Turnover and retention concerns often only become heightened during noticeable staffing shortages. While the healthcare industry has suffered from shortages of registered nurses (RNs) and advanced practice professionals (APP) for some time, nursing turnover and retention decisions are often made without complete knowledge of the associated costs. Nurse recruitment and retention are necessary to ensure adequate healthcare staffing now and into the future when shortages are projected to become even worse.
What Causes Healthcare Staffing Shortages?
Nursing shortages occur for many reasons, including waves of retiring nurses that result in retirements outpacing new graduate nurses entering the field. According to Pew Research, about 25% of today’s workforce are aging Baby Boomers or about 41 million workers. However, this percentage began dropping at the beginning of the pandemic and will continue falling as more employees in this generation finally decide to retire.
This retirement wave could increase the workforce gap in many industries, including nursing. Baby Boomer nurses made up about two-thirds of the RN workforce by 1990 and still numbered about 660,000 in 2020, but approximately 60,000 RNs retire each year. That’s a lot of nurses to replace, including a potentially significant number of APPs, since experienced nurses often take on leadership roles. Attracting younger generations to the nursing field becomes of even greater importance to ensure retirements don’t outpace replacements.
An aging population also means increased healthcare demands requiring more nurses to care for those with chronic illnesses and increased injuries. Other causes potentially impacting staffing shortages include economic downturns, such as recessions, inadequate support for current employees and recruitment and retention challenges.
Nurse Turnover Rates
Nurse turnover is a recurring issue for many healthcare organizations. As nurses retire or leave the workforce for other reasons, healthcare facilities dealing with nurse turnover often experience further turnover. Overburdening existing staff with increased workloads due to turnover could lead to additional turnover, creating the need for even more recruiting to fill vacancies and resulting in an endless cycle.
The 2022 NSI National Health Care Retention & RN Staffing Report compiled nurse turnover, retention and recruitment data from 272 hospitals across 32 states. One significant finding was that the turnover is increasing. The national average for staff RN turnover in 2021 was 27.1%, an increase of 8.4% compared to 2020. All regions of the country, facilities of all sizes, and every nursing specialty saw increased nurse turnover rates in 2021.
Nursing specialties with the greatest turnover during the past five years included emergency services, step-down, telemetry and behavioral health. Healthcare facilities basically turn over their entire RN staff in these departments every five years. While RNs in pediatrics, surgical services and women’s health had much lower turnover rates compared to the national average, the rate was still higher than the previous year. Regardless of specialty, it essentially takes three months to recruit an experienced RN to replace one who left the organization.
Turnover rates haven’t just been increasing among RNs. While healthcare facilities continue to see lower-than-average turnover rates among advanced practice providers and allied health professionals, healthcare workers in all jobs saw increased turnover in 2021. These increases were especially noticeable among certified RN anesthetists, with a 14.5% increase putting them at a total of 22.9%. However, this rate was still lower than the national average of 25.9%.
Physician assistants saw a relatively small jump in turnover from 9.2% in 2020 to 10.7% in 2021, while nurse practitioner turnover rates increased from 8.9% in 2020 to 15.3% in 2021. However, certified nursing assistants and patient care techs had the highest turnover rates overall, going from 27.5% to 35.5% and 28.6% to 38.1%, respectively. Both healthcare roles were well above the national average.
Costs Associated with Turnover
Nurse retention focuses on preventing nurse turnover and keeping nurses in an organization’s employment. Thus, retention reduces the costs associated with turnover. Relatively substantial evidence supports how costly nurse turnover can be for individual hospitals and entire health systems.
While some costs associated with turnover can be clearly attributed to a particular activity, such as advertising job openings, other costs are less defined but still have an impact, such as loss of knowledge. Thus, some costs are obvious, while others are somewhat hidden. Common things an organization covers due to nurse turnover include:
- Costs of attracting and recruiting new staff, which may include sign-on bonuses
- Vacancy costs like paying for temporary nurses, overtime pay, closing beds or entire units, diverting patients to other hospitals and temporary or permanent facility shutdown
- Actual hiring costs like interviewing, drug screenings and background checks
- Orientation and training costs
Add to the monetary costs the hidden costs of nurse turnover, such as:
- Loss of organizational knowledge when experienced nurses leave
- Compromised quality of care and potential patient errors due to being short-staffed
- Disgruntled nurses and dissatisfaction in the workplace
- Poor work environment and decreased productivity
- Additional nurse turnover
Some healthcare organizations may believe certain monetary benefits occur with turnovers, such as reductions in the salary and benefits of an experienced nurse compared to a new hire. They may also feel they receive non-monetary benefits like ridding the facility of poor performers if the turnover was due to termination or the influx of new ideas and innovations if it wasn’t. They might even feel they could gain insight into a competitor depending on where the new hire worked previously.
However, in many cases, whatever an organization gains from losing a nurse will likely be reinvested during the replacement of that nurse. Attracting and recruiting quality new hires may even cost more than what might have been gained, especially if you’re recruiting APPs. Turnover costs significantly impact a hospital’s margin. Thus, more than half of them now track this cost.
According to the NSI Report, the average cost of a single RN turnover in 2021 was $46,100, with an actual range of $33,900 to $58,300 based on various factors such as education level, experience and specialty. Given the recent increase in nurse turnover rates, as detailed above, an average hospital might have lost about $7.1 million during 2021 alone.
Cost Savings and Other Benefits of Retention
While there may be some cost savings and benefits associated with turnover, it’s generally agreed that the cost of replacement often outweighs any gains. On the flip side, healthcare facilities avoid the hassle of replacing staff and potentially losing money in the process while seeing cost savings and other benefits from successfully retaining their nursing staff. Some of these savings and benefits might include:
- Reduced costs for job advertisements and recruitment
- Fewer vacancies with lower vacancy-related costs
- Reduced hiring, orientation and training costs due to fewer new hires
- Preservation of organizational knowledge
- Avoidance of lost productivity, with the potential to see increased productivity
- Improved work environment and increased nurse satisfaction
When your organization has a reputation that nurses stay long-term, it’s a great endorsement. It encourages other nurses to join your staff, leading to easier nurse recruitment, a hidden cost benefit that saves more than you might think. Increase your savings even further during recruiting by using modern techniques to streamline the hiring process and shorten the overall time to hire. Two top ways to get radical with your recruiting are using mobile and advanced technology and leveraging social media.
Another vital strategy that’s been getting much press due to emerging state mandates is pay transparency, which ensures candidates know upfront whether their expectations and your organization’s salary mesh. Pay transparency saves both the interviewer and interviewee time and frustration and ultimately saves your organization money by not wasting time interviewing candidates who wouldn’t have applied had they known the salary from the outset.
Strategies for Cultivating a More Positive Work Environment
Your organization’s culture can significantly affect employee job satisfaction and retention, ultimately impacting the quality of patient care. Here are five strategies to build a strong culture within your healthcare organization to cultivate a more positive work environment for nurses:
- Create an Engaging Employee Orientation: Boosting your onboarding and orientation process can positively impact a new hire’s first impression of your healthcare organization’s culture and work environment. Fostering an engaging, progressive yet adaptable orientation helps new employees quickly bond with co-workers and acclimate to their new workplace.
- Start a Formal Mentorship Program: New employees benefit from guidance and feedback on the job, and experienced employees may appreciate the opportunity to showcase and/or stretch their leadership skills. Establishing a more formal mentorship program accomplishes both and may lead to enhanced relationships through solid mentor-to-mentee matches.
- Focus on Employee Contributions: Most employees like to feel appreciated for both large and small contributions. Making a concerted effort to spotlight accomplishments builds a positive rapport among your staff, greatly enhancing your healthcare organization’s work environment. The added benefit is that rewarding employees for positive behaviors frequently rubs off and makes others want to follow suit.
- Encourage Frequent Communication: While it’s essential for your nursing staff to communicate with each other, it’s even more vital for the organization to communicate with its employees regularly. Communication can come in many forms, such as company-wide emails, regularly scheduled newsletters and/or monthly meetings to ensure your entire staff stays informed about key updates and decisions your organization makes. It also positions your facility as caring about its staff members, further cultivating a positive work environment.
- Encourage an Open Exchange of Ideas: Pair frequent communication with an open exchange of ideas that can also lead to more reasons to spotlight employee contributions. Encouraging nurses and other healthcare staff members to share their ideas lets them know you’re interested in what they have to say and may lead to positive changes in the workplace.
Schedule a demo with Vivian Health to learn how we can help you meet your hiring goals.