It's a given in our industry that provider turnover is very, very costly. A 2004 study
at the University of New Mexico found that clinician turnover at academic medical centers resulted in losses equal to 3–6 percent of annual operating budget.
Sobering as these numbers may be, few organizations really take the time to understand and address the problem. According to the recruiting firm Cejka Search, only 24 percent of healthcare organizations
attempt to quantify the real cost of provider turnover. And in one physician survey
, only 27 percent of respondents said their group had a formal retention or onboarding plan.
At CEP America, we've always shared retention statistics with our medical directors, who hire and supervise new clinicians. However, we reasoned that we could make a far more compelling case for strengthening our retention and onboarding efforts
if we could state the cost of turnover in dollars and cents.
In this post, we'll describe our efforts to quantify these costs and create actionable intelligence to inform operational change. We'll also share some surprising findings made along the way that have major implications for our workforce strategy.
As a group, healthcare providers have relatively low job turnover. In 2012, 6.8 percent of physicians and 11.5 percent of physician assistants (PAs) and nurse practitioners (NPs) changed jobs
— far less than the average for all professions. However, because their roles are so complex, their departure is often felt acutely by the teammates they leave behind.
Cejka also noted that turnover was much higher among newly hired physicians (12–21 percent). We've observed a similar pattern among our own providers. Our data suggest that attrition rates for all types of clinicians drop sharply after the first two years of employment. This trend prompted us to adopt a strategic focus on new hire retention, which was a driving force behind the current study.
Retaining high-performing clinicians is all the more important in today's tough recruiting environment. Competition to hire qualified providers is ramping up
as the physician shortage deepens and the elderly and insured populations grow. At the same time, rebounding stock and housing markets have made it more feasible for providers to relocate
for job opportunities. Many job seekers now receive multiple offers, making workforce retention more challenging than ever.
To conduct our research, we mined cost and quality data from 5 million patient encounters occurring over a two-year period. This information is routinely tracked by our practice management arm, MedAmerica. We also met with leaders throughout the enterprise to gather additional information.
Our initial research question focused on the monetary cost of turnover. To this end, we quantified costs associated with vacancy, recruiting and corporate and site-level onboarding programs. These hard costs included items like recruiter salaries, candidate travel costs, medical director recruiting time and signing bonuses for hard-to-staff sites.
However, we felt that these direct costs didn't tell the whole story. We also wanted to explore the operational cost of replacing a highly productive clinician (one who's reached their "steady state" with regards to performance) with a new hire. To date, relatively few studies have attempted to quantify the cost of reduced productivity (CoRP) associated with clinician turnover. One exception, the New Mexico study cited above, found that CoRP represented 42–66 percent of turnover costs
at academic medical centers.
We measured CoRP in both financial and operational terms, including measures of patient satisfaction, clinical quality, throughput and chargeable provider hours. As we dug deeper into the data, we realized that it takes new clinicians quite awhile to become fully productive, a fact which had enormous cost implications for our organization. We therefore made "time to productivity" a secondary research question — one that ultimately yielded some fascinating results.
Because our analysis leveraged an enormous national data set, it yielded findings of very high statistical validity. We can now state with confidence the financial and operational costs of turnover within our organization.
As expected, we learned that it's quite costly (in raw dollars) to replace an experienced provider. However, our most interesting findings related to productivity. Specifically, we learned that it takes newly hired PAs and NPs 14–24 months to reach a steady state with regards to performance. This timeframe varies considerably with the provider's experience and the nature of the practice. But in general, they take longer to "settle in" than physicians, who take an average of 11 months.
This discrepancy in "time to productivity" makes sense when one considers the generalist nature of PA and NP education. Many of our newly hired PAs and NPs are practicing their specialty for the first time and naturally have a steeper learning curve than a residency-trained physician.
Our analysis unearthed another interesting trend. Turnover of a single provider had a significant impact on the operational performance of the entire department as measured by patient satisfaction, clinical quality metrics, throughput and chargeable hours. We believe we are the first study to quantify this particular "group" effect.
Before we discuss the implications of our findings, we want to point out that there's nothing wrong with a provider taking time — even a long time — to settle into a new position. We understand that these are highly complex jobs, and we want to give our clinicians the time, training and support they need to succeed.
The question then becomes: how can we adjust our corporate workforce strategy to mitigate the inevitable effects of turnover? One thing we've realized is that we need to look at recruiting and onboarding as a very long process. For example, if we add the 3 to 6 months it takes to recruit and credential PA or NP to a 14–24-month period of decreased productivity, the time horizon stretches beyond the two-year mark.
So as an organization, how can we adjust our workforce strategy to meet these challenges? The easiest approach is to treat turnover as inevitable and hire accordingly. However, this strategy is quite costly and doesn't address the root causes of turnover.
A preferable approach is to boost our competitiveness by prioritizing the retention of high performing clinicians. This leads us to another question: what part of turnover is preventable, and what can we do about it?
The next phase of our research will involve identifying positive actions we can take to promote retention. This requires some additional data gathering. Our existing employee satisfaction surveys provide a "snapshot in time" but often miss the deeper, systemic factors that influence providers' career decisions.
With that in mind, we brought together our site and regional PA/NP leaders for a series of focus groups. In a future post
, we'll share what we learned, and how we'll use those lessons to enhance our onboarding and retention efforts.