High turnover is something that unquestionably costs money and time, but its tentacles extend into just about everything a hospital does. Quint's firm, the Studer Group, has done several studies that show that when a hospital is able to reduce turnover, other metrics also improve, and those metrics aren't applicable only to the financial side of the house.
Turnover is fundamentally about the culture of the organization, and whether it really demonstrates to its employees that they are essential to making an organization among the best in patient care.
Until the recent economic downturn, many hospital leaders could legitimately blame at least some turnover on external factors, such as shortages in clinical areas particularly, and the hot job market generally. But many of those external pressures have abated.
That means, however, that it's time now to address the internal problems causing turnover, because if employees are leaving at an accelerated rate, it has much more to do with a CEO and his or her policies than with external factors. Attacking turnover is not a panacea, but by doing so, CEOs can better deal with 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 make a substantial impact. Maybe they can't match higher salaries available elsewhere. Maybe they can't offer the challenge and cutting-edge leadership of the academic medical center. As a result, 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, and they really should. In fact, few priorities touch so many other related criteria on which the quality of a hospital or health system ultimately will be judged.
Laurie Eberst, President and CEO of Mercy Gilbert Hospital in Arizona, says a consistent staff offers a "huge advantage from a quality perspective." Mercy Gilbert's parent, Catholic Healthcare West, thinks turnover rates are so important that it tracks controllable versus uncontrollable turnover.
Uncontrollable turnover would be equivalent to a top nurse leaving because her husband is transferred out of town instead of because she hates her boss, which should be controllable, says Eberst. Indeed, Studer's work suggests that people generally don't leave jobs because of the reasons they may give, such as a higher salary.
"What they tell you (in an exit interview) is not necessarily why they leave," he says. "They really leave because of their boss. Either they don't have a good relationship with their boss or they're not developed. All of this stuff, a CEO can control."
That suggests that organizations with high turnover in the ranks need to work on leader skills and most importantly, hold managers accountable for unacceptably high turnover rates. CEOs lacking motivation to address this issue in an urgent manner, he says, should develop a financial impact statement. Though it encompasses a wide variety of organizations, Studer Group's data suggest that every 1% reduction in turnover saves direct costs of $250,000 and $500,000 in indirect costs.
Pat Jordan, chief operating officer at Newton-Wellesley Hospital in Newton, MA, 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," Jordan said. Jill Fuller, CEO of Prairie Lakes Health 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.
"We had high turnover at one time and we had to change our work environment. HR doesn't do that by themselves. You make your organization a place where people want to work."
Prairie Lakes, a relatively short distance from Sioux Falls, a much larger city, had an unacceptably high 22% annual turnover rate in 2002. "We just compared ourselves to our peer group in South Dakota. Our turnover was 5.8% in 2008 vs. 18% for our peer group," Fuller said. "So that tells us that our good results are not just a result from the poor economy."
Fuller credits innovations in the work environment for the lion's share of the gains but admits the hospital tries to make sure salaries are within 3% of nearby Sioux Falls. For instance, Prairie Lakes is rolling out flexible work arrangements for managers as well as directors, to help retain good people.
Focusing on retention and reduction of turnover doesn't mean that low performers should be allowed to hang around, says Studer. Quite the contrary, in fact. But how can firing low performers help with turnover?
It's a hard concept to integrate into an organization. Studer related a story about a hospital he worked with recently that told him there were 258 people out of 6,000 who weren't meeting performance targets over a long period of time. Of those 258, managers had only 50% with documentation about their low performance.
"They said they were confused. How do you lower turnover and also get rid of people? It's a good point. So we have them identify the people and talk about how much time to give them to meet performance expectations or have them out. Then we add some time onto that."
Until then, these underperformers don't count against turnover calculations for the managers. Using this philosophy, he says, an organization can come as close as possible to ensuring that the turnover they do experience is good turnover.
"CEOs own mortality and length of stay," Studer said, "and they have to own turnover."
Philip Betbeze is the senior leadership editor at HealthLeaders.