The Real Cost of Turnover in Healthcare Practices

Did you know that the average cost of replacing an employee in healthcare can range from $20,000 to $50,000, depending on their role? For healthcare practices, turnover isn’t just a financial burden—it impacts patient care, team morale, and overall operational efficiency.

In this article, we’ll break down the hidden costs of employee turnover using an example of a 50-person healthcare practice, show how to measure its true impact, and explain why investing in retention is the smartest move your practice can make.

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Breaking Down the Cost of Employee Turnover

Employee turnover is more than just replacing one person with another. Let’s take a closer look at the associated costs, using a 50-person healthcare practice as our example:

1.Recruitment Costs

Recruiting a new employee involves advertising, interviewing, and onboarding.

Example: For a 50-person practice, posting a job on platforms like Indeed or LinkedIn might cost $500–$1,000. Add to that the time spent by leadership or HR, which could total another $2,000 in lost productivity during the hiring process.

2. Onboarding and Training Costs

New hires need time to adjust and learn the workflows of the practice.

Example: In a 50-person practice, onboarding and training a mid-level employee might cost $5,000 in resources, including training materials, supervisor time, and reduced efficiency during their first 3–6 months.

3. Lost Productivity

The gap between an employee leaving and their replacement reaching full efficiency can disrupt daily operations.

Example: If a 50-person practice loses one employee, patient throughput could drop by 10% during a 3-month vacancy, resulting in $10,000 in lost revenue.

4. Impact on Team Morale

High turnover creates extra pressure on remaining staff, leading to burnout and potential resignations.

Example: In a 50-person team, losing one employee might push others to work overtime, increasing stress and reducing overall productivity—an indirect cost that’s hard to measure but significant.

5. Patient Experience

Continuity of care is crucial in healthcare. Staff changes can erode patient trust.

Example: Patients at a 50-person practice might notice frequent staff turnover, leading to dissatisfaction and potentially fewer referrals, which could cost the practice another $5,000 in lost opportunities.

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How to Measure Turnover Costs in Healthcare Practices

Understanding the financial impact of turnover requires a structured approach. Here’s a simple framework to calculate these costs, continuing with our 50-person practice example:

Direct Costs:

Recruitment ($3,000) + Onboarding ($5,000).

- Total: $8,000.

Indirect Costs:

Lost productivity ($10,000) + Impact on morale ($3,000) + Patient dissatisfaction ($5,000).

- Total: $18,000.

Grand Total for Replacing One Employee: $26,000.

For practices with higher turnover rates, especially across multiple location, these costs can multiply quickly, significantly impacting the bottom line.

To track these figures, consider using tools like HR software or employee satisfaction surveys to monitor turnover trends and measure their financial impact.

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Retention as a Cost-Saving Strategy

Investing in employee retention doesn’t just save money—it strengthens your practice. Here’s how a 50-person practice could benefit:

1.Competitive Compensation and Benefits

Offering salaries and benefits that align with industry standards shows employees they’re valued.

Example: A $3,000 annual raise for key employees is far less expensive than the $26,000 cost of replacing them.

2. Professional Development Opportunities

Employees want to grow. Providing training programs, mentorship, and clear career paths can boost engagement and loyalty.

Example: Investing $2,000 annually in professional development per employee could reduce turnover by 20%, saving tens of thousands in recruitment costs.

3. Fostering a Positive Workplace Culture

A culture of belonging, where employees feel supported and heard, reduces turnover.

Example: For a 50-person practice, regular team-building activities costing $5,000 annually could save $50,000 in turnover costs by improving morale and retention.

4. Leadership Support

Strong leadership is the foundation of retention. Leaders who prioritize employee well-being and provide clear guidance inspire trust and commitment.

Example: Leadership training for managers, costing $10,000, could improve retention across the entire practice, saving far more in turnover costs.

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Employee turnover is one of the most significant challenges healthcare practices face, but it’s also one of the most preventable. By understanding the true costs and prioritizing retention strategies, your practice can save money, improve patient care, and foster a thriving team.

At Dogwood Enterprises, we specialize in helping healthcare practices like yours build strong leadership teams, create positive workplace cultures, and reduce turnover. Ready to invest in your team’s success? Contact us today to learn more about our leadership development and employee retention programs.