The Cost of Nurse Turnover by the Numbers
Margaret Lindquist | Healthcare Content Strategist | January 10, 2023
Nursing is an immensely challenging profession, even in the best of times, but the COVID-19 pandemic took the challenges of nursing to new levels, leading to higher employee turnover rates and critical-personnel shortages.
The main reasons for the high turnover are pandemic-related burnout, an aging workforce, and fierce competition to attract qualified people amid an industrywide labor shortage. Nursing schools, which are understaffed themselves, won’t be able to produce enough candidates to alleviate the issue.
As nurse turnover proliferates, it costs providers and patients alike in several ways. It increases patient wait times. It decreases the time nurses can spend with individual patients, ultimately diminishing the level of care. And it takes a mental and physical toll on the nurses who remain, causing many of them to move to other healthcare employers, leave the industry, or retire early. Healthcare providers must take steps to improve their retention of staff nurses in this highly competitive labor market.
Key Takeaways
- High rates of nurse turnover create a vicious circle as the overworked nurses who remain at healthcare providers eventually leave for other employers—or exit the profession entirely, either by switching industries or retiring.
- High nurse turnover costs healthcare institutions both directly and indirectly. Direct costs include recruiting, hiring, and training, as well as the expense of temporarily filling staff gaps with contract nurses. Indirect costs include reduced employee productivity and morale.
- Better technology is part of the solution, especially systems that automate or simplify processes and lighten the burden of nurses’ administrative tasks so they can focus on caring for patients.
Reasons Nurses Resign
Overworked, underpaid, and underappreciated, nurses are starting to leave the profession at a rate that has set off alarms at individual institutions and at the national public policy level. The annual turnover rate for staff nurses in the United States increased to an average of 27.1% in 2021, up 8.4 percentage points from the previous year, according to the 2022 NSI National Health Care Retention & RN Staffing Report. During the pandemic, state governors across the US had to call in the National Guard to assist understaffed healthcare providers. To address the turnover problem, it’s important to first understand why nurses are resigning.
Inflexible, demanding schedules
Nurses who work in high-intensity settings know that even if one or two colleagues call in sick or can’t come to work for other reasons, there’s potentially a hole in the shift because of inflexible work schedules. That can mean an exhausting shift for the people who do make it into work, not only putting the well-being of patients at risk but also the mental health of those nurses.
Pandemic-related stress
Even before the onset of COVID-19, more than half of nurses reported symptoms of burnout, according to the U.S. Department of Health and Human Services. Recent surveys show that around a third of nurses are considering retirement within the next three years.
The pandemic is one reason retirement rates have accelerated. Data from the Current Population Survey, a collaboration between the U.S. Census Bureau and the U.S. Bureau of Labor Statistics, shows that 14,500 nurses had recently retired as of March 2021, an increase of 140% from March 2019. In a 2021 survey of more than 6,500 critical care nurses, 92% said the pandemic had “depleted nurses at their hospitals and, as a result, their careers will be shorter than they intended.” 66% said they were considering leaving the profession altogether because of their experiences with COVID-19.
Relatively low pay
Americans believe that nurses are underpaid (and that doctors are paid just about right), according to a recent poll from the Harris Public Policy group and Associated Press. In the US, registered nurses earn a median annual salary of $77,600, according to the most recent data from the Bureau of Labor Statistics. Some nurses, including midwives, nurse practitioners, and nurse anesthetists, can make considerably more.
But consider the fact that the average salary for registered nurses is less than for real estate agents, physical therapists, and construction managers. In a 2022 survey conducted by healthcare staffing company ShiftMed, nurses who said they were likely to leave the industry within the next two years identified staff shortages (64%) and pay that isn’t keeping pace with the cost of living (43%) as their biggest issues.
Outdated technology and processes
Legacy electronic health record (EHR) software was designed to facilitate revenue activities—not make it easier for nurses and other clinicians to deliver care. Routine patient documentation in EHRs can take nurses as many as 200 clicks. Overall, inefficient, manual administrative tasks are taking up too much time, frustrating nurses. 53% of the nurses who responded to a November 2021 survey by Hospital IQ said their work environment could be improved and nurse burnout levels reduced if healthcare providers implemented simpler processes that improved visibility into patient needs. Meanwhile, 45% of respondents said they want better communication and coordination across departments.
Worsening patient-to-nurse ratios
Patient-to-nurse ratios vary depending on how much care a patient needs. For example, a 2:1 patient-to-nurse ratio is considered ideal in intensive care units, but it’s more like 6:1 in surgery prep or recovery wards. As nurses leave or retire, ratios suffer. And even if the organization is able to bring in contract workers to fill in gaps, their lack of familiarity with the provider’s processes, people, and even the geography of the building means that more-experienced nurses will still be overloaded.
Getting the ratios wrong can also have huge consequences for patients, considering that every additional patient added to a nurse’s roster above the ideal number increases the risk of mortality by 7%, according to the National Institutes of Health (NIH). According to a 2022 survey by nurse staffing agency ConnectRN, 61% of the nurses who were considering leaving the profession said the top reason is the impact of nursing shortages.
Lack of support for entry-level nurses
Turnover rates for new nurses are as high as 30% in the first year due to unexpectedly high workloads and poor communication with team members. Unsurprisingly, job satisfaction scores for nurses in their first year of work are also low—averaging 5.5 out of 10, according to the NIH.
The Cost of Nurse Turnover by the Numbers
Healthcare institutions are dealing with unprecedented turnover rates across all clinical roles, but nurse turnover in particular is reaching catastrophic proportions. According to a survey conducted by NSI, a national nurse recruitment firm, the average turnover rate for staff registered nurses in 2021 was 27.1%. The average hospital in the US loses $5.2 million to $9 million a year due to costs associated with nurse turnover.
Some of the costs of high nurse turnover are easy to quantify, others are harder to measure but no less significant.
Separation costs
The costs of nurse turnover include severance pay, vacation payouts, and unemployment insurance claims, as well as the costs of removing employees from internal systems and directories.
Hiring and training costs
Replacing a registered nurse costs US healthcare organizations an average of about $37,000, according to a study by the Robert Wood Johnson Foundation. That includes hard costs associated with posting job openings, interviewing, and ensuring new hires meet the healthcare industry’s rigorous training and certification requirements. New employees can bring new ideas and energy to an organization, but there’s also a learning curve that can reduce overall productivity.
Travel nurse costs
Travel nurses, who are usually contracted to fill in for a nurse who left an organization, get paid an average of $127,694 a year, compared with the average US staff nurse salary of $77,600, according to the Bureau of Labor Statistics. And that contract fee doesn’t include additional payments such as travel reimbursement and stipends for food and housing. It also doesn’t account for the less quantifiable costs of relying on travel nurses, including loss of productivity and the additional burden contractors can place on full-time employees as a result of their unfamiliarity with a facility’s policies, equipment, and staff.
Substandard patient care
High nurse turnover causes staff shortages that reduce staff-to-patient ratios and the quality of patient care as overworked nurses can miss the warning signs of issues that can slow recovery times. There are subtler impacts on patient satisfaction as well. A study by the NIH showed that patients lose confidence in their healthcare provider when they don’t believe they’re receiving the best care, tarnishing the provider’s reputation.
Negative impact on public health
One ramification of nurse shortages across the US is that segments of the population, especially in rural areas, lose nearby access to healthcare services. About 83 million Americans now live in what’s known as a health professional shortage area (HPSA).
Surprising Benefits of Nurse Turnover
If there’s one overarching benefit of rampant nurse turnover, it’s that the resulting publicity has brought unprecedented attention to the problem, increasing the likelihood of positive change.
Here are three other benefits of nurse turnover. They don’t offset the turnover problem itself, but farsighted healthcare organizations can use them to improve their operations.
1. Fewer performance problems
Nurses who leave are often burned out and may be performing poorly and lowering the morale of the people around them. Their replacements can bring new energy and a fresh perspective to an organization.
2. Lower termination costs
The cost of terminating an employee varies depending on salary, tenure, contractual agreements, and more. Vacation payouts, severance pay, and unemployment insurance benefits add up—and only a portion of these costs need to be paid out if an employee leaves voluntarily.
3. Visibility into problem areas
If nurses are leaving for the same reasons, or making a similar career switch, savvy employers will learn from that. Managers may discover problems with their onboarding processes, team culture, or pay structure. Digging into the data behind high turnover rates can shed light on changes an organization needs to make to processes, tools, and policies.
Five Tips to Decrease Nurse Turnover
Lowering nurse turnover requires healthcare organizations to work on a variety of factors—their culture, processes, practices, and tools—to help their nurses feel appreciated and achieve a healthy work-life balance. The first step is for managers to listen to their nurses to understand what needs to change.
1. Hire thoughtfully
Even when the hiring pool is shallow, employers must go into the process with a clear sense of the skills they need and the types of employees who will fit well into their system and culture—and, ultimately, will be most likely to stay for the long term. Get input from current staff members, and make sure your recruitment and onboarding tools make the process easier for all involved. For example, AI features built into cloud-based human capital management (HCM) systems enable employers to analyze data submitted by job applicants and examine that data against job requirements and other parameters.
2. Offer people the right training at the right time
Nurses, particularly those just starting out in their careers, often feel as though they’ve been thrown into the deep end. Regardless of their level of experience, new hires need training that’s both specific to their organization and mandated by government regulations (such as training on infection control and pain management). Organizations that put together comprehensive onboarding plans with clear goals and give new hires the time they need to complete their training will help reduce their attrition rates for staff at every level.
3. Give nurses greater scheduling flexibility
The American Nurses Association recommends that hospitals set up flexible pools of nurses across units to create a deeper bench so managers aren’t constantly calling on the same people. It also recommends that managers work directly with individual nurses to set up their schedules to accommodate requests for off hours or overtime. The latest HCM scheduling systems enable employees to filter available shifts based on an individual nurse’s competencies and experience, allowing them to see which shifts are available. Hospitals that take full advantage of available staff will be able to scale down their reliance on expensive contract nurses.
4. Adopt a “continuous listening” model
New mobile applications enable managers to communicate instantly and more regularly with their nurses and get quick feedback through pulse surveys. Managers can also use technology to activate performance management plans that include scheduled check-ins and automatic reminders to support continuous one-on-one coaching.
5. Put the right technology in place
Every system that a nurse touches adds to or detracts from their employee experience. That includes the applications that support recruiting, onboarding, training, benefits, and other core HR processes, as well as the EHR system, the nerve center of every healthcare organization. When those interfaces and access points aren’t connected, nurses have to spend more time inputting and trying to find data and less time caring for patients. Making sure nurses are supported by the right technology so they aren’t needlessly bogged down with administrative tasks is key to retention. After all, the top reason nurses choose the profession is to make a difference in people’s lives.
Leverage Technology to Build and Retain Nursing Workforces
Giving nurses control and flexibility has a positive impact on job satisfaction and, ultimately, on their willingness to stay at an organization. Here, technology can play a crucial role. Nurses need simple-to-use, always-available HCM systems with tools that enable them to sign up for shifts, adjust their schedules, check their benefits, register for and track their training, plan and develop their careers, provide feedback on the organization, and connect with their managers and colleagues.
Oracle Fusion Cloud HCM, which includes the new Oracle ME employee experience platform, provides both nurses and their managers with these tools, helping healthcare organizations keep their staff supported, engaged, and eager to stay.
As the world begins to emerge from the COVID-19 pandemic, healthcare leaders are focusing on different priorities, according to the Philips Future Health Index survey. Top among them are staff retention and satisfaction, cost reduction, and improved patient care. To reduce turnover among nurses and other key employees, healthcare organizations can use higher pay as a motivator.
Learn how the Oracle ME platform can help your organization improve the employee experience.
Cost of Nurse Turnover FAQs
What was the average employee turnover rate in 2022?
Gartner predicts a 20% annual employee turnover rate across industries for the foreseeable future. The average turnover rate for hospitals is about 26%.
What is the cost of turnover in healthcare?
The shortage of clinicians in the US added 8%, or $24 billion, to hospital labor costs in 2021, according to data released by healthcare consultancy Kaufman Hall.
Will there be a big demand for nurses in 2023 and beyond?
Nursing is on track to be the sixth-fastest-growing occupation in the US over the next decade, according to the Bureau of Labor Statistics (BLS), as a result of an aging population in need of more medical care, the need to replace nurses approaching retirement age, and an increase in chronic conditions such as obesity and dementia. The BLS estimates that there will be around 203,000 new nursing positions open each year between now and 2031.