The Hidden 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. Having trained and experienced nurses on hand to deal with life or death situations on a regular basis is a business necessity. And that 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.
The Business Costs
A recent report from Nursing Solutions, Inc. shared some of the costs organizations face when it comes to losing nursing talent:
The average cost of turnover for a bedside RN ranges from $36,900 to $57,300 resulting in the average hospital losing $4.9M – $7.6M. Each percent change in RN turnover will cost/save the average hospital an additional $379,500.
This is a frightening prospect for healthcare institutions employing these skilled individuals. But surely they are taking steps to remedy this issue, right? Well, not so much. From the report:
While an overwhelming majority (89.1%) of organizations view retention as a “key strategic imperative” it is not evident in operational practice/planning. Although viewed in such a strong light, just over a third or 36.4% have a formal retention strategy.
So, not only is there an immense associated cost with losing nurses, but many organizations aren’t even focusing on how to retain them.
Top 5 Reasons Nurses Resign
Let’s swap for a minute 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:
- Personal reasons
- Career advancement
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.
Time to Fill Vacant Nursing Jobs
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 85 days, and it can extend beyond three months for more specialized roles.
Imagine for a moment that one of the critical individuals on your team left or was unable to work for 85 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 just over 7% for nurses), then we can begin to understand just how quickly turnover can cause challenges for organizations of any size.
Costs 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. How significant? Here’s a quote from another study:
The recruiting and hiring costs, though not insignificant, on average, accounted for only 17% of the total cost. More substantial were the onboarding and training costs, which make up 27% of the expense. [Source]
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 $36,900 to $57,300 from the NSI report seem high, it’s easy to see how quickly all of these associated pieces can build into a substantial expense.
The Business Implications of Nursing Turnover
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:
- Magnet Recognition
- Competitive Benefits
- Scholarship/Student Loan
- Continuing Education
- Profit/Gain Sharing
- No Mandatory Overtime
- Tuition Assistance
- Nurse Residency Program
- Recognition Program (Non-monetary)
- 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.
As you can see, the issue of nursing turnover is not something healthcare organizations can simply brush off. It’s of paramount importance and can be a critical differentiator for those select employers that focus their efforts on making retention a priority. For those that do not, turnover can rapidly become an out of control cost, limiting the organization’s efforts to truly focus on patient care.