The cost in dollars of replacing healthcare employees is absolutely staggering. When you consider all of the factors, the cost of replacing a physician is over $1 million.
The cost in dollars of replacing healthcare employees is absolutely staggering. When you consider all of the factors, the cost of replacing a physician is over $1 million. The cost of replacing a healthcare executive, or any highly educated and skilled professional is 213% of salary. For example, a clinician, such as a physician's assistant, who earns about $120,000 a year, will cost over a quarter of $1 million to replace. An executive earning $200,000 a year will cost $426,000 to replace, and a nurse earning $85,000 a year will cost over $180,000 to replace.
When you multiply those costs by the actual number of positions which turnover in any healthcare organization in a year, it’s in the millions of dollars for even a small healthcare organization. When you project these figures over the next 10 years, a small group of 100 healthcare professionals can have turnover costs of well over $80 million. That is an enormous expense for which the healthcare organization gains nothing because, before the turnover, the organization had an employee, and after the turnover, they still have an employee.
That 100-person Healthcare organization could cut that $80 million cost by up to 75% and save over $50 million over a 10-year period if they would do three things:
1) Offer lifetime pensions as part of their benefit package.
2) Use bank financing to lower the cost of that pension plan.
3) Only hire candidates who are concerned about retirement and are willing to commit to a 10-15-year pension vesting period.
Imagine how much we could lower the cost of healthcare by using pension plans to tie the staff, both clinical and nonclinical, to the healthcare organization. Imagine how much better patient care healthcare organizations could deliver if they are always fully staffed.
If you would like more information, on Thursday September 29th, at noontime, the San Diego Chapter of the Healthcare Financial Management Association (HFMA) is presenting a free webinar on this topic, and I'll be pesenting live. You can register right here.