The cost of turnover for a new hire of a Nurse Practitioner or Physician Assistant is estimated to be approximately $250,000 -$300,000.
Institutions that calculate the cost of APP turnover assess several factors to reach the $250,000 – $300,000 estimate.
Research by the Society for Human Resource Management (SHRM) supports this calculation. The organization says that recruiting and hiring a new employee costs, on average, 50%-60% of the employee’s salary. But that’s only half of the equation. When an employee leaves your organization, the cost of turnover (including lost revenue and disengagement) can equate to an additional 90% – 200% of the employee’s salary. Given that these statistics are industry-neutral, we would expect APPs, with their in-demand skills and training, to be on the upper end of these ranges.
Our 2019 Melnic Advanced Practice Salary Guide lists annual salaries for eight different Advanced Practice Provider (APP) roles. Our data reports that APP salaries range from $90,000 – $150,000+, depending on role, specialty, and experience. We also calculate an additional 25-30% in benefits, resulting in national APP compensation range of $128,500- $214,000+.
The Cost and Impact of APP Turnover
Recruitment and hiring are the most obvious costs related to APP turnover. However, orientation, decreased patient coverage, and disengagement are equally important factors that should be included in the cost of APP turnover.
Orientation – Calculate the Cost of Training
Orientation refers to training and onboarding a newly hired APP in a specific practice area. It can take 4-6 months depending on the level of patient acuity. During this time, a new APP hire has a gradually increasing patient load (or the number of patients covered, if inpatient). Meanwhile, the preceptor assigned to the new hire also has a decreased patient load. The lost revenue due to a lower patient load by the new hire and the preceptor during the orientation period is the cost of training. Meanwhile, the cost of total compensation to the new hire and the preceptor (salary and benefits) remains the same. See Calculating the Cost of Turnover
Decreased Patient Coverage
As suggested above, the costs associated with turnover include decreased patient coverage. APP turnover leads to understaffing, which can cause lost patient revenue and additional staffing costs for temporary APPs. Both of these scenarios affect the bottom line. Unfortunately, understaffing also leads to disengagement among healthcare providers who remain.
One of the highest but least appreciated costs of turnover is the cost of disengagement of the remaining team members. Disengagement can become a multiplier to turnover, increased patient safety events, and decreased patient satisfaction.
Studies have shown that having engaged employees’ leads to employee retention, increases patient safety, lowers malpractice claims, improves quality of care and increases patient satisfaction. Gallup — in partnership with Loma Linda University Medical Center (LLUMC) — has discovered key evidence that shows how employee safety and employee engagement work together to enhance a safe environment for healthcare consumers.
Melnic has found that institutions with low turnover also need to consider engagement especially if the organization is operating in an area with limited job opportunities. Employees who want to leave but don’t can easily become disengaged.
Weighing the Cost of Turnover vs. the Cost of Retention
When organizations compare the true cost of APP turnover to the cost of APP retention (see Satisfiers List below), it becomes clear why investing in retention is worthwhile.
The value of APP retention can be measured in terms of RVUs and collections. The value can also be calculated in terms of patient satisfaction, quality improvement, research, education, beds open, length of stay, team satisfaction and efficiency, and other benefits to the hospital. These benefits are directly impacted by hiring an APP, although APPs may not be the only factor to achieve all of these benefits.
The costs of APP retention include compensation and investment in factors that motivate APPs, which we refer to as “satisfiers.” Investing anything less than the cost of turnover and disengagement drives to a positive ROI.
- Build an APP Leadership Structure
- Provide APP leadership with voting rights (voice) at the executive and department levels
- Provide Professional development opportunities
- Interdisciplinary collaboration
- Physician collaboration
- Create a culture of respect
- Respect and trust in the role
- Provide recognition for the value of APPs
- Provide: protected time, continuing education funds, research/QI/educational opportunities, and pay for licensing
- Work-life balance optionality
- Flexibility in scheduling and self-scheduling
- Measurement and feedback for the role
- Reporting to APP Leadership/Physician Leaders
- Compensation Package
- A clearly defined role – practicing within the full scope of practice
- A role that does not practice outside the scope of practice
- Mentorship structure
- New hire structured orientation with adequate time (4-6 months), gradual patient load, feedback, education and training, preceptor, and shadowing
- Lack of flexibility
- No evaluation metrics
- Non-market based pay scale
- No annual increases
- NPs being considered as a fallback, just filling the gap
- Unclear expectations
- Anything that is the inverse of the satisfiers
Melnic Specializes in APP Staffing
We are committed to helping hospitals and clinics build and grow APP services, through a focus on staffing, recruitment, and retention. If you would like more information about building an Advanced Practice Structure for APRNs and PAs, please schedule a call or email email@example.com.
Check out our Advanced Practice Resource Center for more resources!
- Simon M. Millions in Cash Wandering Through the Halls of Your Hospital; Calculating the Cash Value of Employee Engagement. Workforce Engage, http://workforceengage.com/cash value.html. Published 2003. Accessed 2/04/2011.
- Little B, Little P. Employee engagement: conceptual issues. Journal of Organizational Culture, Communications and Conflict. 2006;10(1);111-121.46