We don’t talk about this very much, but an unsustainable cost in healthcare is employee turnover. When compared to other industries, employee turnover in healthcare is incredibly high. In fact, “it’s about 30% higher than other industries” states PSI Services.
These statistics are especially true for those who serve as first responders. According to EMS1, “prehospital professionals such as EMTs and paramedics have an annual turnover rate as high as 25%. Meanwhile, “nursing turnover has an average annual rate of 15%” reports Becker’s Hospital CFO Report.
Creating a healthcare professional is time and resource-intensive. Beyond standard minimum competency training obtained by accredited educational programs just about all healthcare workers require on-boarding training and performance development when they enter an organization. Cost-effective onboarding and nurturing of employees makes a difference to the bottom line and patient care.
When we peel back the layers on the causes of turnover we begin to see that the underlying theme is a lack of employee training and engagement.
The Cost of Employee Turnover
Employee turnover can cost you thousands of dollars and can be significantly more expensive than retraining an employee. According to Employee Benefits News, “employee turnover can cost a company about $15,000 per employee who makes an average salary of $45,000.”
Whether your company is in the healthcare space or one of the other three industries with high employee turnover, it means you could be losing thousands and possibly millions of dollars every year. Consider this, your company pays for the background check, drug tests, screening, and other hire-on costs in addition to what it cost you in time and money to train an employee. Then a lack of measures are taken to retain the employee. After a brief period of time the employee moves on and the entire process starts over again.
According to National Healthcare Retention & RN Staffing survey, ‘the average cost of turnover for a bedside RN is $52,100 and ranges from $40,300 to $64,000 resulting in the average hospital losing $4.4M – $6.9M. Each percent change in RN turnover will cost/save the average hospital an additional $328,400.’.
What’s even more alarming is that “employee turnover costs represent an expenditure of about 5% of the annual operating budget,” according to Health Care Management REVIEW. We find this particularly concerning because the expense of operating healthcare organizations is increasingly high and budget cuts are often made in areas that affect all stakeholders, including patients.
For instance, in the realm of emergency medical services (EMS) one study found that the “median agency cost of turnover was approximately $72,000,” states Prehospital Emergency Care.
A study featured in the Employee Benefits News article suggests that “75% of the reasons employees leave could be prevented.” The top 3 reasons employees leave a company according to EBN are:
- Career development: Thanks to several recessions, employees understand the importance of having specialized skills or increasing their repertoire of skills. While you might think of career development as preparing your employees for competitors, it’s actually a great way to promote employee loyalty. Employees often fear that they will struggle to find employment outside of their current situation, but if you provide a positive work environment and career development they are much more likely to stick with your company and wait for advancement.
- Work-life balance: It’s increasingly important employers understand the demands placed on their employees that occur outside of work. We rarely have families where one parent stays home and the other works, thus, parents have to balance their work and family responsibilities. Not to mention, many families are taking care of their parents or grandparents or trying to stay healthy themselves. Companies that offer more paid-time-off or show compassion for their employees’ responsibilities are ways to promote employee retention.
- Management behavior: Training your managers to treat employees well is becoming more important with time. It’s just one of the ways Millennials are influencing the market. Their priorities are vastly different than past generations. They want companies that value people and ethics above profits. As a result, they are more likely to spend their money at a company that treats their employees well, even if they end up paying more than your competitors.
Several companies within the healthcare industry are addressing high employee turnover in a number of ways. As the journal of The International Journal of Human Resource Management explains:
“If organisations want to improve their work environment and retention, they should consider designing training programmes to prevent or reduce emotional exhaustion on topics such as stress management, anger management, positive thinking programmes, clarification of goals and team roles. These programmes could prevent employees from suffering these negative situations by redirecting their focus to positive aspects of their work.”
Let’s take a look at the ways we can increase employee retention and use budgets more wisely.
Positive Work Environment
Speaking of Millennials, they’re the reason more and more companies must compete for the top talent versus talent competing for the top jobs. Millennials, who are entrepreneurs, innovative, and savvy with technology, have made a habit of taking jobs that promote a positive working environment even if it means less pay.
Companies like Google, LinkedIn, and Facebook have noted these changes to the employment industry and strive to foster positive work environments that support and encourage their employees’ happiness and feelings of self-worth in the company.
According to the Harvard Business Review, there are three primary reasons a company’s work environment is costing it money and they include:
- The stress of hierarchy positions: Healthcare expenses are 50% greater at high-stress jobs than companies with low-pressure jobs.
- Employee disengagement: In studies by the Queens School of Business and by the Gallup Organization, disengaged workers had 37% higher absenteeism, 49% more accidents, and 60% more errors and defects.
- Lack of employee loyalty: Workplace stress leads to a 50% increase in voluntary employee turnover.
Promote Communication and Feedback
Take the time to build a relationship with your employees. Not only will you understand them better, but you’ll also gain loyal employees. Encouraging them to provide feedback on the company is another way to help them feel appreciated and could produce some unique business solutions.
Value Employee Contribution and Initiative
Recognition and accomplishment are fourth on Maslow’s Hierarchy of Needs. Acknowledging an employee’s contributions doesn’t have to be monetary either. Most employees appreciate a simple thank you or company recognition for their achievements.
The Reward or Retrain vs Punishment Strategy
The old way of promoting employee loyalty was to discipline employees for errors. This negative action discouraged employees from repeating the behavior, but times have changed and positive reinforcement is more effective than negative reinforcement.
Companies can reward their employees for perfect attendance, going above the call of duty, being safe, helping other employees, and so forth by offering monetary rewards, promotion opportunities, or career development opportunities.
Many companies have small reward programs like additional time off, gift cards to popular stores and restaurants, or by giving away a large item such as a television or stereo system — most of which is sponsored by the manufacturer.
Moreover, instead of terminating an employee for performing poorly (unless it’s a serious infraction like theft or harassment), consider putting the employee back through the training process. It will be significantly less to retrain a current employee than to hire a new employee.
As we mentioned previously, employees understand the importance of developing their skills for a specific career or by acquiring a range of skills to make themselves more attractive to you and potential employers.
Companies that offer college reimbursement programs are very popular these days as more students go into debt to obtain an education. In addition, businesses that offer training and education are attractive to potential employees because the employee can either climb the ladder at your company or has a backup plan should they have to leave your company.
The Great Recession that occurred in 2007 and with predictions of another recession within the next year or two has caused many people to be very conscientious about their job skills and ability to retain a job even in difficult times. Offering training and development programs greatly improves your work environment and employee retention.
Encouraging Employee Safety
Some of the most effective businesses have specific employee safety programs, which entails holding each other accountable for safe practices, rewards for being safe, and bonuses for reduced errors.
Some companies offer employees quarterly bonuses if there are no safety occurrences during that period. This bonus has a dual effect on the employees’ effort to be safe. They try to follow protocols because they want the extra money and because their colleagues need the money too. This has led to a team effort in safety. They watch over each other and talk to each other about being safer.
In our article, Death By Medical Error we discuss the consequences of errors in the healthcare industry. Medical errors are the third cause of death in the United States, and it is often because medical professionals are fatigued, burned out, or do not have someone evaluating their work.
The Benefits of Continuous Training
We often think that once we’ve been trained for a job that our development is finished, but the best workers and businesses encourage continuous training. As a matter of fact, HealthLeaders states one study found:
About 86% of the 571 clinicians, clinical leaders, and executives who responded said physicians lack the training they would need to discuss the cost considerations affecting their patients, according to data released Tuesday by the University of Utah Health in partnership with NEJM Catalyst.
Although medical costs are not technically part of the physician’s job, doctors are much more efficient when they understand the importance of finding affordable or in-network treatments for their patients. Obtaining education on healthcare costs is just a part of continuous training for physicians.
Furthermore, the best medical professionals have adapted as technology has advanced. This has meant training to use technologies such as using devices that incorporate augmented reality in medical care, robots to do surgery, video chatting to provide medical advice to their patients, and much more.
Innovation and awareness are needed to address the unsustainable costs of turnover in healthcare. High performing and future thinking organizations should consider cost-effective technologies that aid in creating a culture of engagement and training. Training for stress management, clinical competency, employees wellness, and conflict resolution could build efficiencies into a healthcare organization that could save millions of dollars.
At MedCognition we are creating innovations in training of healthcare professionals with PerSim®, our holographic patient simulator, and we advocate through our blog for technologies and practices that improve the healthcare industry for everyone.
Cameron, E. S. K. (2017, May 8). Proof That Positive Work Cultures Are More Productive. Retrieved from https://hbr.org/2015/12/proof-that-positive-work-cultures-are-more-productive.
HealthLeaders. (n.d.). Doctors Say They Lack Training to Discuss Healthcare Costs. Retrieved from https://www.healthleadersmedia.com/clinical-care/doctors-say-they-lack-training-discuss-healthcare-costs.
Otto, N. (2019). Avoidable turnover costing employers big. [online] Employee Benefit News. Available at: https://www.benefitnews.com/news/avoidable-turnover-costing-employers-big?brief=00000152-14a7-d1cc-a5fa-7cffccf00000&utm_content=socialflow&utm_campaign=ebnmagazine&utm_source=twitter&utm_medium=social [Accessed 9 Oct. 2019].
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Rosenbaum, M. (n.d.). Will 2018 be the year healthcare addresses its turnover problem? Retrieved from https://www.beckershospitalreview.com/finance/will-2018-be-the-year-healthcare-addresses-its-turnover-problem.html
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What is the turnover rate for EMTs, paramedics? (2018, July 18). Retrieved from https://www.ems1.com/ems-management/articles/aaa-study-sets-a-benchmark-for-turnover-in-the-ems-industry-fZRlmIIN71M7ox2I/.
About the Authors
Hector Caraballo, MD is a practicing Board Certified Emergency Physician and Chief Medical Officer at MedCognition.
Brandy Vickery is a professional medical writer with a degree in Health Administration and is currently earning a degree in English Creative Writing. She enjoys writing about medical technology, processes, and concepts that improve the healthcare industry for everyone.