there was no shocked guffaw at my rate, no negotiation, no refusal: the business managers in the last two hospitals I approached were more than willing to sign me up for $100 an hour as my base rate.
They explained that they would be even be prepared to pay more than that, simply because they could hire me on an as-needed basis, and when the patient load was down, they didn’t hire me, and it cost nothing: I didn’t need to be hired just to hand around, as employees might do.
I suspect I could have pushed my rate up more than a little further.
What I did find out with absolute certainty, though, is that the market value of a regular clinical nurse is considerably higher than the money offered to a nurse as an employee. At $34 an hour, or $58.00 an hour with on-costs, nurses are a bargain.
Nurses have a much higher value on the free market, and are a valuable commodity.
So finally, we know what the ingredients of a nurse are worth, and we know what a nurse roughly costs and what the market value of a nurse might possibly be. So what would a nurse be truly valued at if we take into account what society expects of us?
The families of those in our care expect a kind of dual service from us: they want us to provide a high standard of technical care, and they want us to show at least the same level of compassion to our patients that they would experience if that patient was being cared for in their own home by their family. Of course there’s a bit more to it than that, but let’s keep things simple, so we can at least put a dollar value to this aspect of our services.
I think it would be very difficult to put a monetary value on care and compassion itself, but we can put a value on the act of providing those services in lieu of family members.
I think that providing a level of technical expertise can be quantified by the $58.00 an hour figure we have established previously, so how do we put a dollar value on compassion and care by proxy?
When someone is placed into hospital, it’s done for two reasons. Firstly, to receive expert technical care, something that can’t be done without the appropriate training.
Secondly, because the level of emotional care required is beyond the family’s logistical capacity to give. That is, if they were required to provide round the clock emotional care to their family member, then it would interfere with their capacity to earn an income. There’s other aspects to this, of course, but I’ll keep it simple so at least I can manage the sums involved.
So, there’s the expectation that nurses will provide the same level of emotional support to every patient that their relatives would provide if that person were at home and they were caring for them full time.
And you do this not just for one patient, but for up to five or more, around the clock.
So, we now have an angle that allows us to calculate a dollar value to our previously intangible emotional services that can be added on top of our base wage.
For each patient we look care for, we can reasonably assume that our emotional care allows one family member to stay in the workforce.
The average wage of a person in the Australian workforce is $74724.
However, not all our patients have family that work, so they won’t suffer economic hardship. We can rule out the partners and families of those who are aged over 65, as they are generally not working anyway, and they comprise around 48% of all patients in the hospital system.
So, we can say that by our delivering emotional care, we are ensuring that the families of 52% of our patients are able to remain economically productive.
If we provided only clinical expertise, then they would be required to come into the hospital and care for their loved ones. But, we do that as part of our job anyway.
But we aren’t actually paid for it. I can safely assume this because I know our pay is on par with other healthcare disciplines that provide technical expertise only, such as a lab technician.
So how much is that compassion worth? Well, if the average wage is about $287 a day, then that equates to $11.97 an hour over 24 hours. If a patient’s family requires you to deliver the emotional care on their behalf so they can work and earn money, then that equates to you being worth $11.97 an hour plus your base rate plus on costs for a week day shift.
But that’s per patient, and on an early shift, you’ll have around 5. So the dollar value is really about $60 plus your base rate and on costs. So, I think to our society, your per hour value as a nurse is around $118 n hour as an employee, and you free market value if you practiced independently would be around $160 an hour. Not taking into account shift work.
So what’s the point of all this, other than an interesting exercise in amateur accounting.
Well, what I wanted to do is illustrate the economic POWER of nurses from at least two or three perspectives.
I wanted to illustrate at least what the market value of a nurse is without the constraints of an employment contract, and I wanted to especially illustrate that some aspects of our job are expected, but not compensated for.
There isn’t any other profession that can provide both technical expertise and meet the emotional expectations of its patients and their families.
If you want to understand the economic power of nurses, then imagine that for one year, we provided technical services only, and required families to come into hospital to provide round the clock emotional support for their loved ones.
And let’s imagine that only about half actually give up work to come in and provide that emotional support on a round the clock basis.
The average wage in the US is around $71 000, or $273 a day.
The number of Americans admitted to hospital last year was 15.5 million, with 8.06 million of those coming from families where at least one member worked. If half of those gave up a single day to come in and provide bedside emotional care for their family member, the loss to the American economy would be around 2.2 billion dollars.
Now that is economic power.
This is the Ausmed Handover podcast, my name is Darren Wake, and thank you for listening.
If you enjoyed this podcast, please subscribe to the channel for future episodes, and please feel free to leave your comments and feedback for us: we always welcome your opinion.
Peripatetic and always intellectually restless, Darren Wake has pursued varied careers in journalism, media production, academic philosophy and nursing. As a nurse, he worked in the speciality areas of critical care, community care, remote area healthcare and education. As a formally qualified academic philosopher Darren taught undergraduate units in law and ethics in healthcare, although his principle research focus revolved around logic and the philosophy of language. Darren’s media production output can be found scattered about the Ausmed website and in his long forgotten days as a word monkey, he wrote for European publications such as The Scotsman, The Great Outdoors, Country Walking and The Times. In 2014 Darren consulted to the Department of Health for the development of Consumer Directed Care policy and guidelines for remote area communities in the Northern Territory. These days he is the managing editor of a small independent publishing company based in the United Kingdom, and lives in Tasmania. In his spare time, Darren is currently studying a formal course in celestial navigation, just in case the inevitable zombie apocalypse messes with the world’s GPS satellite system.