Hospitals average 100% staff turnover every 5 years — Here’s what that costs

Hospitals have been paying astronomical prices for staff turnover, according to the “2022 NSI National Health Care Retention & RN Staffing Report.”

It covers 589,901 healthcare workers and 166,087 registered nurses from 272 facilities and 32 states. Participants were asked to report data on turnover, retention, vacancy rates, recruitment metrics and staffing strategies from January to December 2021. 

The survey found a wide range of helpful figures for understanding the financial fallout of one of healthcare’s hardest labor disruptions:

  • The average hospital lost $7.1 million in 2021 to higher turnover rates.
  • The average hospital loses $5.2 to $9 million on RN turnover yearly.
  • The average turnover cost for a staff RN is $46,100, up more than 15 percent from the 2020 average.
  • The average hospital can save $262,300 per year for each percentage point it drops from its RN turnover rate.
  • To improve margins, hospitals need to control labor costs by decreasing dependence on travel and agency staff, but only 22.7 percent anticipate being able to do so.
  • For every 20 travel RNs eliminated, a hospital can save $4.2 million on average.

In the past 5 years, the average hospital turned over 100.5 percent of its workforce:

  • In 2021, hospitals set a goal of reducing turnover by 4.8 percent. Instead, it increased 6.4 percent and ranged from 5.1 percent to 40.8 percent. The current average hospital turnover rate nationally is 25.9 percent, according to the report.
  • While 72.6 percent of hospitals have a formal nurse retention strategy, less than half of those (44.5 percent) have a measurable goal.
  • Overall, 55.5 percent of hospitals do not have a measurable nurse retention goal.
  • Retirement is the number four reason staff RNs leave, and it is expected to remain a primary driver through 2030. More than half (52.8 percent) of hospitals today have a strategy to retain senior nurses. In 2018, only 21.6 percent had one.

Historically, RN turnover has trended below the hospital average across all staff. For the first time since conducting the survey, this is no longer true: 

  • In the past five years, the average hospital turned over 95.7 percent of its RN workforce.
  • Close to a third (31.0 percent) of all newly hired RNs left within a year, with first year turnover accounting for 27.7 percent of all RN separations. Given the projected surge in retirements, expect to see the more tenured groups edge up creating an inverted bell curve.
  • Operating room RNs continue to be the toughest to recruit, while labor and delivery RNs are trending easier to recruit than in the year prior.
  • Hospitals are experiencing a dramatically higher RN vacancy rate (17 percent) compared to last year’s rate of 9.9 percent.
  • The vast majority (81.3 percent) reported a vacancy rate higher than 10 percent.

The dire state of hospital finances (Part 1: Hospital of the Future series)

About this Episode

The majority of hospitals are predicted to have negative margins in 2022, marking the worst year financially for hospitals since the beginning of the Covid-19 pandemic.

In Part 1 of Radio Advisory’s Hospital of the Future series, host Rachel (Rae) Woods invites Advisory Board experts Monica WestheadColin Gelbaugh, and Aaron Mauck to discuss why factors like workforce shortages, post-acute financial instability, and growing competition are contributing to this troubling financial landscape and how hospitals are tackling these problems.

Links:

As we emerge from the global pandemic, health care is restructuring. What decisions should you be making, and what do you need to know to make them? Explore the state of the health care industry and its outlook for next year by visiting advisory.com/HealthCare2023.

Did hospital wage increases come too soon?

https://mailchi.mp/e44630c5c8c0/the-weekly-gist-december-16-2022?e=d1e747d2d8

It’s been a difficult year for the hospital workforce, both here and around the world, as the effects of the pandemic, the economy, and the legacy of lean staffing models have combined to drive up vacancy rates and threaten the sustainability of hospital operations. 

Everywhere we’ve gone in the past six months, workforce issues have overshadowed every other topic: how can hospitals attract and retain staff given the environment, how can they stabilize finances in the face of 15-20 percent increases in labor costs, how can they safeguard patient care with intense turbulence in the clinical workforce?

This week we heard yet another wrinkle to this problem, one that had not occurred to us but in retrospect is obvious. A system CFO was lamenting the fact that even with big salary increases, the hospital workforce remains unstable. “It’s like we’re not even getting credit for raising base salary 15 percent across the board and giving big retention bonuses.” 
 
As to why—it’s a timing issue. Her system, like many, delivered pay raises back in the late winter and early spring, when staff were still recovering from the Omicron surge and the urgency of reducing reliance on expensive agency labor became clear. But economy-wide inflation had only then begun to spike, and has since continued to be stuck at high levels. 

Staff don’t view the earlier salary increases as a response to inflation, but as predating it—and they’re asking for still more, to offset rising prices for food, transportation and housing. “I wish we’d waited to give the pay bump,” the CFO told us. “Even though our wage increases have outpaced inflation this year, the timing of events didn’t help us at all.” 

With the hospitals operating near capacity, and a severe flu season impacting both patient volumes and staff availability, her sense is that the system is back to square one on staffing—and more difficult financial decisions lie ahead.

Do Hospitals share the blame for the COVID staffing crisis?

https://mailchi.mp/e44630c5c8c0/the-weekly-gist-december-16-2022?e=d1e747d2d8

The latest piece in the New York Times ’“Profits over Patients” series focuses on the staffing policies of Ascension, one of the nation’s largest nonprofit health systems, drawing a straight line from its cost-cutting practices over the last decade to its current staffing woes. Like previous articles in the series, the piece hones in on Ascension’s profit-seeking motives, pairing pre-pandemic accounts of Ascension executives boasting about savings from slashed labor costs with story after story of its frontline clinicians struggling to provide adequate patient care once COVID hit.

In responses included in the article, an Ascension spokesperson rejected the idea that the system’s workforce policies were responsible for its current staffing crisis, claiming that Ascension has maintained better staff-to-patient ratios than many of its peers. 

The Gist: Yet again, the New York Times is shining a harsh light on a health system that has been engaged in management practices common across the industry. 

While the piece omits some relevant information, such as the recent spike in labor costs, it’s useful to point out that many hospitals were so thinly staffed prior to COVID that they had virtually no slack in their labor pools, hindering their response to the crisis. 

In our experience, the reasons for this have less to do with lining executives’ pockets, and more to do with the realities of dealing with a worsening payer mix and rising input costs. While future hospital workforce strategy is going to have to focus on reducing dependency on nurses—especially in the inpatient setting—any effort to that end must augment nurses with team-based care models and technology solutions, rather than pushing further on already-tight nurse-to-patient ratios.

Will agency labor needs become permanent? 

https://mailchi.mp/b1e0aa55afe5/the-weekly-gist-october-7-2022?e=d1e747d2d8

“A few months ago, I was confident we would be able to wean our system off travel nurses. But now I’m not so sure,” a chief nursing officer recently shared with us. Like most health systems, they had seen their use of agency nurses decline from peaks during the Delta and Omicron waves of the pandemic, and were encouraged by anecdotes of nurses returning to staff after stints as travelers. But today they remain “persistently stuck with a quarter of the agency nurses we needed at the peak”. 
 
Seeing nurses returning from travel roles makes sense. It’s naturally a time-limited job—eventually the desire to be home wins out over the earning potential on the road. But another nursing leader shared his fear that a stint as a traveler could become an expected part of the arc of a nurse’s career. And from a hospital operations perspective, agency nursing needs are no longer connected to COVID, but are instead driven by general capacity needs in a tight labor market, keeping the operating rooms, emergency department, and ICUs open.

Health systems and physician groups continue to face labor costs that are up to 40 percent higher than 2019. A permanent need for agency nurses will frustrate efforts to rein in labor costs, through both the dollars spent on premium labor, and the resulting need to boost staff nurse salaries when a portion of their colleagues’ pay is anchored at the “traveling rate”.

Travel nurses’ gold rush is over. Now, some are joining other nurses in leaving the profession altogether.


Working as a travel nurse in the early days of the Covid pandemic was emotionally exhausting for Reese Brown — she was forced to leave her young daughter with her family as she moved from one gig to the next, and she watched too many of her intensive care patients die.

“It was a lot of loneliness,” Brown, 30, said. “I’m a single mom, I just wanted to have my daughter, her hugs, and see her face and not just through FaceTime.”

But the money was too good to say no. In July 2020, she had started earning $5,000 or more a week, almost triple her pre-pandemic pay. That was the year the money was so enticing that thousands of hospital staffers quit their jobs and hit the road as travel nurses as the pandemic raged. 

Two years later, the gold rush is over. Brown is home in Louisiana with her daughter and turning down work. The highest paid travel gigs she’s offered are $2,200 weekly, a rate that would have thrilled her pre-pandemic. But after two “traumatic” years of tending to Covid patients, she said, it doesn’t feel worth it.

“I think it’s disgusting because we went from being praised to literally, two years later, our rates dropped,” she said. “People are still sick, and people are still dying.”

The drop in pay doesn’t mean, however, that travel nurses are going to head back to staff jobs. The short-lived travel nurse boom was a temporary fix for a long-term decline in the profession that predates the pandemic. According to a report from McKinsey & Co., the United States may see a shortage of up to 450,000 registered nurses within three years barring aggressive action by health care providers and the government to recruit new people. Nurses are quitting, and hospitals are struggling to field enough staff to cover shifts. 

Nine nurses around the country, including Brown, told NBC News they are considering alternate career paths, studying for advanced degrees or exiting the profession altogether. 

“We’re burned out, tired nurses working for $2,200 a week,” Brown said. People are leaving the field, she said, “because there’s no point in staying in nursing if we’re expendable.”

$124.96 an hour

Travel nursing seems to have started as a profession, industry experts say, in the late 1970s in New Orleans, where hospitals needed to add temporary staff to care for sick tourists during Mardi Gras. In the 1980s and the 1990s, travel nurses were often covering for staff nurses who were on maternity leave, meaning that 13-week contracts become common. 

By 2000, over a hundred agencies provided travel contracts, a number that quadrupled by the end of the decade. It had become a lucrative business for the agencies, given the generous commissions that hospitals pay them. A fee of 40 percent on top of the nurse’s contracted salary is not unheard of, according to a spokesperson for the American Health Care Association, which represents long-term care providers. 

Just before the pandemic, in January 2020, there were about 50,000 travel nurses in the U.S., or about 1.5 percent of the nation’s registered nurses, according to Timothy Landhuis, vice president of research at Staffing Industry Analysts, an industry research firm. That pool doubled in size to at least 100,000 as Covid spread, and he says the actual number at the peak of the pandemic may have far exceeded that estimate.

By 2021, travel nurses were earning an average of $124.96 an hour, according to the research firm — three times the hourly rate of staff nurses, according to federal statistics. 

That year, according to the 2022 National Health Care Retention & RN Staffing Report from Nursing Solutions Inc., a nurse recruiting firm, the travel pay available to registered nurses contributed to 2.47% of them leaving hospital staff jobs.

But then, as the rate of deaths and hospitalizations from Covid waned, the demand for travel nurses fell hard, according to industry statistics, as did the pay.

Demand dropped 42 percent from January to July this year, according to Aya Healthcare, one of the largest staffing firms in the country. 

That doesn’t mean the travel nurses are going back to staff jobs.

Brown said she’s now thinking about leaving the nursing field altogether and has started her own business. Natalie Smith of Michigan, who became a travel nurse during the pandemic, says she intends to pursue an advanced degree in nursing but possibly outside of bedside nursing.

Pamela Esmond of northern Illinois, who also became a travel nurse during the pandemic, said she’ll keep working as a travel nurse, but only because she needs the money to retire by 65. She’s now 59. 

“The reality is they don’t pay staff nurses enough, and if they would pay staff nurses enough, we wouldn’t have this problem,” she said. “I would love to go back to staff nursing, but on my staff job, I would never be able to retire.” 

The coronavirus exacerbated issues that were already driving health care workers out of their professions, Landhuis said. “A nursing shortage was on the horizon before the pandemic,” he said.

According to this year’s Nursing Solutions staffing report, nurses are exiting the bedside at “an alarming rate” because of rising patient ratios, and their own fatigue and burnout. The average hospital has turned over 100.5% of its workforce in the past five years, according to the report, and the annual turnover rate has now hit 25.9%, exceeding every previous survey. 

There are now more than 203,000 open registered nurse positions nationwide, more than twice the number just before the pandemic in January 2020, according to Aya Healthcare.

An obvious short-term solution would be to keep using travel nurses. Even with salaries falling, however, the cost of hiring them is punishing.

LaNelle Weems, executive director of Mississippi Hospital Association’s Center for Quality and Workforce, said hospitals can’t keep spending like they did during the peak of the pandemic.

“Hospitals cannot sustain paying these exorbitant labor costs,” Weems said. “One nuance that I want to make sure you understand is that what a travel agency charges the hospitals is not what is paid to the nurse.”

Ultimately, it’s the patients who will suffer from the shortage of nurses, whether they are staff or gig workers. 

“Each patient added to a hospital nurse’s workload is associated with a 7%-12% increase in hospital mortality,” said Linda Aiken, founding director of the University of Pennsylvania’s Center for Health Outcomes and Policy Research.

Nurses across the country told NBC News that they chose the profession because they cared about patient safety and wanted to be at the bedside in the first line of care. 

“People say it’s burnout but it’s not,” Esmond said about why nurses are quitting. “It’s the moral injury of watching patients not being taken care of on a day-to-day basis. You just can’t take it anymore.”

Why 67% of nurses want to quit—and what would make them stay

As RNs struggle to work through staffing shortages, their job satisfaction has sharply declined, with 67% saying they plan to leave their jobs within the next few years, according to a survey from the American Association of Critical-Care Nurses (AACN) published in Critical Care Nurse.

RNs cite poor work environments

For the survey, AACN collected responses from 9,862 nurses, 9,335 of which met the study criteria of being currently practicing RNs, in October 2021. The mean age was 46.5 years, and the mean years of experience was 17.8 years.

Of the participants, 78.3% worked in direct care, and 19.4% worked in a Beacon unit, meaning that their unit had been recognized by an AACN Beacon Award for Excellence. Half of the participants said they spent 50% or less of their time caring for Covid-19 patients, while the other half said they spent 50% or more.

To measure the health of a work environment, AACN looked at six standards:

  • Skilled communication
  • True collaboration
  • Effective decision-making
  • Meaningful recognition
  • Authentic leadership
  • Appropriate staffing

Overall, AACN found that nurses’ perceptions of quality on these six measures had declined across the board since the organization’s 2018 survey.

In particular, appropriate staffing was the lowest rated of all the standards at 2.33 out of 4, which is the lowest rating the standard has received since AACN first began the survey in 2006. Only 24% of RNs said their units had the right number of nurses with the right knowledge and skills more than 75% of the time—down from 39% who said the same in 2018.

In addition, there was a significant decline in how RNs rated the quality of care in their organizations and their units. Only 16% rated their organizations’ quality of care as excellent (compared to 24% in 2018), and 30% rated their units’ quality of care as excellent (compared to 44% in 2018). Over 50% of nurses said quality of care in their organization or unit has gotten somewhat or much worse over the last year.

Many nurses also reported difficulties with their physical and psychological well-being in the survey. For example, less than 50% of RNs said they felt their organization values their health and safety, a significant decline from 68% who said the same in 2018.

In addition, 40% of participants reported that they were not emotionally healthy. The percentage of RNs who reported experiencing moral distress also doubled from 11% in 2018 to 22% in 2021.

A significant portion of RNs also reported experiencing verbal abuse, physical abuse, sexual harassment, or discrimination over the past year. Of the 7,399 RNs who answered this question, 72% said they had experienced at least one negative incident, with verbal abuse being the most common at 65%, followed by physical abuse at 28%.

RN job satisfaction

Only 40% of RNs said they were “very satisfied” with their job, down from 62% who said the same in 2018. Further, a significant number of RNs in the survey reported planning to leave their jobs within the next few years.

Overall, 67% of RNs said they planned to leave their current position within the next three years, compared to 54% in 2018. Of this group, 36% said they planned to leave within the next year, with 20% planning to leave within the next six months.

According to the respondents, the top factors that could lead them to reconsider their decision to leave their job were a higher salary and more benefits (63%), better staffing (57%), and more respect from administration (50%).

“Without improvements in the work environment, the results of this study indicate that nurses will continue to exit the workforce in search of more meaningful, rewarding, and sustainable work,” the survey’s authors wrote. “It is time for bold action, and this study shows the way.” (Firth, MedPage Today, 8/3; Ulrich et al., Critical Care Nurse, 8/1)

Hard truths on the current and future state of the nursing workforce

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Concerns about an imbalance in supply and demand in the nursing workforce have been around for years. The number of nursing professionals nationally may be healthy, but many nurses are not in the local areas, sites of care, or roles where they’re needed most. And many of today’s nurses don’t have the specialized skills they need, widening the existing gap between nurse experience and job complexity.

As a result, gaping holes in staffing rosters, prolonged vacancies, unstable turnover rates, and unchecked use of premium labor are now common.

Health care leaders need to confront today’s challenges in the nursing workforce differently than past cyclical shortages. In this report, we present six hard truths about the nursing workforce. Then, we detail tactics for how leaders can successfully address these challenges—stabilizing the nursing workforce in the short term and preparing it for the future.

Read More

Younger hospital nurses leaving the profession altogether

https://mailchi.mp/3390763e65bb/the-weekly-gist-june-24-2022?e=d1e747d2d8

The prevailing opinion earlier this year was that the hospital registered nurse (RN) shortage was being driven by older nurses retiring early or leaving hospital employment for less-demanding care settings during the pandemic. However, recent data shown in the graphic below paint a different picture. 

Hospital RNs with over ten years of tenure actually turned over at lower rates in 2021, compared to 2019. Meanwhile, the turnover rate for nurses with less tenure (who are typically younger) increased in 2021. While less-tenured nurses have always turned over at higher rates, we are seeing a new uptick in younger RNs leaving the profession

The size of the total RN workforce decreased by 1.8 percent between 2019 and 2021and the decline was twice as steep for hospital-employed RNs. Younger RNs disproportionately drove this decline: nurses under age 35 left the nursing workforce at four times the rate of those over age 50. 

A recent survey suggests younger RNs are less likely to feel their well-being is supported by their organization, and more likely to define themselves as “emotionally unhealthy.” To keep younger nurses in the profession, hospitals must increase the support available to them. Investments might include expanding preceptorship and mentorship programs, many of which were cut during the pandemic, and increasing behavioral health support and job flexibility.