Most CNOs I talk with are dealing with the same basic challenge.
They are being asked to control labor expense while still dealing with a nursing workforce that remains difficult to recruit and retain.
According to the American Hospital Association’s 2026 Costs of Caring analysis, workforce spending represented roughly 60% of hospital expenses in 2025. Workforce costs increased 5.6% during the year.
There is no question that nursing productivity matters. The mistake is assuming productivity simply means putting fewer nurses on the schedule.
The labor market doesn’t support that approach either. The Bureau of Labor Statistics projects approximately 180,800 registered nurse openings each year, on average, from 2025 through 2035. Hospital employment was approximately 5.78 million in August 2026, with unemployment among people previously employed in hospitals at only 1.9%.
The challenge for nursing leadership is figuring out how to use that workforce more effectively without creating the turnover, overtime and vacancies that eventually drive costs right back up. That means getting much more precise about staffing.
Average daily census is important, but it doesn’t tell the whole story.
Two nursing units can have exactly the same census and require very different staffing. One may have more admissions and discharges. Another may have higher acuity. One may have observation patients, behavioral health needs, or sitter requirements. Patient movement throughout the day can change the workload considerably.
That is why managing nursing labor strictly against a monthly target can sometimes create more problems than it solves, trust me we hear about it all the time from the nursing leadership we talk to when recruiting!
Some of the stronger organizations look at:
- Are schedules built around when patients actually arrive?
- Does the skill mix match the complexity of the patients?
- Are charge nurses carrying assignments that prevent them from actually leading the unit?
- Can staff be moved quickly when demand changes?
- Are float pools, internal resource teams, seasonal positions and cross-training being used effectively?
Retention is also a part of the productivity discussion.
A staffing change can look very good financially for three months and turn out to be very expensive six months later if experienced nurses start leaving.
Vacancies bring recruiting costs, overtime, orientation expense, and sometimes another round of agency utilization. The nurses who stay end up carrying more workload and more responsibility for training new people.
That is why I think the nursing dashboard needs to include both financial and workforce measures.
Hours per patient day, overtime, premium pay, and productivity absolutely matter. So do vacancy rates, turnover, first-year retention, orientation completion, sick calls, and employee engagement.
Quality has to be sitting beside them. If labor numbers are improving while falls, infections or missed care are increasing, the hospital hasn’t really solved the problem.
Frontline leadership is another part of this that sometimes gets overlooked. A hospital can build a great staffing model on paper and still struggle if nurse managers can’t execute it.
Manager span of control, Scheduling discipline, and Coaching matters. The ability to hold people accountable while still retaining good nurses of course matters.
Those are often the factors that determine whether a productivity initiative becomes part of the operating culture or disappears after a few months. Creating a high-performing culture through Co-Opetition is an idea from one of our podcasts with Shirley Bomhoff, worth checking out if you missed it.
Now, for CNO candidates considering a new opportunity, I would spend some time understanding exactly what the organization means when it says it needs to “improve productivity.”
- Does leadership want better staffing discipline?
- Or are they trying to solve a broader financial problem by cutting nursing expense?
- Are the baseline numbers reliable?
- Are the CFO and CNO aligned on the targets?
- Does the organization actually have the systems and management structure to staff dynamically?
Hospitals should be asking equally specific questions when interviewing CNO candidates.
- Don’t just ask whether someone improved productivity. Ask how they did it.
- Did they reduce agency dependence? Change the staffing model? Build an internal resource pool? Improve scheduling? Reduce vacancies? Strengthen nurse managers?
- Most importantly, what happened to turnover and quality while they were doing it?
This distinction matters when we evaluate nursing executives in a search.
Someone who happened to inherit good labor numbers is very different from someone who walked into a difficult situation, redesigned the model, and improved both cost and workforce stability.
Nursing productivity in 2026 isn’t about figuring out how few people you can schedule.
It is about getting the right people in the right places at the right times and building a workforce that will still be there tomorrow.
