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The High Cost of Nursing Turnover

October 10th, 2014

What does it cost a hospital when an RN leaves? In 2007, when the Robert Wood Johnson Foundation studied the cost of RN turnover, the average was $36,567. Today, inflation has ballooned that to $41,948.

As high as that is, it's only an average, developed from a detailed audit of 13 hospitals and health systems across the country.

The Foundation discovered that at a large hospital in a major metro -- Los Angeles'  Cedars-Sinai, which then had 1,229 RNs -- the cost was a steep $60,102 ($68,945.90 in today's dollars). Even at tiny Mary Imogene Bassett Hospital in rural Cooperstown, NY, home of the Baseball Hall of Fame, the loss of any of its 92 nurses cost $25,091.

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.

What really drives up the expense are the costs of hiring a temporary replacement or paying overtime to existing staff -- or both -- to cover the work until a permanent replacement can be found. Those expenses contribute an average of 41% of the total cost.

PricewaterhouseCoopers analyzed the implications of the nation's nursing shortage, finding an annual turnover rate between 7% and 10% among RNs. "Every percentage point increase in nurse turnover costs an average hospital about $300,000 annually," the consulting firm wrote in its report, What Works: Healing the Healthcare Staffing Shortage.

The first goal of every hospital and health care system is to retain its nurses. The PWC report lists a number of practices that have been shown to improve nurse satisfaction and, thus, retention. Among them are flexible shift scheduling and bidding, shared decision and policy-making, merit-based compensation and performance goals, and ergonomic improvements.

Improved engagement by the nursing staff, not only reduces turnover, but has the secondary, yet very significant, benefit of building the hospital's or health systems' reputation as a good place to work. That makes a difference when it comes time to fill the inevitable vacancy. A high brand value attracts a higher quality of professional and can reduce the replacement cost by more quickly filling positions.

Tags: turnover, nurse, study
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