Healthcare is a high-stakes industry (and certainly not one that thrives with statistically high turnover rates).
But employee retention has always been one of the biggest challenges facing healthcare workforces.
Retaining healthcare workers requires a uniquely strategic approach, and there's very little room for error.
Read this article or watch the video below to get your healthcare employee retention program right the first time.
Employee Retention in Healthcare by the Numbers
Between employee burnout, salaries, career development, and work-life balance, numerous factors affect a healthcare worker's decision to leave their current positions.
Let's take a look at a few essential statistics to understand the current state of the healthcare job market.
In 2016, healthcare employee turnover was almost 32%. By 2020, that figure had risen to 45%.
Between 2020 and 2021, the healthcare industry suffered a net loss of roughly 460,000 workers.
Labor shortages are primarily driven by external factors: demographic changes, increased demand, and higher numbers of chronically ill patients.
On a macro level, the healthcare workforce is aging. By 2030, half the physicians who were practicing in 2021 will be retired.
39.8% of new healthcare employees left within a year and 58.7% left within two.
Up to 47% of healthcare employees plan to leave their positions by 2025
Although employee turnover rates are lower than they were at the height of the pandemic, every industry has followed the same pattern. Across all industries, the average turnover rate sits around 18% — slightly lower than the ~23% turnover rate we see in healthcare.
But turnover isn't the only issue. An aging workforce means fewer are available to take the place of those who leave. More worryingly, it's the younger workforce that's turning over in record numbers — about one-third of all healthcare turnover is from first-year employees who leave before their first anniversary.
The message is clear:In the next decade, the impact of turnover and employee retention initiatives will be amplified.
The True Cost of Losing Healthcare Employees
In any role, it's far less costly to retain employees than hire new ones. In a highly specialized field like healthcare, even more so. The direct costs of replacing one employee can cost up to 200% of their salary.
Suppose a hospital worker makes a salary of $81,000 per year (the average annual salary for a healthcare worker as of 2023). In that case, their replacement would cost the hospital up to $162,000.
The average hospital has around 980 employees, so if 22% of them leave their positions, you're looking at turnover costs of just under $35 million.
Considering the average hospital lost as much as $10.5 million in 2022 from RN turnover alone, this hypothetical isn't too far from reality.
What makes the healthcare industry different from others?
It goes without saying that most companies aren't losing tens of millions per year because their workers are quitting (though most aren't as large as healthcare providers, either).
But what makes healthcare organizations so different?
Many of the jobs in healthcare are highly technical and require specialized training. Even if you can find a talented pool of candidates, there's often no guarantee that they'll have the same skillset as their predecessors.
Company culture is still paramount, but the need to hire skilled workers who already understand complex medical procedures makes it harder to achieve a balance between culture and professional performance.
Patient care is more than just a technical role — working hands-on with patients (most of whom do not understand their care options) requires an adeptness, social awareness, and innate kindness that's hard to teach.
Patient outcomes are also what raises the stakes for improving employee retention. A shortage of workers is sometimes a matter of life or death, and that puts an enormous amount of pressure on the entire system.
The higher stakes of this industry lead to a different kind of burnout. Healthcare professionals report alarming rates of insomnia, depression, anxiety, PTSD, and other mental health challenges most other professions don't necessarily encounter.
The length of a healthcare worker's typical shift (12 hours is the norm for 24-hour facilities) raises serious negative health concerns.
4 Pillars of Workforce Management for Healthcare Organizations
Though employee retention in healthcare has a lot of moving parts, the actual framework isn't as confusing as you think.
Here are four essential elements for managing and improving employee retention:
1. Planning
There's a certain degree of unpredictability in healthcare work, but managers need to plan ahead for fluctuating volume and staffing needs. The good news is that most of the time, patient volume is reasonably predictable.
Establishing a staffing strategy and contingency plan for last-minute changes is the first step. It's best to use healthcare management software that can learn and gather trends over time to anticipate the future needs of your organization.
2. Scheduling
Although clinical jobs are stereotypically long and varied (e.g., day shifts and night shifts in the same week), these workers are humans, too. They'd prefer predictability to social jetlag and sleep deprivation.
Planning for an optimized workforce and using volume trends to understand the ideal length of each shift is a good start.
For a sustained competitive advantage in retention efforts, flexible scheduling (or at least giving them more control over when they work) is the next step.
3. Follow-Up
Balancing schedules with patient demand isn't an exact science, it's an interactive process. Continuously measuring the outcomes of your scheduling process and periodically analyzing it for improvement opportunities is an absolute requirement.
To gauge its effectiveness according to employees, leaders also have to create a mechanism to gather employee feedback on their levels of burnout, job satisfaction, and engagement.
4. Employee Engagement
Engagement can take many forms, but it's a core pillar of workplace culture and retention. It's about creating an environment where healthcare professionals feel their work is valued, respected, and rewarded goes a long way.
For an effective employee engagement strategy, healthcare leaders need to balance performance coaching and continuing professional development with employee recognition for accomplishments, milestones, and contributions.
6 Employee Retention Strategies for Healthcare Professionals
All healthcare providers are different, each with its own unique culture and challenges. These strategies are tried and true — no matter the size, scope, or specialty of your team, they'll help you improve employee retention.
Offer student loan repayment as an employer benefit.
Across the board, as many as nine in 10 healthcare graduates leave school in debt, according to the latest data from the College Board.
Med school graduates, on average, owe over $250,000 in total education debt. Not all clinical roles require extensive medical school education, but even lower-cost degrees still put healthcare workers in tens of thousands of dollars of debt.
Nurses, for example, owe between $19,928 and $47,321 depending on whether they graduate with an Associate's degree or complete a Master's program.
In addition to the high demands of their day-to-day roles, 64% of healthcare workers say they've lost sleep due to their personal finances, 65% live paycheck to paycheck, and 48% expect to have to take out a short-term loan in the next six months, says a 2022 Harris Poll.
When they're stressed and sleep deprived, employee morale is low and performance and engagement suffer as a result.
Some healthcare workers qualify for student loan forgiveness at the federal level, but employers should still provide additional relief through a student loan repayment program.
Create a policy for on-demand pay (and other competitive pay options).
Telling you to "offer competitive pay" would be lazy. In reality, you need to to a lot more than give them a higher salary (though you should do that, too).
According to the abovementioned Harris Poll, 64% of respondents indicated they would be considerably more attracted to an employer that offered on-demand pay — a payment plan that allows workers to access a portion of their paycheck instantly and flexibly rather than waiting until the end of a pay period.
On-demand pay apps use direct deposit to get employees their earned wages before payday, which provides relief during those financially stressful periods and gives your healthcare workers more financial autonomy in general.
In addition to providing on-demand pay options, consider other compensation methods like performance-based bonuses, spot bonuses (peer-to-peer and manager-to-employee), and shift differentials.
For new hires, sign-on bonuses to sweeten the deal increase employee retention and set the precedent for future employee engagement levels.
Provide flexible benefits and perks.
Beyond student loan repayment and competitive wages, salaries, and pay disbursment options, every healthcare organization needs provide an attractive benefits package that helps workers manage their mental and physical health in addition to their finances.
In addition to the core employee benefits most employers offer, we strongly advise you to offer unique perks that make it easier for healthcare workers to get around and reduce their stress levels outside of work.
This might include:
Commuter benefits (e.g., discounted transportation or parking passes)
There are two easy ways we recommend offering these additional benefits: health and wellness stipends or a lifestyle spending account.
Health and wellness stipend: A health and wellness stipend is a sum of money that allows employees to use the funds to purchase medical care, gym memberships, or any product/service relevant to their mental, physical, or financial health.
Lifestyle spending account:A lifestyle spending account is a flexible benefits program that covers "non-health" benefits like pet care, day care, fitness classes or memberships, child care assistance, commuter benefits, or anything that makes employees feel they need to feel their fullest.
The main benefit to stipends compared to specific individual perks is that they allow your organization to create a package tailored to the individual needs of each worker.
By giving your employees the freedom to choose how they'd like to use these benefits, you create a much more meaningful reward and improve employee engagement with the program.
Offer flexible scheduling.
Flexible schedules aren't always doable, especially for new healthcare employees you're onboarding or those who are residents as a part of their medical education.
Adding flexibility where you can, however, will significantly improve retention and ensure your current employees are more productive when they're at work.
Cleveland Clinic sets a solid example for flexibility with their scheduling strategy for its clinical nurses. It includes:
Staggered shifts that start and end at unconventional times (e.g., 9 A.M. to 9 P.M.)
Adaptable shift durations and job sharing to split long hours into more feasible times.
Splitting RN time between care areas (such as the emergency department and ICU) to reduce the demands of one single job type.
These strategies can be adjusted to fit different specialties and departments, but they all share the same goal: making sure healthcare workers have enough time to rest between shifts.
Internally, the the implementation is well-received. Employees report having more time to focus on their medical school work, balance childcare needs with their jobs, and generally be able to better manage the demands of a role in healthcare.
Improve recruiting and onboarding processes.
Engaging employees starts with the hiring process — it sets the precedent for your relationship with them.
Attracting the best new employees requires competitive pay, rock-solid benefits, and a positive work environment. But high turnover of healthcare employees forces you to look beyond the basics and find ways to go above and beyond.
For that, you have to recruit with job satisfaction in mind. There are a few factors that influence whether or not they stay long-term:
Sign-on bonuses. Offering new hires an additional bonus to welcome them aboard makes them feel valued right out of the gate. That said, they aren't the only factor — employees leave for other companies if their needs aren't continuously met.
Lifestyle benefits. Even if you can't offer all your employees the best work hours or flexible scheduling options, you can still recognize their lifestyle needs by offering benefits like commuter subsidies, child care assistance, and health and wellness stipends.
Onboarding program. Attention to detail is key when training new hires on administrative tasks, electronic health records, and company software. Peer intros, a facility tour, and staff activities to get them acquainted with the rest of the healthcare team are also important parts of the onboarding process.
Mentoring programs. Most healthcare professions are dynamic, requiring ongoing education and constant agility. Especially for new employees, this environment is incredibly daunting. Whether it's for help with continuing education units, showing new staff members the ropes, or helping them navigate the psychological challenges of the field, employee retention is higher when team members have mentors looking out for them.
Encourage continuing education.
Lots of healthcare professionals require continuing medical education (CME) credits to advance their careers.
For front-line workers, research shows competencies gained through CME credits have a positive impact on job satisfaction, employee retention, and patient outcomes.
Certifications and credentials are also critical for upward mobility — they result in higher earnings potential, earn healthcare employees more respect from their peers, and make patients more comfortable and satisfied with the care they provide.
To facilitate continuing educational development, here are a few ideas:
Tuition reimbursement.
Sponsorship for relevant conferences and seminars.
Reimbursement for CME credits and certifications.
Peer-driven professional development groups/meetings.
You should also add an element to your scheduling policy that directly addresses employees who are still in school or who are pursuing certifications. Flexible scheduling and paid time off for taking exams make the process of earning new credentials and specializations much more reasonable.
And once they have the new skills to show for it, they'll keep them under your roof.
Retaining employees is easier with Compt.
Boosting employee engagement and rewarding dedicated employees for their work is a complicated equation. If you don't have the right software, that is.
Regulatory compliance is our bread and butter, and we take care of all the administrative work (well, our software does). That way, your HR team can focus less on paperwork and more on how to help their health professionals feel and perform their best.
Click here and we'll show you exactly what we're talking about.
