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How Much does Increased Turnover Cost the Hospital?

Question

I am looking for some ways to measure the costs of poor customer service and teamwork, particularly in terms of employee turnover, for hospitals.

Answer

Estimates of the total cost of losing a single position to turnover range from 30 percent of the yearly salary of the position for hourly employees (Cornell University) to 150 percent, as estimated by the Saratoga Institute and independently by Hewitt Associates.

We feel that it is important for organizations to know the cost of turnover. As you calculate replacement costs, some of the expenses to consider include:

New Hire Costs

  • Drug Screens
  • Background Checks
  • Health Assessment and File Paperwork
  • New Employee Orientation—General
  • Relocation Expense
  • Recruitment Expense—Bringing the employee in for the interview
  • Recruiter Expense (External)
  • Advertising

Departmental Orientation Costs

Non-nursing

  • New Hire (number of hours X average wage)
  • Mentor Hours (number of hours X average wage)

Nursing

  • New Hire (number of hours X average wage)
  • Mentor Hours (number of hours X average wage)

Subtotal Orientation Costs Overtime Costs—for departments covering vacancy

Contract Labor Costs—for replacement for the period of the vacancy

This will give you an estimate of your total replacement costs.