The Cost of Nursing Turnover

Turnover can range in severity from a nuisance to a business-crippling problem. When it comes to healthcare, turnover is a critical issue that needs addressing, especially when it most frequently occurs in the critical early days of a nurse’s tenure. Having trained and experienced nurses on hand to deal with life-or-death situations on a regular basis is a business necessity. It’s important to ensure that new RNs, especially recent graduates, are given enough support and attention so they remain and become long-term contributors to the organization.

This doesn’t even take into account any of the effects on the organization in terms of talent or financial impact. Let’s dig into the causes and costs of nursing turnover to help get a grasp on the seriousness of this issue.

Turnover Costs for Nursing

NSI’s 2024 National Healthcare Retention and RN Staffing Report shared some of the costs organizations face when it comes to losing nursing talent:

According to the report, the average turnover rate for all RNs in 2023 was 18.4%, down from the high in 2021 but still not back to pre-pandemic levels. Although the turnover rate is down, the average cost of turnover for a bedside RN is $56,300, a 7.5% increase from the previous year. This increase results in the average hospital losing $3.87M – $5.79M each year. Each percent change in RN turnover will cost/save the average hospital an additional $262,500 per year. 

What are the Top Reasons a Nurse Resigns

Let’s swap for a minute to consider the other side of the relationship. Why would these RNs leave? The better organizations understand the needs of their employees, the more likely they can have an impact on maintaining the employment relationship. Here are the top five reasons from most to least common:

  1. Relocation
  2. Personal reasons
  3. Career advancement
  4. Salary
  5. Retirement

While some of these are difficult to measure and counter (relocation, personal reasons), others (career advancement, salary) are merely opportunities for organizations to step up and meet the needs of staff to prevent unnecessary turnover.

First-Year Turnover for RNs

One group in particular has higher than average turnover rates. NSI’s data showed that that first-year RN turnover is over 30%. While turnover among any population is painful, it is especially difficult when it occurs within a nurse’s first year on the job. With a skilled position like nursing, the first year consists of a significant amount of training, which means that all of those costs are unrecoverable if the person departs.

How to Reduce First-Year RN Turnover

One of the most effective ways to reduce RN turnover is to develop a residency program. According to a study published in the journal Nursing Economicsfirst year RN turnover can go down to 13% when residency programs are in place.

Residency programs help to fill the gap between school and practice. The goal is to continue education, mentoring, and support, so new nurses become competent, confident contributors. It doesn’t require administrators to move mountains in order to set up a residency program–the key elements are actually quite simple.

Elements Of A Nursing Residency Program

  • Realistic Job Previews: Provide a clear, realistic picture of the job to RN applicants. Offering a perspective of only the positive aspects can cause someone to quickly become disengaged once they take the job and find that their expectations are not met.
  • Shadowing Opportunities: Offer opportunities to shadow existing RN staff on the floor to see their workload, practices, and more. The more opportunities a resident has to see the clinical staff in action, the better the person will be able to transition into the job.
  • Pre-Hire Classroom Seminars: Set up a series of seminars that give newly-hired nurses a deeper understanding of employment and of their duties. One successful seminar lineup we’ve seen used included a week each on human resources, general nursing, basic arrhythmia, and critical care.
  • Clinical Orientation: Leadership at a Pennsylvania hospital required new nurses to participate in a year-long clinical orientation with a preceptor.
  • Regular Evaluation: The same hospital implemented a six-month evaluation, with the nurse, their manager, and their preceptor.

A residency program requires participation and cooperation from nurse managers, doctors, and human resources professionals. It’s something that must be planned ahead of time, and phased into everyone’s workload.

How Long Does it Take to Fill a Vacant Nursing Job

With any vacancy, there is an associated “wear and tear” cost on the organization to replace workers. The longer the position is open, especially in a critical field like nursing, the more costly it becomes in terms of overtime, staff burnout, etc.

According to the NSI report, the average length of time to fill a vacant nursing position is 86 days, down 9 days from 2022.

Imagine for a moment that one of the critical individuals on your team left or was unable to work for 86 days. What impact would that have on you, the team, or the customers? It’s a sobering thought.

If we multiply that impact by the overall vacancy rate (currently at an average of 9.9% for nurses), then we can begin to understand just how quickly turnover can cause challenges for organizations of any size.

What Does it Cost to Fill Vacant Nursing Positions

Time to fill is one thing, but the cost is yet another.  Hard talent acquisition costs can include compensation for internal recruiters, job posting costs, applicant tracking systems, and any third-party staffing firms.

In addition, there is the matter of getting new hires up to speed once they start the job. This is often a hidden cost rolled into training or onboarding budgets, but it has a very real price tag. 

The goal of any onboarding program is to get new hires up to 100% productivity as quickly as possible. Every day the employee is at less than full productivity is a day the organization isn’t getting a full ROI on the dollars invested in the individual.

This truly is a hidden cost and can be difficult to track without the use of competency models, learning measurement tools, and formal onboarding programs. All too often new staff are expected to learn on the job, and any new hire training is accomplished in front of a computer or while sitting in a classroom. This doesn’t even go into the possibility that those training hours are not providing the needed return on the time and dollars invested in those programs.

While the turnover cost figures of $45,100 to $67,500 from the NSI report seem high, it’s easy to see how quickly all of these associated pieces can build into a substantial expense.

How Does Nursing Turnover Affect Business

This is not a recruiting problem. This is not a human resources problem. It is a business problem. We can safely say that many healthcare organizations are losing millions of dollars to nursing turnover, and many of them say they want to do it right.

This is the time to focus on implementing some strategic initiatives to retain these skilled healthcare workers before it’s too late. If we return to the NSI report one last time, we see that there are some specific strategies companies can use to reduce turnover. The following ten avenues have effectiveness rates of 80% or higher for retention purposes:

  1. Magnet Recognition
  2. Competitive Benefits
  3. Scholarship/Student Loan
  4. Continuing Education
  5. Profit/Gain Sharing
  6. No Mandatory Overtime
  7. Tuition Assistance
  8. Nurse Residency Program
  9. Recognition Program (Non-monetary)
  10. Float/Flex Staffing Pool

This list provides a great example of the ways we can adjust our practices and offerings to keep our employees. These programs range in cost from minimal to those requiring substantial investment, and each option comes with its own varying degrees of applicability and results.

Other Powerful Nursing Retention Tools

You can implement additional best practices to help the first-year nurses you have right now. Some of these include:

  • Employee SurveysSurvey the existing RN population about what they wish they would have known when they started. The answers to these questions can help you take specific steps to improve your interview processes, professional development efforts, and more.
  • Hiring Process: Use your current RNs in the hiring process. This allows your existing staff to answer questions, offer previews of the work, and help assess the capabilities of your applicants.
  • Frequent Check-ins: Check in with new hires frequently and support their unique needs. We all know that someone with one month of tenure has different needs than someone with one year of tenure, yet both groups are often treated the same. New hires need frequent supervisor interactions and regular check-ins to make sure they are on track.
  • Know Your Turnover Data: Be sure you’re analyzing the specific reasons RNs leave your own organization. While we can look at data to see common causes of nurse turnover, every healthcare firm is unique. If you don’t know the most common reasons for turnover at your organization, you can’t try to mitigate them.

It isn’t easy to deliver high-quality patient outcomes when your organization is constantly battling to hold on to its RN population. While nurses leave for many reasons, the best practices described above are essential tools for retaining new graduates. These efforts can solve several challenges, bring your RN population closer together, and create the foundation for the sustainable nursing workforce your organization needs.

Get a Handle on Turnover with People Element

If you are ready to get a handle on your turnover, consider partnering with People Element for employee surveys. From onboarding to exit interviews, and everything in between, we have you covered. We have partnered with healthcare systems across the country and have helped them save millions in turnover costs. Make your company a better place to work with surveys and understand the real reasons your nurses are quitting before it is too late. Contact us today to learn more!

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