The Real Costs of Healthcare Staff Turnover
Margaret Lindquist | Healthcare Content Strategist | March 22, 2023
Staffing tops the list of healthcare industry challenges heading into 2023, according to polling data from healthcare advocacy group MGMA. It’s no wonder: Hospital staff turnover rates climbed as high as 26% in 2021 as workers retired due to burnout or went to work for organizations offering higher pay or better work-life balance.
For healthcare organizations, high employee turnover rates are a burden on finances and resources. Turnover costs include the expense of recruiting, hiring, and training new employees, as well as the cost of temporarily filling staffing gaps with expensive contract workers. There’s also the cost of reduced productivity as managers shift much of their attention to hiring and as new hires get up to speed. A less tangible—but still significant—turnover cost is lower employee morale as those who remain work harder to fill gaps for less pay than contract workers hired to provide temporary coverage.
What Is Employee Turnover?
Employee turnover refers to the total number of workers who leave a company over a specific period of time. Companies measure involuntary departures (layoffs and firings) and voluntary turnover (resignations) as well as the cost of replacing a given type of employee. Considering turnover can provide opportunities to replace underperformers, many employers also calculate the ideal turnover rate for their organization so managers can set specific employee retention goals. Every company has employee turnover—farsighted companies take the time to understand their turnover rate, the factors driving turnover, and what they can do to build and retain a workforce that will help achieve their organizational goals.
Key Takeaways
- Even before COVID-19, more than half of doctors and nurses reported symptoms of burnout, defined by physical and/or emotional exhaustion due to the rigors of the profession. But the pandemic shifted burnout into overdrive. During the pandemic, 93% of health workers reported experiencing stress.
- The average cost of turnover for a regular position is between six and nine months of an employee’s salary. Replacing a highly specialized healthcare professional can cost as much as 200% of the employee’s yearly salary.
- Patients notice high turnover rates when they see the impact of poor patient-to-staff ratios. They lose confidence in their healthcare provider when they don’t believe they’re receiving the best care, which can cause reputational damage.
Why Do Healthcare Workers Leave Their Jobs?
In 2022, turnover rates for segments of the healthcare industry ranged from 19.5% at hospitals to 65% for at-home care providers to 94% at nursing homes.
This level of turnover puts a huge financial and logistical burden on healthcare providers. While COVID-19 put additional stress on the healthcare labor force, and the industry will likely feel the effects of COVID for years to come, the healthcare staffing crisis existed long before the pandemic. The following factors are also contributing to today’s healthcare worker exodus:
Inflexible, demanding schedules
Healthcare jobs are notorious for long hours and erratic schedules, and many are considered “deskless” jobs, meaning workers spend much of their time on the move. In fact, it’s estimated that nurses in hospitals walk about five miles a day.
Excessive administrative work
Fictional doctors and nurses are often depicted standing by a patient’s bedside, developing personal relationships and providing hands-on care. In reality, providers no longer have sufficient time to spend one-on-one with patients and other caregivers. Instead, they’re burdened by documentation, charting, and other administrative tasks. In 2021 doctors reported spending, on average, 15.6 hours per week on paperwork and other administrative tasks. First-year medical residents spend only about 10% of their work time face-to-face with patients, according to a study from Penn Medicine and Johns Hopkins University.
Heavy workloads
Even before COVID-19, more than half of nurses and physicians reported symptoms of burnout, according to the U.S. Department of Health and Human Services, and burnout rates have worsened over the past several years due to heavy workloads and related job stress. (A person experiencing burnout suffers from emotional exhaustion, depersonalization—a sense of detachment from oneself—and a reduced sense of personal accomplishment.) During the pandemic, researchers found that 93% of health workers were experiencing stress, 86% had anxiety, and 76% reported exhaustion.
Disconnection from managers
Healthcare workers who don’t work in a single location, such as nurses, medical assistants, and respiratory therapists, may miss out on opportunities to interact with their managers in person. Cut off from these critical personal connections, they can feel underappreciated and unseen, which makes it more likely they’ll look for a job elsewhere.
Relatively low pay
Many nurses feel they aren’t getting the pay they deserve. Even with a median annual salary of US$77,600, 66% of nurses describe pay as their No. 1 consideration when planning their next career move, according to a survey by Vivian, a healthcare hiring platform.
6 Costs of High Employee Turnover in Healthcare
The direct costs of high employee turnover—the costs of recruiting, onboarding, and training new people and the costs of hiring contract staff to fill empty positions—are relatively easy to measure. The indirect costs are less quantifiable but just as burdensome; they include reduced patient satisfaction and lower employee morale. Consider these costs as you assess the impact of employee turnover on your organization.
Direct Costs
1. Separation costs
These include severance pay, costs associated with unemployment insurance claims, payments for any ongoing benefits, and the costs associated with exit interviews and removing employees from all internal systems and directories.
2. Hiring costs
Turnover costs an organization much more than money. There’s the cost of reduced productivity when an employee leaves, and the hiring process itself can be expensive and resource intensive. It costs an employer an average of between six and nine months of an employee’s annual salary to replace them, according to the Society for Human Resource Management, and it can cost as much as 200% of the employee’s annual pay to replace a specialized healthcare professional.
3. Training costs
Even highly skilled and experienced employees need time to adapt to a new job. The healthcare industry has mandatory training and certification requirements that don’t exist in other industries. Unfortunately, many healthcare employees don’t feel they’re getting the right skills training for their rapidly changing roles, and managers and healthcare HR teams struggle to track and enforce training requirements.
4. Contingent labor costs
Understaffed healthcare organizations often resort to hiring travel or contract staff to fill workforce gaps. Unfamiliar with a facility’s policies, staff, and even its geography, contract workers can reduce overall productivity and burden full-time employees.
Indirect Costs
5. Substandard patient care
High employee turnover can lead to unsafe staff-to-patient ratios that make it hard to provide the best care. With too many patients to monitor, nurses and aides can overlook issues that slow recovery times and endanger patients. A study by the US National Institutes of Health showed that patients can lose confidence in their healthcare provider when they don’t believe they’re receiving the best care, which can tarnish the provider’s reputation.
6. Lower morale
The US healthcare industry lost more than 500,000 employees each month in 2022, according to the U.S. Bureau of Labor Statistics, and those left behind are dispirited about the future. In 2021, nearly three quarters of healthcare employees surveyed by Vivian, a healthcare hiring platform, said that workplace morale had gotten worse over the previous 12 months, and only 20% said they’re optimistic about the future of healthcare in the US. This lack of employee engagement is likely to increase employee turnover rates and reduce patient care levels, negatively impacting a healthcare organization’s reputation and financial health.
5 Ways to Decrease Employee Turnover
To reduce healthcare staff turnover (PDF), organizations must first improve employee well-being. People want to be compensated fairly, but beyond that, they want to be surrounded by coworkers and managers they respect. They want to feel ownership of their work lives and find work-life balance. They want systems and processes that are easy to navigate so they can focus on what matters—patient care. Here are some steps healthcare organizations can take to reduce turnover.
1. Be intentional when hiring
Managers who practice intentional hiring take the time to develop a clear job description for an open role and a clear plan for finding the right set of candidates. It may feel like this preparation lengthens the hiring process, but in the long run, it will pay off for the organization and for the candidates’ coworkers.
2. Offer flexible work schedules
There are complications inherent in managing any 24/7 workforce, but these complications are compounded in healthcare by the need to have people with specific education, training, and certifications present at all times. The latest cloud-based human capital management (HCM) systems give managers visibility into staffing needs and availability and allow them to anticipate and cover surges.
3. Prioritize onboarding and training
Giving new employees the right tools at the start allows them to get a clear sense of the organization’s training goals and how they can fit training requirements into their workday. Dashboards that show employees what training they need, and when they need it, can improve compliance numbers while showing HR staff who’s falling behind. Cloud-based HCM systems let employees set their own training pace and measure their progress, which is especially valuable in busy workplaces where staff may have limited time to devote to training.
4. Provide career development and continuing education
Healthcare professionals look for organizations that offer professional development programs beyond what’s required by law, including courses in management, communications, and ethics.
5. Improve your technology
The stress of logging long hours in challenging situations is compounded by having to use inflexible, out-of-date, unconnected systems. Prospect Medical Holdings, which operates 17 hospitals and 165 medical care clinics across five states, at one time had 37 different HCM systems before successfully centralizing operations on a single cloud platform. A cloud HCM system enables employees to choose flexible schedules, sends workers notifications when it’s time to take a break, and allows management to send out regular communications that make workers feel more connected to the organization.
Create a Better Employee Experience with Oracle Fusion Cloud HCM
Healthcare-specific recruiting features in Oracle Fusion Cloud HCM help hospitals and other providers attract the best doctors, nurses, physician assistants, therapists, technicians, and support staff while giving them the tools they need to retain their accreditations and grow their expertise.
Oracle Cloud HCM’s workforce management capability enables staff to manage their schedules, sign up for shifts on their mobile devices, and block off time when they’re not available—giving them the ability to manage when and where they work. Healthcare providers can also use the cloud application’s dashboards to stay informed about patient counts and resource requirements so they can make shift changes as needed. Additionally, Oracle Cloud HCM’s employee experience platform makes it easy for hospital leaders to keep employees informed about significant organizational news and initiatives and, through pulse surveys, learn about employee concerns and needs.
Technology alone will never solve the healthcare industry’s employee turnover problem. That will take concerted efforts by healthcare organizations to focus on staff well-being, open up lines of communication, and improve the workday experience. But the right technology—easy to use, mobile friendly, and able to take on the most monotonous administrative tasks—can make a huge difference, allowing staff to focus on more complex and rewarding work: caring for patients.
Learn how the Oracle ME platform can help your organization improve the employee experience.
Cost of Turnover in Healthcare FAQs
What is the cost of employee turnover generally?
Employee turnover costs US companies an average of $50,000 per worker, not factoring in the heavy burden on the employees who stay.
How is the cost of employee turnover calculated?
To calculate turnover costs, dig into the numbers. Calculate the cost to hire contract fill-ins for the vacant position and the cost to recruit and hire the new employee (including job postings, managerial and HR time, and background screenings). Also factor in onboarding and training costs, as well as productivity costs as the new hire ramps up. The latter is usually calculated as the cost of a new hire’s salary and benefits during their first 30 to 90 days, when they’re doing more training than work.
What is the cost of nurse turnover?
The average cost of turnover for a staff registered nurse in the US is $46,100, with an average range of $33,900 to $58,300, according to the 2022 NSI National Health Care Retention and RN Staffing Report from Nursing Solutions Inc., a national nurse recruitment agency. The average time needed to replace a nurse is about 87 days. Nurses in some fields, including emergency services and behavioral health, are leaving at accelerating rates, with cumulative turnover rates that exceed 100%. (This happens when jobs need to be filled over and over—for example, an organization with 100 employees may have 50 positions that are filled by employees who stay long term and 50 positions where lots of turnover is the norm. Each terminated employee is part of the organization’s overall turnover rate.)