This article examines the multiple factors leading to the nursing shortage and the financial impact of the nursing shortage on hospitals and health care providers, the government, society and educational institutions. Nursing shortages have occurred in this country throughout history, however, the current shortage is especially grappling due to the financial condition of the health care system, Health Insurance Portability and Accountability Act, the Balanced Budget Act, the compounding conditions that have led up to the shortage and the forecasted health care needs. Many solutions have been proposed to improve the nursing shortage. This article provides recommendations to problem solving methods and discusses some current policy alternatives, including recently enacted "nurse-patient ratio" regulation, demonstrated by California state policy and the "Magnet Certification" program developed by American Nursing Credential Center (ANCC). This article further examines the financial impacts on nursing shortage problem. © 2005 Aspen Publishers, Inc.