RN Turnover Costs Hospitals An Estimated $9.75 Billion Annually

Nurse burn-out – a result of working in high-stress environments – is bad for patient care and expensive for hospitals.  According to the American Organization of Nurse Executives (AONE), “a conservative estimate” of the price of hiring a new nurse totals $10,000 in direct recruitment costs.  In a hospital with 400 RNs on staff, it is no stretch to theorize that as many as 80 new nurses must be recruited and trained every year, adding up to $800,000 annually – and that’s just the direct costs.http://www.afscme.org/publications/2211.cfm

These direct costs – which include recruiting a new nurse, hiring the optimal candidate and training that individual — represent only a small portion of the expense of hiring and training a nurse.  It is the hidden costs – such as signing bonuses and other incentives, lost productivity because of the vacant position, and the expenses associated with training – that drive up the price of replacing RNs.  Additionally, hospitals pay more to hire agency nurses versus employing nurses directly on their staff.  A survey of hospital CEOs found that “agency nurses are often not familiar with policies, protocols and standards, and staff nurses then find that they have the additional burden of trying to educate these nurses on the unit.”

According to AONE estimates, the real cost of replacing a medical/surgical nurse is $42,000 and $64,000 for a specialty nurse.  Kaiser Permanente places an even higher price tag on nurse turnover — $47,403 for a medical/surgical nurse and $85,197 for a specialty nurse.  For the hypothetical 400-nurse hospital, the cost of replacing just 80 nurses annually could total $4 million in direct and hidden costs.  Nationally, it is estimated that 1.3 million RNs are employed by hospitals.  With an average turnover rate of approximately 15 percent, that translates to 195,000 nurse positions turning over every year at an estimated total cost of $9.75 billion.

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