NURS 523 Week 8 Resource Management Paper Final Draft Example

Resource Management Paper: Spending to Keep Nurses, a Retention Bundle and Internal Float Pool to Cut Contract Labor on a Medical-Surgical Service Line

Abstract

A 180-bed medical-surgical service line in a community hospital paid staffing agencies $6.2 million for contract nurses over the past twelve months, while its registered nurse turnover rate reached 22%, or about 92 resignations among 420 nurses. This paper analyzes contract labor as a resource management problem whose root cause is turnover, using recent evidence on turnover costs, retention strategies and staffing models. It proposes a two-part plan: a retention bundle of a strengthened nurse residency, structured mentorship and intentional rounding by leaders, costing about $326,000 a year, and a 12-FTE internal float pool funded by converting 40% of contract hours to the hospital's own premium-paid nurses. In a base case that assumes turnover falls to 16% and contract conversion reaches 40%, the plan yields a net annual benefit of about $2.46 million. In a conservative case, with turnover falling only to 19% and conversion reaching 25%, the net benefit is still about $1.23 million. The paper recommends a phased implementation over 18 months, owned by the service line director, with quarterly reporting of turnover, contract hours, float pool fill rates and nurse-sensitive outcomes. Keywords: nurse turnover, contract labor, retention, float pool, resource management

Introduction

Nursing labor is the largest controllable expense in most hospitals, and over the past several years a growing share of that expense has gone to contract nurses hired through travel and staffing agencies. Contract nurses filled essential gaps during periods of crisis, but their cost is high, and when they become a permanent part of a staffing plan, they signal a deeper problem: the organization is not keeping enough of its own nurses. Jones et al. (2019) describe resource management as matching resources to need at the lowest cost consistent with quality, and by that definition a service line that spends millions each year replacing nurses it could have retained is managing its resources poorly.

This paper examines contract labor spending on a composite five-unit medical-surgical service line of 180 beds. Last year the service line spent $6.2 million on contract registered nurses, about 18% of its nursing labor budget, and its turnover rate among 420 registered nurses was 22%. The paper argues that contract labor is best reduced not by negotiating lower agency rates but by investing part of that spending in keeping nurses and in building internal flexibility. It reviews evidence on the cost of turnover and of contract staffing, evaluates retention strategies and internal float pools, presents a financial analysis of a combined plan, and offers recommendations, risks and measures.

The Cost of Nurse Turnover

The cost of turnover is easy to underestimate because it is spread across many budget lines. A departing nurse's salary disappears from the payroll, while the costs of recruiting, onboarding, orientation, precepting, lost productivity and temporary coverage appear elsewhere. Razmpour et al. (2025) developed the RETAIN Framework to capture those costs systematically, mapping each step of the turnover process, categorizing direct and indirect costs, analyzing the financial tradeoffs of different backfill strategies and combining the results in a dashboard that allows scenario testing.

In the follow-up study, Razmpour et al. (2026) put the framework to work in an academic medical center with seven hospitals, where nearly a quarter of the medical-surgical workforce left during 2023. The average opening stayed unfilled for close to five months, agency and travel nurses worked roughly three of every four uncovered hours, and the full cost of a departure, with contract replacement included, came to $85,498, or about $27.9 million for the year. The organization used the findings to support a $150 million investment in nurse salaries. The study changes the question leaders ask: the real choice is between paying to keep nurses and paying, more heavily, to replace them. Other estimates are lower but still substantial. Pascale et al. (2026) start from a lower published figure, roughly $56,000 to replace one nurse, and then add a cost that rarely reaches the ledger: teams that keep losing members communicate less well, and their patients fall more often.

For the composite service line, this paper uses a conservative estimate of $70,000 per turnover event, between the published figures and below the RETAIN result, because the service line's contract rates are somewhat lower than those in the academic center. At 92 resignations a year, turnover costs the service line about $6.4 million, which is close to its contract labor spending and reflects the same underlying problem.

The Hidden Costs of Contract Labor

Contract labor costs more than its hourly bill rate suggests. Contract nurses need orientation to each unit, may be unfamiliar with local policies and equipment, and often leave before they become fully efficient. Evidence from the operating room illustrates the efficiency cost. When Bendich et al. (2025) looked back over a year of hip replacements at one busy center, procedures that relied on travel scrub technologists, circulators or first assistants ran longer and wasted more opened supplies than procedures staffed by employees, at a time when each operating room minute was valued at $46.

Contract staffing may also affect patient flow. Tracking one health system through the pandemic, Polancich et al. (2023) saw average stays shorten as its own registered nurse workforce grew and lengthen as travel nurse numbers rose. Infection and fall counts showed no significant link to either group, so the data do not suggest travel nurses caused harm; still, every extra inpatient day is costly for a hospital whose payment is fixed by diagnosis. Whatever the source of the nurses, total hours must be protected. In the Japanese multicenter data analyzed by Hayashida et al. (2026), ward patients whose daily nursing care dropped under four hours were noticeably more likely to die in the hospital than patients who received four and a half to five hours. Reducing contract labor must therefore never mean reducing hours below safe levels; it must mean filling those hours more sustainably, with nurses who know the units, the patients and one another.

Evidence for Retention Strategies

Several low-cost strategies have shown promise in retaining nurses, especially in the first two years of practice when turnover is highest.

Nurse Residency Programs

Nurse residency programs support newly licensed nurses through their first year with structured education, peer support and reflection. Mastro et al. (2026) analyzed national data on 3,153 nurses in Vizient/AACN Nurse Residency Programs and found no statistically significant difference in composite transition scores between a cohort trained in person before the pandemic and a cohort trained virtually during it, after adjusting for time and education. This finding suggests that residency programs can be delivered in flexible formats without losing their benefit, which lowers their cost.

Mentorship

Mentorship extends support to new hires beyond the residency curriculum. In a six-month program on three hospital units, Volk et al. (2025) paired 12 experienced nurses with 13 new hires. Measured job satisfaction, burnout and engagement did not change significantly, but none of the participating nurses left during the project, compared with an 18.6% turnover rate among nonparticipants. The study was small, but the main cost of the program was protected time for mentors, which makes it inexpensive relative to the cost of one resignation. For a service line losing 92 nurses a year, even a modest effect on first-year turnover would repay the program many times over.

Intentional Rounding by Leaders

Retention also depends on whether new nurses feel seen by leaders. Failla et al. (2026) described a Magnet hospital whose one-year retention rate for newly licensed nurses fell below its 92% benchmark, and whose residency steering committee responded with an initiative called intentional rounding, in which leaders checked in with residents on a planned schedule. The authors reported that turnover improved and suggested that professional development practitioners adapt the approach. Rounding requires leaders' time rather than new spending, making it an easy addition to a retention bundle.

Evidence for Internal Float Pools

Even with better retention, a service line will have gaps from leaves, census swings and the vacancies that remain. An internal float pool, made up of the hospital's own nurses trained to work on several units and paid a premium for flexibility, can fill many of those gaps at lower cost than agency nurses. Evidence suggests that the type of float nurse matters. In a study of 25 inpatient units in three hospitals, Stephens et al. (2026) found that nurses from a dedicated float pool were linked to fewer pressure injuries and fewer bloodstream infections from central lines, whereas nurses borrowed from other units for a shift showed no such link. A dedicated, well-oriented float pool is therefore a different resource from pulling nurses from one unit to another, and it may support quality as well as cost.

Financial Analysis

The plan combines a retention bundle with an internal float pool. Jones et al. (2019) recommend that program proposals state their costs, expected benefits and assumptions clearly and test the results under less favorable conditions, so the analysis below presents a base case and a conservative case.

Costs of the Retention Bundle

Mentorship requires protected time for 40 mentors for two hours a week at an average of $45 an hour plus 28% benefits, or $239,616 a year. A half-time residency and retention coordinator at $50 an hour costs $66,560 with benefits. Training materials and the rounding program's tracking tools add $20,000. The bundle therefore costs about $326,176 a year.

Savings From the Float Pool

At an average agency bill rate of $110 an hour, the service line's $6.2 million in contract spending bought about 56,364 hours last year. Converting 40% of those hours, about 22,545, to an internal float pool requires about 12 FTEs at 1,872 productive hours each. Float pool nurses would earn $50 an hour, an $8 premium over the staff average, or $64 an hour with benefits. Covering the 22,545 hours internally would cost $1,442,909 instead of $2,480,000, a saving of $1,037,091 a year.

Savings From Reduced Turnover

If the retention bundle lowers turnover from 22% to 16%, the service line would see about 25 fewer resignations a year. At $70,000 per turnover event, that avoids $1,750,000 in turnover costs.

Net Benefit Under Two Scenarios

Even the conservative case returns nearly four dollars for each dollar spent on the retention bundle, and the base case returns more than seven. The largest uncertainty is the turnover reduction, which depends on the bundle working as the studies suggest. For that reason, the plan's first year should be treated as a pilot with careful measurement.

Recommendations

• 1. Approve the retention bundle for all five units, with the service line director as owner. Begin the structured mentorship program and leader rounding within three months, and appoint the residency and retention coordinator within two months.
• 2. Create a 12-FTE internal float pool over nine months, recruiting first from experienced staff nurses who want schedule flexibility, with cross-training on all five units and a premium of $8 an hour.
• 3. Reduce agency contracts in step with float pool hiring, so total nursing hours per patient day never fall below the service line's staffing standard.
• 4. Offer the residency program in a hybrid format, using virtual sessions for didactic content to lower cost, consistent with evidence that format does not affect transition outcomes.
• 5. Report results quarterly to the chief nursing officer and finance, using the RETAIN approach to calculate turnover costs locally so the next budget cycle uses the service line's own figures rather than published estimates.

Stakeholders and Implementation

A plan that moves money from one budget line to another needs the support of everyone who controls those lines. Four groups matter most. The chief nursing officer and the service line director must sponsor the plan and protect its funding when the first quarter's results are mixed, as early results often are. Finance must agree to credit the savings from reduced contract hours and turnover to the plan, rather than treating the retention bundle as a new expense and the contract reductions as unrelated good news. Human resources must build the float pool position, including the premium, cross-training requirements and scheduling rules, and must provide the turnover data the RETAIN approach requires. Finally, staff nurses must see the plan as theirs. Unit practice councils should help design the mentorship program and the rounding questions, and float pool nurses should help set the orientation standards for each unit.

Implementation should be phased over 18 months. In the first three months, the service line would appoint the coordinator, train mentors, begin leader rounding with first-year nurses, and set baseline measures. In months four through nine, the float pool would be recruited and oriented in groups of four, with contract positions released only as float pool nurses become available. In months ten through eighteen, the plan would run at full scale, and leaders would compare results with the baseline every quarter. Jones et al. (2019) note that managers should monitor new programs against their budget assumptions and revise them when results differ, so the 18-month point should include a formal review that decides whether to expand the float pool, adjust the premium or change elements of the retention bundle. Communication with staff and physicians throughout the 18 months should be honest about the goal: the plan exists to reduce dependence on agencies by keeping and supporting the hospital's own nurses, not to cut nursing hours.

Risks and Measurement

The plan carries three main risks. First, retention strategies may produce smaller effects than expected, which the conservative case addresses but which leaders should watch closely in the first year. Second, the float pool may struggle to recruit, especially if staff nurses see the premium as too small for the added complexity of working across units; the premium can be adjusted using the savings from reduced contract hours. Third, the plan could be undermined if contract cuts move faster than float pool hiring, leaving units short. The third risk is the most serious because of its effect on patients, and the safeguard is a firm rule that contracts are reduced only after float pool nurses are oriented and available.

Measurement should cover cost, workforce and quality. The quarterly dashboard should report contract hours and spending, float pool fill rate, first-year and overall registered nurse turnover, vacancy duration, nursing hours per patient day, and nurse-sensitive outcomes including injurious falls, hospital-acquired pressure injuries and urinary catheter infections. Targets for the first year are turnover at or below 19%, contract hours down at least 25%, float pool fill rate above 80% of requests, and no decline in nursing hours per patient day or quality measures.

Conclusion

The service line's $6.2 million contract labor bill is the visible cost of an invisible problem: it loses nearly a quarter of its nurses each year and pays premium rates to replace them. Recent research shows that turnover costs far more than leaders often assume, that contract staffing carries hidden efficiency and flow costs, and that inexpensive strategies such as mentorship, flexible residency programs and leader rounding can improve retention. A dedicated internal float pool can fill remaining gaps at lower cost and may support quality. A combined plan costing about $326,000 a year is projected to return a net benefit of $1.2 million to $2.5 million annually. Managed as a measured pilot with clear owners and safeguards for staffing levels, the plan represents sound stewardship of the service line's most important resource, its nurses.

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

Failla, K. R., Wren, S., Granados, E., & Kendal, C. (2026). Use of intentional rounding to increase new licensed nurse retention. Journal for Nurses in Professional Development, 42(1), 38-41. https://doi.org/10.1097/NND.0000000000001205

Hayashida, K., Moriwaki, M., & Murakami, G. (2026). The association between actual nursing care hours and in-hospital mortality in Japanese acute care hospitals: Evaluating a practical safety threshold. Policy, Politics, & Nursing Practice. Advance online publication. https://doi.org/10.1177/15271544261473221

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

Mastro, K. A., Giordano, N. A., Polomano, R., Smith, B. A., Book, K., Ballinghoff, J., & Mattioni, C. (2026). A comparison of transition experiences and practice readiness of newly licensed nurses with in-person and virtual residency training: A national observational study. Nurse Education in Practice, 91, Article 104721. https://doi.org/10.1016/j.nepr.2026.104721

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

Polancich, S., Miltner, R., Montgomery, A., Dick, T., Poe, T., Brown, D., & Patrician, P. A. (2023). Quality matters: Examining the impact of nurse staffing challenges on clinical outcomes. Journal of Healthcare Management, 68(3), 174-186. https://doi.org/10.1097/JHM-D-22-00170

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

Razmpour, O., Pappas, S., Lee, D. K. K., Mian, S., Bouvier, M., & Cimiotti, J. P. (2025). Advancing the calculation of nurse turnover costs: A methodological approach using the RETAIN framework. Nursing Outlook, 73(6), Article 102517. https://doi.org/10.1016/j.outlook.2025.102517

Stephens, C. P., Norton, J., Walker, D., & Verklan, M. T. (2026). Float nurses' association with nurse-sensitive indicators: A cross-sectional study. Journal of Nursing Care Quality, 41(4), 336-342. https://doi.org/10.1097/NCQ.0000000000000948

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