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CEOs: Employee Retention Is Your Job

Philip Betbeze, for HealthLeaders Magazine, March 8, 2010
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If costs, patient mortality, and patient satisfaction are important, then turnover should be at the top of your list.

Quint Studer says that if a hospital or health system CEO isn't concerned about employee turnover, by extension, he or she is OK with higher patient mortality. Put more bluntly: "If the CEO doesn't own turnover, he's more comfortable with more people dying than need to," the healthcare leadership consultant says.

High turnover is something that unquestionably costs money and time for existing staff, but its tentacles extend to just about everything a hospital does, he says. His firm, the Studer Group, has done several informal studies that show that when a hospital is able to reduce turnover, other metrics also improve, and those metrics aren't just financial.

"I was talking to two CEOs recently. They've lowered their turnover to 4% and they've shown me what that means financially compared to 8% turnover," he says. "Big dollars. Meanwhile, their mortality index has also gone down."

It's about the culture
Turnover really is fundamentally about the culture of the organization and whether it really cares about retaining good people, not only because it's the right thing to do, but because it puts your organization among the best in patient care and financial well-being.

Until the recent economic downturn, many hospital leaders could legitimately blame turnover on external factors, such as shortages in clinical areas particularly, and the hot job market generally. Many of those external pressures have abated to a large degree, so now is a perfect time for senior leaders to address the internal problems causing turnover. By doing so, CEOs can better attack associated problems with morale, waste, patient handoffs, patient satisfaction scores, and medical mistakes.

Many CEOs don't see employee turnover as an area where they can (or should) make a substantial impact. Maybe they can't match higher salaries available elsewhere. Maybe they can't offer the challenging and cutting-edge leadership of the academic medical center. Concerns about turnover are often shunted to HR. The CEO has many more important things to worry about, so the thinking goes. But CEOs can make a big difference in turnover.

"There's a huge advantage from a quality perspective from having a consistent staff," says Laurie Eberst, president and CEO of Mercy Gilbert (AZ) Hospital. Mercy Gilbert's parent, Catholic Healthcare West, thinks turnover rates are so important that it tracks controllable versus uncontrollable turnover. For example, uncontrollable turnover would be equivalent to a top nurse leaving because her husband is transferred out of town rather than because she hates her boss, which should be controllable, says Eberst.

Why people leave
Studer's work suggests that people generally don't leave jobs because of the reasons they often give, such as the opportunity for higher salaries.

"What they tell you [in an exit interview] is not necessarily why they leave," he says. "They really leave because of their boss."

That suggests that organizations with high turnover in the ranks need to work on leaders' skills and, most important, hold managers accountable for unacceptably high turnover rates. If you're lacking motivation to address this issue in an urgent manner, Studer says, develop a financial impact statement. As turnover drops, "they start saving money," he says. Though it encompasses a wide variety of organizations, on average, the Studer Group's data suggest that every 1% in turnover reduced saves direct costs of $250,000 and $500,000 in indirect costs.

Pat Jordan, chief operating officer at Newton-Wellesley (MA) Hospital, part of Partners HealthCare System, helped derive some of the data for those cost estimates and says his CFO validated it. "For us, the fundamental understanding is that [turnover] costs money and hurts quality and patient and employee satisfaction."

Why people stay
Jill Fuller, president and CEO of Prairie Lakes Healthcare System in Watertown, SD, says high turnover might be the CEO's highest priority because of all the important facets of the organization that it touches.

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