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Calculating the total nursing cost per Diagnosis-Related Group (DRG) involves a comprehensive approach to ensure that all relevant costs associated with nursing care are considered. The correct method accounts not only for direct nursing wages but also for additional expenses incurred.

To arrive at the total nursing cost per DRG, one must consider the average RN hourly rate, which reflects the basic compensation for nursing staff. However, this figure alone does not provide a complete overview of costs. It's essential to also include benefits, which can add significantly to the cost of employing nurses. These can encompass health insurance, retirement contributions, paid time off, and other employee benefits that impact the overall compensation package.

Moreover, indirect costs need to be taken into account, which may include overhead expenses related to supporting staff, training, medical supplies, and equipment necessary for delivering nursing care. Indirect costs are often substantial and should not be overlooked, as they contribute to the total cost of care provided by nursing staff.

Therefore, the correct method for calculating the total nursing cost per DRG involves a formula that integrates nurse time with the comprehensive cost of employing nursing staff: the average RN hourly rate plus benefits and additional indirect costs. By utilizing this thorough approach, healthcare organizations can achieve a more accurate representation