NURS 523 Week 2 Discussion Board Forum 1 on the Cost of Nurse Turnover Example

Retention Belongs in the Budget: Counting the Full Cost of Registered Nurse Turnover

NURS 523 Financial and Resource Management for Nurse Leaders, Discussion Board Forum 1

Thread by [Student Name]

The unit example and the classmates replied to are composites written for a model discussion.

At our last quarterly budget review, my manager's largest variance was not supplies or overtime. It was contract labor, more than 40% over budget, driven by four resignations in six months. The finance partner asked what the unit planned to do about the overrun. Nobody asked what the unit planned to do about the resignations. That exchange shows a problem in how many units budget: we track the cost of replacing nurses in one line and invest almost nothing in keeping them in another. The overrun was treated as a pricing problem, a matter of negotiating better agency rates, when it was really a staffing stability problem with a price tag attached.

Jones et al. (2019) explain that managers make better decisions when they understand the full cost of an activity, including indirect costs that do not appear on the line where the decision is made. Turnover is a clear example. When a nurse resigns, the salary line actually falls for a while, which can make the loss look like a saving. The real costs appear elsewhere: recruiting, orientation, precepting time, lost productivity and, above all, premium pay for the travel or agency nurses who cover the vacancy.

A recent study put a number on that hidden cost. Using an event-level costing method, Razmpour et al. (2026) traced every expense linked to 360 turnover events among 1,501 medical-surgical nurses at seven hospitals in an academic medical center during 2023, a 24% turnover rate. Vacancies took an average of 21.7 weeks to fill, and contract labor covered about three quarters of the backfill hours. With contract replacement, each resignation cost $85,498, for a total of $27.9 million in one year. The organization used those results to justify a $150 million salary investment. When each resignation costs more than most nurses earn in a year, retention stops being a soft goal and becomes one of the largest cost controls a nurse manager has.

Smaller programs can also pay for themselves. Volk et al. (2025) evaluated a six-month mentorship program pairing 12 experienced nurses with 13 new hires on three hospital units. The program did not significantly change measured job satisfaction or burnout, but none of the participants left during the project, while nonparticipants on the same units turned over at 18.6%. A mentorship program costs mainly protected time for mentors, which on most units would be repaid by preventing a single resignation. The study was small and ran for only six months, so it cannot prove that mentorship caused the difference, but the size of the gap and the low cost of the program make it a reasonable test for any unit with high first-year turnover.

My proposal is simple: units should carry a retention line in the operating budget, funded at a level tied to the unit's turnover cost, for mentorship, flexible scheduling and professional development, and managers should report retention savings beside contract labor spending. Jesus asked, "For which of you, desiring to build a tower, does not first sit down and count the cost?" (English Standard Version Bible, 2001/2016, Luke 14:28). Counting the full cost of turnover is the first step toward spending to prevent it.

Reply to Kendra

Kendra, your careful observation that your unit's falls increased during the months when most shifts were covered by agency nurses connects turnover to quality in a way that strengthens the financial argument. A recent article makes that same link explicitly. Pascale et al. (2026) note that the direct cost of replacing one registered nurse has been estimated at about $56,000, varying by region and specialty, and argue that turnover also disrupts communication and teamwork in ways that can raise adverse outcomes such as inpatient falls. If that is true on your unit, the financial cost of turnover includes not only recruiting and contract pay but also the cost of treating injuries from falls that a stable, familiar team might well have prevented. Jones et al. (2019) encourage managers to consider such indirect costs whenever they evaluate a staffing decision, and a fall with injury can add days to a patient's stay that the hospital is not paid for. It would be worth checking whether your quality department can match each fall event to the staffing mix on the shift when it happened. Even a rough comparison between shifts with mostly core staff and shifts with mostly agency staff could give your manager a stronger case for retention funding than turnover numbers alone. Have you had a chance to see whether the falls clustered on particular shifts or with particular staffing patterns? If they did, that pattern would be worth bringing to your next budget meeting alongside the contract labor figures.

Reply to Brian

Brian, I really appreciate your point that travel nurses kept your hospital open during the worst staffing months and that we should not treat them as the villains of the budget. I agree completely, and my concern is with relying on them as a long-term plan, not with the nurses themselves. Recent evidence suggests that the costs of heavy travel staffing go beyond the hourly rate. In a retrospective review of 947 total hip replacements at a high-volume center, Bendich et al. (2025) examined how operating room efficiency and wasted supply costs differed when travel staff rather than full-time staff filled roles such as scrub technologist and circulating nurse, using an operating room cost of $46 per minute. Their point was that consistent teams work faster and waste less, so the price of temporary staffing includes efficiency losses that never appear on the labor invoice. That supports your argument that travel nurses filled a real and urgent need, while also suggesting why a hospital would want to reduce dependence on them over time. Jones et al. (2019) describe the decision between buying a service and building internal capacity as a classic make-or-buy comparison, and an internal float pool is one way to build that capacity. Has your hospital considered converting some of its travel budget into a premium-paid internal float pool for its own nurses? Even a small pilot, perhaps covering one service line for six months, would show whether the savings and the steadier teams appear in your own numbers.

References

Bendich, I., Ford, C., Christy, M., & Nunley, R. M. (2025). Travel staff in total hip arthroplasty is associated with increased operating room costs and decreased efficiency. The Journal of Arthroplasty, 40(S1), S44-S48. https://doi.org/10.1016/j.arth.2025.03.053

English Standard Version Bible. (2016). Crossway. (Original work published 2001)

Jones, C. B., Finkler, S. A., Kovner, C. T., & Mose, J. N. (2019). Financial management for nurse managers and executives (5th ed.). Elsevier.

Pascale, A., Welch, T. D., Smith, T. B., & Warshawsky, N. E. (2026). Reducing nurse turnover: A key strategy for lowering patient falls and costs. Nursing Administration Quarterly, 50(2), 119-122. https://doi.org/10.1097/NAQ.0000000000000709

Razmpour, O., Pappas, S., Bouvier, M., Mian, S., Lee, D. K. K., & Cimiotti, J. P. (2026). Operationalizing the RETAIN framework: Calculating the cost of nurse turnover in practice. Nursing Outlook, 74(2), Article 102694. https://doi.org/10.1016/j.outlook.2026.102694

Volk, I., Hultquist, T. B., & Struwe, L. (2025). Combating nurse turnover: A cost-effective mentorship intervention. The Journal of Nursing Administration, 55(11), E45-E50. https://doi.org/10.1097/NNA.0000000000001661