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The plan to improve nurses retention in healthcare organizations

Potential patient errors, compromised quality of care Poor work environment and culture, dissatisfaction, distrust Loss of organizational knowledge Additional turnover In economic terms, direct costs are generally considered to be those costs that are clearly and readily attributable to a particular activity. Examples of direct costs of nurse turnover include advertising costs and those costs incurred by health care organizations HCOs to market nursing positions in an attempt to recruit and hire nurses to fill turnover vacancies.

However, it is not always easy to separate costs into these two categories of direct and indirect costs. To overcome this classification challenge, Jones 2004 recommended classifying costs based on the timing of cost accrual, i. The quantification of nurse turnover benefits, on the other hand, has been a largely ignored activity. This may have occurred for several reasons: Nurse Turnover Benefits Reductions in salaries and benefits for newly hired nurses vs.

Toward this end, several strategies have been suggested to improve nurse retention. Through the successful implementation of such retention strategies, HCOs may, in turn, incur certain downstream benefits of retention, such as becoming a nursing employer of choice.

  • It must also recognize that retention is not a short-term problem, but like quality, an enduring concern within health care that needs to be continually updated and evaluated as the demands of the health care industry and society change;
  • For example, the turnover of one nurse may be welcomed and may actually bring about gains in productivity and performance, while the turnover of another nurse may reflect a significant loss to the organization that is above the amount, that general nurse turnover cost estimates might suggest;
  • This lack of studies focused on valuing the costs and benefits of retention is likely attributed to several factors.

Nurse Retention Benefits Reduction in advertisement and recruitment costs Fewer vacancies and reduction in vacancy costs Fewer new hires and reduction in hiring costs Fewer orientees and reduced orientation and training costs Maintained or increased productivity Fewer terminations and reduction in termination costs Decreased patient errors and increased quality of care Improved work environment and culture, increased satisfaction, increased trust and accountability Preserve organizational knowledge Easier nurse recruitment The costs of retention are obviously related to the specific organizational strategies implemented.

Because organizations generally choose a combination of strategies that meet their unique needs and budget constraints, the retention costs incurred will vary from organization to organization. Yet the costs of other strategies may be relatively easy to quantify, such as specific program costs associated with a new graduate residency program or limiting nurses work hours.

Additionally, certain costs associated with the same program, such as the costs of forgone investments, may be more difficult to quantify than other costs related to that program. Costs of the more global strategies, such as improving nurses work environment, involving nurses in organizational decision making, establishing a culture of safety, or providing strong, top-level nursing leadership and supportive nursing supervision throughout the organization are more diffuse and difficult to quantify.

Nurse Retention Costs Specific program costs e. For example, Beecroft, Kunzman, and Krozek 2001 and Pine and Tart 2007 have described the costs and benefits of implementing residency programs aimed at retaining new RN graduates. Unfortunately, to date, there have been no systematic efforts to quantify the costs and benefits of nurse retention more broadly or in economic terms.

This lack of studies focused on valuing the costs and benefits of retention is likely attributed to several factors. First, HCOs typically implement a variety of nurse retention strategies rather than one single strategy. Short of designing a true experimental study, it is difficult to sufficiently control for. Short of designing a true experimental study, it is difficult to sufficiently control for both external and internal factors, as well as program and individual factors, so as to quantify the costs and benefits of specific retention programs.

Although the more descriptive or naturalistic research designs allow one to identify nurse retention initiatives underway and assess some of the costs and benefits, it remains difficult to isolate the economic impacts of any particular program. Turnover and retention are distinct concepts; however, the costs and benefits of both are interrelated, and in some cases it may be appropriate to assume that the benefits of retention are the costs of nurse turnover avoided.

One can also argue that the opportunity cost of nurse retention, or the most costly foregone alternative to retention the plan to improve nurses retention in healthcare organizations an organization invests in a retention program, is nurse turnover.

One can also argue that one benefit of turnover is retention costs avoided. While these assumptions may point toward gross costs and benefits, retention and turnover are conceptually distinct concepts, requiring different methods and approaches of quantification. Yet there are also costs of retention, such as the expenses related to increasing nursing wages, and costs of turnover, such as the loss of organizational knowledge that is incurred when a highly experienced and valued nurse leaves.

The totality of these benefits and costs is generally not captured in most cost studies of nurse turnover. RN Turnover, Retention, and Quality of Care Although it is logical to expect that turnover would adversely affect patient care.

Yet there are very few reported studies that have examined the specific relationships between nurse turnover or retention and quality of care, or that have attempted to quantify the quality of care and patient safety costs related to nurse turnover and retention.

A Canadian the plan to improve nurses retention in healthcare organizations reported negative effects associated with nurse turnover and communications, medications management, compromised follow-up, client disengagement, illness exacerbation, and added burdens of caregiving for families Minore et al.

Caveats About Quantifying Costs and Benefits: Benefit-Cost and Cost Effectiveness Analysis While quantifying the costs and benefits of nurse turnover and retention is an extremely valuable and important activity, the difficulty in doing so is not trivial and should not be underestimated.

For example, conducting a formal benefit-cost analysis BCA requires the quantification and comparison of all costs and all benefits related to a particular program. A program investment is generally considered if the benefits outweigh the costs. When several programs are being considered, the program with the greatest net benefit should be selected.

However, many organizations fail to accurately quantify all of the costs and benefits associated with specific programs because they often focus only on the more easily captured organizational costs and benefits. The more easily captured costs and benefits are those direct or visible costs that are attributable to nurse turnover or retention investments e.

In some cases, the indirect or invisible costs will exceed the direct or visible costs. Third party benefits and costs, known as externalities, are those that accrue to individuals or groups beyond the individual or organization making the investment.

In the case of nurse retention, for example, third parties that could be expected to benefit from a nurse retention program implemented at one HCO are the individual nurses who work at the organization, or an employer by whom a nurse or group of nurses might become employed in the future. Other issues to be considered when conducting a benefit-cost analysis include the discount rate selected for use in calculations and the many ramifications of a particular decision.

Commonly, the discount rate selected reflects the foregone earnings of alternate investments Folland et al. Steps also can be taken to avoid counting some costs as benefits, or double-counting certain benefits Folland et al. For example, it is easy to envision that the implementation of certain strategies will retain nurses, yet it is also easy to fail to consider the wages and benefits paid to nurses who are retained, which can be expected to escalate in the future.

An examination of the costs of nurse retention, similarly, should account for the amount nursing wages would need to increase in order to reduce turnover. Even the plan to improve nurses retention in healthcare organizations costs and benefits can be quantified in monetary terms, policy makers may choose to bring in other more subjective criteria to aid in decision making Folland et al. CEA is a more modest approach that assumes the benefits of a program are desirable, yet assigning a dollar amount on those benefits is impossible or undesirable Folland et al.

The advantage of this approach is that while, for example, the costs of a retention program must still be determined, the benefits may be quantified in terms of a more qualitative outcome, such as quality of work life or nurse satisfaction. This then allows one to estimate retention program costs per quality of work life, or retention program costs per level of nurse satisfaction.

As is done in a benefit-cost analysis, a program is considered based on its cost per benefit or outcomerelative to all program options being considered.

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Should the challenges associated with quantifying the costs and benefits of nurse turnover and retention deter us from attempting such activities? However, knowledge of the challenges such an activity presents should be acknowledged at the outset. Another caveat specific to calculating the costs and benefits of nurse turnover or retention is that all nurse turnover is not equal Sullivan, 2007.

However, most studies of nurse turnover costs assume that it is. For example, the turnover of one nurse may be welcomed and may actually bring about gains in productivity and performance, while the turnover of another nurse may reflect a significant loss to the organization that is above the amount, that general nurse turnover cost estimates might suggest.

In other words, this nurse and his or her human capital are organizational assets. Finally, the costs of internal nurse turnover i.

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When a nurse takes another job or position within a HCO, it suggests that advancement opportunities are available for nurses within the organization and perhaps reflects a benefit to both the individual and organization; internal turnover will create other vacancies within the organization unless positions are eliminated. We know very little about the costs and benefits of internal turnover for a HCO. For these reasons, nursing and health care leaders must consider additional aspects of nurse turnover and retention that are not typically captured in most cost estimates.

Considering organizational gains and losses associated with nurse turnover and retention from a variety of perspectives will result in more informed decision making, and will better position the HCO to address aspects of nurse turnover and retention beyond those that are typically included in general cost estimates. However, a successful business case for nurse retention cannot be based solely on financial markers.

  • The determination of nurse retention costs and benefits is necessary to calculate a benefit-cost analysis of nurse retention;
  • Agency for Healthcare Research and Quality;
  • Because her approach focused specifically on the economic value of nursing from the perspective of those who purchase nursing care, insurers and payers are omitted;
  • Other issues to be considered when conducting a benefit-cost analysis include the discount rate selected for use in calculations and the many ramifications of a particular decision.

It must also recognize that retention is not a short-term problem, but like quality, an enduring concern within health care that needs to be continually updated and evaluated as the demands of the health care industry and society change. HCOs must make their business case and financial analyses available to other HCOs and the field so that the industry, in general, can learn from and advance our knowledge concerning nurse retention.

The first by Leatherman and colleagues 2003 examined the business case of four specific, health care-related programs and offered the following conclusions: Leatherman and colleagues determined that the costs and benefits of any health care investment can accrue to different groups: It is possible, however, that the majority of the benefits of an investment may not accrue to the entity making the investment.

The second business case reported recently was by Needleman and colleagues 2006who determined that there was an unequivocal business case for increasing the proportion of RN staffing if the overall number of hours of care provided did not increase. Interestingly, these authors recognize that their estimates of staffing the plan to improve nurses retention in healthcare organizations and costs are conservative because they did not include the cost savings of reducing nurse turnover that would result from improved nurse staffing.

These points made by the business cases described above are particularly poignant when considered relative to nurse turnover and retention. Because the benefits of nurse retention or turnover may not always accrue until sometime in the future, health care leaders and consumers may either fail to consider these costs and benefits, or they may assume that the benefits and costs simply do not exist.

In this way, the costs and benefits of nurse turnover and retention have potentially far-reaching effects on quality of care, societal well-being, and the health of our health care system all of which are well beyond a particular organizational entity making an investment decision.

  • Case studies and analysis;
  • When several programs are being considered, the program with the greatest net benefit should be selected;
  • The advantage of this approach is that while, for example, the costs of a retention program must still be determined, the benefits may be quantified in terms of a more qualitative outcome, such as quality of work life or nurse satisfaction;
  • An international examination of the cost of turnover and its impact on patient safety and nurse outcomes;
  • For example, the turnover of one nurse may be welcomed and may actually bring about gains in productivity and performance, while the turnover of another nurse may reflect a significant loss to the organization that is above the amount, that general nurse turnover cost estimates might suggest;
  • Jones has taught health economics, policy, administration and management at the undergraduate and graduate levels, and she is a co-author with Steven Finkler and Christine Kovner of the recently published 3rd edition of Financial Management for Nurse Managers and Executives.

Nurse turnover and retention costs and benefits may affect organizational initiatives, as suggested by Needleman et al. Conceptualized in such a way, one can argue that nurse turnover and retention are elements of a larger phenomenon, namely the value of nursing. Patterson 1992 identified three levels of purchasers that are relevant in determining the economic value of nursing: Because her approach focused specifically on the economic value of nursing from the perspective of those who purchase nursing care, insurers and payers are omitted.

Patterson viewed groups such as insurers and payers as intermediary purchasers of nursing care, or one step removed from the actual purchase of nursing care.

This approach is in contrast to the elements involved in the development of a business case identified by Leatherman et al. Although this fact complicates the interpretation of a business case and the investment decision, the entities to which costs and benefits accrue should be considered.

3 Ways to Increase Employee Engagement and Retention for Healthcare Organizations

It may be that, for example, a health care organization would be willing to invest in a nursing retention program if adequate benefits accrued to society the plan to improve nurses retention in healthcare organizations.

The organization could justify the decision if it expects to be perceived favorably by the community because of its contributions to improving the welfare of citizens. Any efforts to value nursing that do not take into account the costs and benefits of nurse turnover and retention must be interpreted with caution.

Having said that, however, the short comings identified in this paper should not be taken lightly. Determining the economic value of nursing requires that all possible costs and benefits associated with nursing and nursing care, including the costs of nurse turnover and retention, are quantified for patients and their families, institutions and organizations, and corporations who purchase nursing care.

It also requires that limitations of the cost and benefit included in the valuation are acknowledged. Given the widely recognized nursing shortage and the sheer numbers of nurses that are projected to be needed in the future, discussions of the costs and benefits of turnover and retention are generally focused on staff nurses and rightly so. We would be remiss, however, not to point out that similar issues exist for nurses in all types of positions.

Quantifying the costs of nurse faculty turnover or retention may be difficult, but it would be no surprise if the aggregate costs of nurse faculty turnover and vacancies were substantial.

The AONE nurse manager orientation, institute, and fellowship programs AONE, 2005 suggest that turnover and retention of this group of nurses is of concern, and that associated costs and benefits are important. As a result, the costs of nurse manager turnover or retention might be more than one might estimate on the surface.

The same argument can be made for chief nursing officers, who provide a pivotal leadership role both for nurses and health care organizations at large.

  1. His current work examines nurse labor market behaviors, migration, and employment trends.
  2. The quantification of nurse turnover benefits, on the other hand, has been a largely ignored activity.
  3. Health Affairs, 22 2 , 17-30.

Finally, the largely overlooked position of nursing faculty is now being recognized in the public media and in the nursing and health care literature as a critical barrier to increasing the pipeline of nurses. We know so very little about turnover and retention in this group, or the associated costs and benefits. These far reaching effects are rarely considered, but knowledge of the costs and benefits of nurse faculty turnover and retention are extremely important.

The Costs and Benefits of Nurse Turnover: A Business Case for Nurse Retention

Conclusion Future efforts are needed to quantify the costs and benefits of nurse turnover and retention across different types of nurses, so as to determine the societal effects of nurse turnover and retention. Efforts are also needed to determine the mechanisms through which nurse turnover and retention contribute to the overall value of nursing.

Unfortunately, none of these efforts will be easy. They will require discipline and the systematic development of related knowledge that contributes to these economic valuations.