KDADS officials tell committee contract nursing drove $59M in state hospital costs in 2024; bonuses and hiring strategies aim to curb use

Scott Bruner, deputy secretary for hospitals and facilities at the Kansas Department for Aging and Disability Services, told the Senate Ways and Means briefing that contract nursing has driven substantial costs at the state's two primary psychiatric hospitals and described recruitment, retention and policy steps KDADS has taken to reduce reliance on agency staff.

Bruner said Larned State Hospital spent $41.3 million on contract staffing in fiscal 2024 and Osawatomie State Hospital spent about $17.9 million, for a combined total in the neighborhood of $59.2 million. "We've been coming to the governor and the budget process and really asking for just-in-time funding to fund what our need is for the current fiscal year," Bruner said. He and legislative staff said the governor included enhancement requests in her budget and the House Appropriations Committee has partially funded those requests.

Dayton Lemunyan, senior fiscal analyst with Kansas Legislative Research, summarized the House committee recommendations: Larned requested $32.7 million for contract staffing in FY2025 and the House recommended $30.0 million for FY2025 and added proviso language to prohibit contract staffing at Larned beginning in FY2027; Osawatomie requested about $16.0 million and the House recommended adding $8.0 million for FY2025 and FY2026.

Superintendents described day-to-day care needs and the workforce gap. Dr. Lindsey Dinkel, superintendent of Larned State Hospital, said Larned currently averages about 237 contract nursing staff on campus compared with roughly 55 FTE nursing staff and that many patients require one-to-one direct-care assignments. "When you think about that, in comparison to 3 shifts that it takes to cover a 24 hour day, that's 90 additional people we need to cover direct care," Dinkel said, describing how dozens of one-to-one assignments magnify staffing needs.

Ashley Byram, superintendent at Osawatomie State Hospital, said Osawatomie requires about 48 nurses, 20 LPNs and 96 mental health tech-type positions per day across its programs and that earlier implementation of bonuses and scheduling changes has reduced the weekly average contract nursing count and cost. Byram said weekly average contract spending fell from about $355,000 to $277,000 after bonuses and recruiting efforts and the average number of contract staff declined from roughly 108 to about 82 in December.

KDADS described several recruitment and retention strategies now in use: - Bonus authorities increased by proviso last year to allow higher employee bonuses (the cap was raised from $3,500 to $10,000), enabling sign-on, referral and retention payments; KDADS reported a layered sign-on/retention bonus structure (up to about $3,000 across milestones) and a $100 pickup-shift bonus for critical shifts. - Pilot scheduling changes such as RN self-scheduling and other flexible-work approaches to reduce turnover. - Targeted hiring and training pipelines, including nursing clinical relationships with community colleges and university programs.

Officials said vacancy rates remain high but are improving in some places. Bruner said the system-wide authorized staffing for the relevant programs is roughly 1,430 positions, with about a one‑third vacancy rate system-wide and direct-care vacancies closer to 50–60% in some classifications. Dinkel said Larned’s vacancy rate declined from about 45% to 35% during the latter part of 2024 after bonus and recruiting work; KDADS also reported it had hired more FTEs in 2024 (158 hires) than separations (43) for the Larned campus in that calendar year.

Cost and contract mechanics: KDADS officials noted the headline per-hour cost the state pays to a vendor does not equal the nurse’s wage; the agency pays the vendor rate (which includes agency overhead), and the vendor pays the clinician. Committee members pressed officials on whether raising state pay would reduce reliance on contractors; KDADS officials said market competitiveness matters but also cited rural housing availability, the specialized nature of some patients and multi-year effects at larger campuses such as Larned.

House and governor funding: Bruner said the governor included the requested enhancements (Larned $32.7 million; Osawatomie $11.0–16.0 million depending on the calculation) in the executive budget and House Appropriations provided a portion of those requests. Staff cautioned that these are fluid figures while the appropriations process continues.

Why it matters: state hospitals provide court-ordered and acute psychiatric care, and reliance on high-cost contract nurses affects both the state’s operating budget and the hospitals’ ability to maintain consistent staffing and clinical continuity.

Questions remaining: committee members asked what would happen if the state could not fully fund contract nursing needs, how many FTEs are authorized versus filled, the average ages of staff and housing/childcare issues that affect recruitment. Superintendents and KDADS committed to provide additional data to the committee upon request.