The Hidden Cost of Turnover

 Published: August 3, 2023

By: Debbie Bunch


June 3, 2023 

Given the robust job market for respiratory therapists right now, there is probably nothing that gives managers a good case of indigestion more than learning that a member of their staff is about to walk out the door for a new opportunity. 

There will be schedules to juggle, recruitment ads to run, interviews to conduct, onboarding to take place, and on and on and on. 

In the midst of all the work involved in hiring a new staff member, it might be easy to miss the elephant in the room: the cost. Turnover isn’t just a hassle, it is expensive, for the department and for the hospital as a whole.  

Charlotte V. Reikofski, MSPH, MPA, RRT, health system director for respiratory care services at the Duke University Health System in Durham, NC, has put some numbers to the process, and you can see her breakdown in costs in this Excel chart.

Spoiler alert: the grand total comes in at a whopping $114,644.77 per employee. 

We asked Reikofski why she decided to study turnover costs in the profession and what she thinks managers need to take into account when addressing turnover concerns in their departments. 

Recipe for trouble 

Part of the problem centers around the fact that the demand for respiratory therapists is hot and getting hotter. According to the Bureau of Labor Statistics (BLS), employment of RTs is projected to grow by 14% between 2021 and 2031 – that’s 9% more than the average growth for professions across the board. Couple that with a pandemic that left a lot of people rethinking their career goals and you have a recipe for trouble.  

The need for recruitment is apparent in those numbers while the impact of retention and the hidden cost of turnover is not as transparent,” she said. “As our profession experienced high rates of turnover during the pandemic, it became necessary to include turnover elements and hidden costs of turnover in budgeting, operational proposals, and future planning,” 

Her efforts to tackle the problem began with a look at who is involved in the recruitment, onboarding, and orientation processes and how much time is spent on each step. “I accessed the United States Bureau of Labor Statistics for salary references and then averaged salaries from numerous employment sites and salary postings,” said Reikofski. “In general, the bulk of outright cost associated with turnover is represented.” 

Some of the bigger ticket items identified on her chart include $43,200 for agency staff to cover the vacancy through the preceptor period, $39,360 for agency staff to cover the vacancy during the time to hire, $13,404.60 for pairing with a preceptor, $8,930.88 for a recruiter, and $5,686.80 for the paid time off cashout.  

But those are just the concrete costs. She emphasizes turnover has other costs that aren’t as easy to quantify, such as the mental and emotional work team members provide in welcoming, investing in, and mentoring new team members, and the disruption to the team that typically takes place whenever a new team member comes on board.   

All this can combine to cause slower or decreased performance among the staff because their energy is diverted to the new team member.  

“Turnover is intellectually and emotionally taxing for team members, can amplify risk, threaten patient safety, and increases operational expenditure,” said Reikofski. “With wages and benefits being a top hospital system expenditure, leaders and team members should intimately understand the impact of their team’s turnover, workflow FTE leakage, and wages and benefits as part of the organization’s overall success planning.” 

Key points to consider 

 How can you get a better handle on your own turnover costs? Understanding your organization’s recruitment, onboarding, and orientation processes and how many hours are spent on each activity – and the job roles involved in those activities — is critical to gathering the most accurate data. Reikofski cites the BLS and job boards as good sources for generating specific regional estimates on salaries.  

“Knowing the hidden cost of turnover can help explain ‘the why’ behind organizational departmental changes and expectations,” she said. “The information can also be used to present appropriate budgeting data, build C-suite resource requests, and develop ‘hire ahead’ practices to account for average historical turnover.”  

Of course, the most efficient way to beat turnover costs is to minimize turnover whenever possible. Charlotte Reikofski believes once managers better understand how much turnover is costing their departments they will be incentivized to do more to keep people happy and on the job.  

She offers these tips on making that happen —   

  • Leaders and team members alike need to be aware of the monetary and emotional cost of turnover. 
  • Leaders are charged with leveraging information to obtain resources that support retention while all team members are charged with creating a collaborative, respectful, engaging, and professionally challenging environment that reduces turnover.  
  • Both financial and environmental aspects to retention must be addressed.  
  • Leaders can contribute to retention by working with executive and business partners to assure compensation elements are optimal while alleviating daily stressors, improving workflows, providing opportunity for involvement, and mentoring those who are engaged.  
  • Partnering with the C-suite to discover business and financial options while working to improve the daily experience for team members will be important as the health care industry recovers from unprecedented challenges and pivots to manage longer-term demands. 

Taking a good look at the real price tag on turnover should be enough to encourage any manager to do whatever they can to keep it in check. 

Email with questions or comments, we’d love to hear from you.

Debbie Bunch

Debbie Bunch is an AARC contributor who writes feature articles, news stories, and other content for Newsroom, the AARC website, and associated emailed newsletters. In her spare time, she enjoys reading, traveling, photography, and spending time with her children and grandchildren. Connect with Debbie by email or on AARConnect or LinkedIn.

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