Taking Aim at the High Cost of Provider Turnover

Keith A. Herl, MHA, MBA

Matthew Mingenback

In today’s ultra-competitive market, smart healthcare delivery organizations have sought to improve their margins by capitalizing on strategic advantages and maximizing efficiencies. However, most organizations have yet to adequately address one inefficiency that costs millions of dollars annually – provider turnover.

In fact, less than one-quarter of healthcare organizations measure the cost of provider turnover and/or have a plan in place to promote retention of their providers, despite the impact turnover has on the Triple Aim: cost, quality and access.

Effect of Physician Turnover on Healthcare’s Triple Aim

The Institute for Healthcare Improvement’s Triple Aim seeks to decrease cost while increasing quality and access to medical care. Physician/provider turnover has a negative and widespread impact on all three areas of the Triple Aim and beyond.

Swollen Costs

Turnover carries a significant price tag. It’s been estimated that clinician turnover may result in losses of up to 6 percent of an organization’s annual operating budget1, as many indirect costs often aren’t accounted for by organizations. Between the loss of clinic, inpatient, specialist referrals and ancillary services, the opportunity cost of losing a provider can add up to more than $1 million dollars. Add the direct costs of recruiting and onboarding a new physician, and the total cost of losing just one physician can equal nearly $1.3 million dollars2.

The Cost of Losing a Physician2
Loss of downstream revenue/ FTE $990,033
Estimated recruiting cost/FTE $61,200
Average annual start-up cost/FTE $211,063
Total Turnover Cost/FTE $1,262, 296

The average annual physician turnover rate is estimated to be somewhere near 7 percent (but could be even higher in today’s market). Operating under this assumption, an organization with 200 physicians that is able to reduce their turnover by just 1 percent could save over $2.5 million in one year alone.

Consequences for Quality 

In addition to the costs, provider turnover invariably can reduce quality of care. One study3 found that turnover in healthcare organizations may result in:

  • decreased organization morale and employee engagement and satisfaction
  • decreased efficiency and precision of care
  • increased provider illness and absenteeism
  • increased feeling of provider “burnout”
  • increased workload on other providers and employees

Turnover can cause a chain reaction profoundly affecting care through:

  • decreased patient satisfaction
  • decreased patient access and increased patient wait times
  • decreased patient throughput
  • increased infection rates and hospitalizations for infection
  • increased length of stay
  • increased complication rates
  • increased mortality
  • increased malpractice claims

Conversely, organizations with lower rates of turnover were found to have providers who are more engaged and satisfied with their jobs. Physician job satisfaction has been strongly correlated to increased patient satisfaction and a more positive perception of patient care. Patients of satisfied physicians are also more likely to remain in managed care plans and adhere to medication, exercise and diet regimens4.

Diminishing Access

When providers leave practices, they often create a care gap that takes anywhere from three to six months to fill, if the role is filled at all. Once hired, physicians take approximately 11 months to “settle in.” NPs and PAs take up to 24 months to fully ramp up. So when a provider leaves, it could be a year-and-a-half to two years before the new provider is at full productivity1.

In some cases, a physician leaving means access dries up altogether, and not just in rural areas. For instance, if a community hospital loses their orthopedic group, it may be years before the hospital can rebuild its orthopedic program, if at all.

The elderly are most affected by turnover as they tend to suffer from more complex health issues that rely on continuity of care, have more difficulty finding transportation to their physician’s office and fewer providers are accepting Medicare every day.

How Can My Organization Promote Proactive Retention?

Despite the huge, undisputable costs, most healthcare organizations don’t measure the impact of turnover or have a proactive program in place to retain their best providers. A 2015 study found that only 24 percent of organizations attempted to quantify the real cost of provider turnover, and only 27 percent have a formal retention or onboarding plan in place1.

Considering all the implications, this problem deserves more attention.

Digging Deeper to Find the Cause 

Identifying the true reason providers are leaving can be particularly challenging as the exit process is filled with emotion and biases that can affect perceptions of the situation. The most common reasons why providers leave their practice environment are:

  • Job dissatisfaction – Employee engagement and satisfaction, or lack thereof, is a top predictor of turnover1.
  • Cultural fit – If the provider’s personal and professional priorities and personality don’t mesh with the organization, the provider is likely to leave or be let go.
  • Burnout Burnout now has its own CPT Code (Z73.0). Forty-five percent of physicians reported burnout in 2014 and most family medicine (68 percent) and internal medicine (73 percent) physicians said they would not choose the same specialty again5.
  • Overworked – Providers report a larger burden with electronic medical records and additional administrative duties while facing pressure to see more patients.
  • Lack of autonomy – Providers often feel they are not in control of business decisions for their practice or face interference in their patient care decisions.
  • Compensation – A decline in compensation is strongly linked to a decrease in job satisfaction. Known disparities in compensation between providers can create mistrust and unhappiness4.
  • Lack of professional/leadership development – Providers will play an ever greater role in managing and leading business in healthcare and want to define their own career paths within their organization.

Begin Your Transformation

Through surveys, interviews, panels and committees, uncover and review the findings of your root cause turnover analysis and create a plan. Some strategies to attract and retain top provider talent include:

  • Recruit for Retention – Find the right fit the first time. Engage your recruiters regularly to carefully select providers whose goals, attitudes and personalities fit in the culture of your organization.
  • Upgrade Onboarding & Orientation – Give maximum support to your new provider and listen to their needs. Ease them into practice and facilitate opportunities to network and grow relationships. Take the baseline pulse of the mindset of your new provider from the very beginning.
  • Start a Provider Mentoring Program – Mentoring is proven to reduce turnover. Studies showed that organizations with a formal mentoring program experience significantly less provider turnover.
  • Align Compensation – Review current pay scales to see if they align with regional and local norms. Ensure that the method of compensation motivates providers and aligns with organizational goals.
  • Align HR Processes – Administer exit interviews when providers do leave. Alternatively, bring in an objective third-party, who may be able to uncover more valid, detailed information about a provider’s decision to leave than an in-house employee.

Measure, Monitor and Adapt

Lastly, continue to monitor the positive factors you’ve identified that promote satisfaction and engagement, as well as the negative factors that lead to turnover. By collecting good data on the front end and establishing a valid baseline, you will be able to measure the progress of your interventions.

Realistically, it could take years before you know the effects of your interventions. However, keep in mind that any effort to proactively retain providers and promote engagement will have a positive effect on your organization and the people who drive it.

Works Cited

[1] D. Culhane, J. Munkner and J. Heil, “Shedding Light on the Cost of Provider Turnover (Part 1 of 2),” CEP America, 23 July 2015. [Online]. Available: http://www.cepamerica.com/news-resources/perspectives-on-the-acute-care-continuum/july-2015/cost-of-physician-turnover-retention.
[2] G. J. Stovall and L. Shutte, “Investing in Retention Pays Dividends,” Group Practice Journal, September 2011.
[3] B. J. Becton, M. C. Matthews, D. L. Hartley and D. H. Whitaker, “Using Biodata to Predict Turnover, Organizational Commitment, and Job Performance in Healthcare,” International Journal of Selection and Assessment, June 2009.
[4] S. Brown and R. Gunderman, “Viewpoint: Enhancing the Professional Fulfillment of Physicians,” Academic Medicine, June 2006.
[5] T. Rosin, “Integration and Physician Issues,” 5 December 2014. [Online]. Available: http://www.beckershospitalreview.com/hospital-physician-relationships/the-triple-aim-s-fourth-leg-improving-clinicians-work-life.html.

About The Author

COO & President of Career Services: Afferent Provider Solutions
Keith Herl MHA, MBA is a founding partner of Afferent Provider Solutions where he holds the roles of COO and President of Career Services. Keith has more than 6 years of physician recruiting, network development, business operations management and marketing experience where’s navigated the healthcare field with prominent organizations such as Humana Inc, AMN Healthcare and Baylor Scott and White Healthcare System. Having worked closely with thousands of physicians and other healthcare providers in his career, Keith is passionate about helping busy healthcare providers with their careers and helping healthcare organizations find and keep the best providers.