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/JONA na341206-2 December 2, 2004 4:24

JONA
Volume 34, Number 12, pp 562-570

C 2004, Lippincott Williams & Wilkins, Inc.

The Costs of Nurse Turnover

Part 1: An Economic Perspective

Cheryl Bland Jones, PhD, RN

Nurse turnover is costly for healthcare organiza- relocate for reasons that may not be responsive to in-
tions. Administrators and nurse executives need a re- tervention. Under such conditions, nurse and health-
liable estimate of nurse turnover costs and the origins care executives may direct very little attention to-
of those costs if they are to develop effective mea- ward reducing nurse turnover. However, when nurse
sures of reducing nurse turnover and its costs. How- turnover occurs, there are several potential finan-
ever, determining how to best capture and quantify cial consequences for HCOs. First, there is loss of
nurse turnover costs can be challenging. Part 1 of future returns that would have accrued from past
this series conceptualizes nurse turnover via human investments in nurses. Second, there are short-term
capital theory and presents an update of a previ- productivity losses and instability in the workforce.
ously developed method for determining the costs Third, there are financial losses incurred above and
of nurse turnover, the Nursing Turnover Cost Cal- beyond routine costs when supplemental or tempo-
culation Method. Part 2 (January 2005) presents a rary registered nurse (RN) staff are employed, beds
recent application of the methodology in an acute are closed, patients are deferred, or employed nurses
care hospital. are asked to work overtime to fill vacancies caused
by RN turnover. Fourth, investments must be made
Turnover rates and the more obvious costs of nurse to orient and train newly hired nurses, and losses are
turnover may be tracked in healthcare organizations incurred while newly hired RNs become fully pro-
(HCOs), but rarely are data on the full scope of ductive. Fifth, it may be difficult to acquire sufficient
turnover or its costs available and analyzed. This numbers of RNs and patient-nurse ratios may in-
lack of information makes it difficult for nurse and crease such that care delivery becomes unsafe, qual-
healthcare executives to fully understand the true ity of care suffers, or nurses become overburdened
consequences of turnover in HCOs, and may com- or burned out. In essence, nurse turnover consumes
plicate efforts to fill nurse vacancies and efficiently resources that could be directed at core business ac-
allocate organizational resources. Consequently, the tivities, such as quality improvement programs, and
identification of adverse organizational effects may staff development or nurse retention activities.
be impeded and the financial performance of HCOs In today’s competitive healthcare environment,
may suffer.1,2 administrators must recognize the impact that nurse
turnover has on the satisfaction and safety of nurses
and other clinicians, the satisfaction and retention
Nurse Turnover and its Costs
of healthcare customers, and customer perceptions
Even under ideal circumstances, HCOs may expe- of quality of care. A recent survey3 examining em-
rience some level of turnover, as nurses leave or ployee turnover and customer satisfaction in 6 differ-
ent industries—banking, computing, retail, telecom-
Author’s affiliation: Associate Professor and Health Care Sys- munications, investment management, and property
tems Coordinator, School of Nursing; Investigator, Southeast Re- and casualty insurance—reported a direct correla-
gional Health Workforce Center, Cecil G Sheps Center; The Uni- tion between customers’ perceptions of employee
versity of North Carolina at Chapel Hill.
Correspondence: University of North Carolina at Chapel Hill, turnover and customer satisfaction, which were,
CB #7460, Chapel Hill, NC 27599-7460 (cheryl jones@unc.edu). in turn, linked to customer retention or defection.

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Consumers can “vote with their feet,” making the turnover costs, but more accurate turnover cost es-
effects of turnover reach well beyond the usual ex- timates would require detailed study.
pectations of recruiting and hiring to fill vacancies. The lack of detailed nurse turnover data and
This report notes that, “The negative effects of the conflicting cost estimates have left some health-
increase in employee turnover are no longer being care administrators and researchers scrambling to
felt exclusively by human resource managers . . . It is quantify RN turnover and its costs. This informa-
apparent that consumers are directly impacted by tion would allow chief nurse executives (CNEs) and
turnover . . . as a result, turnover is now a principal HCO executives to better allocate resources aimed
concern of chief executive officers (CEOs) because it at RN retention, and to make more informed de-
directly affects the bottom line.”3 cisions about resource allocation. Further, knowl-
A study by Press Ganey4 recently reported that edge of the costs of turnover enables the CNE and
the nursing shortage affects patient satisfaction, and other executives to demonstrate potential organiza-
that nurse-patient ratios and patient satisfaction are tion savings—or costs avoided—if retention invest-
positively correlated. Given this relationship, it is ments are made.
reasonable to expect that nurse turnover may ad- RN turnover can be conceptualized within the
versely affect patient satisfaction. In spite of the re- context of the economic theory of human capital.12
ality that healthcare consumer choice is somewhat Human resource accounting methods,13 derived
limited, patients do have some choice in where and from human capital theory, provide a way to
how they receive services. If healthcare consumers operationalize human capital theory. These meth-
perceive problems with nurse turnover or quality of ods recognize and value the contributions of
care, their perceptions may influence their behaviors. “knowledge-workers”14 within organizations, and
Thus, RN turnover is not simply a human resource view employees as organizational assets that af-
issue, but can be costly in terms of dollars—human fect organizational productivity and future financial
capital losses, disruptions in the work environment, returns.15
customer loyalty, and organizational performance.
These costs make RN turnover a problem at the very Human Capital Theory
top levels of an HCO5 and affect the bottom line.3 Economists refer to the knowledge, skills, and abil-
Five previous estimates of turnover costs per ities possessed by individuals as “human capital.”16
RN, presented in Table 1, vary considerably. For Human capital is acquired by making investments
example, studies published between 1990 and 2004 to attain knowledge, skills, and abilities, such as
reported turnover costs ranging from approximately acquiring advanced education or specialized work
$10,100 to $64,000.6–10 The most recent estimates experience, or changing jobs for a higher-level po-
of RN turnover costs reported in 2003 and 2004 sition. The acquisition of human capital increases
range from $21,5149 to $31,486,10 while the high- individual and organizational productivity and pro-
est estimate of RN turnover costs, ranging from duces returns on investments.16 Human capital the-
$42,000 to $64,000, was made in 1999.8 The cal- ory (HCT) recognizes that individuals and organiza-
culation methods used to estimate turnover costs tions invest in human capital in anticipation of gains
vary, and some previous estimates are now dated, in the forms of increased productivity and financial
which makes direct comparisons difficult. Methods returns. Because the productivity of individuals is
used in some of the previous studies captured pri- difficult to measure and data on investment returns
marily visible costs, omitted some important but are more readily available, these data are typically
less visible costs of nurse turnover, were local or re- used as indicators of productivity. For example, eco-
gional in nature, and did not adequately capture the nomic studies guided by human capital theory often
current costs associated with replacing nurses who use employee wages and other financial returns as
leave. proxies for productivity. An assumption of HCT is
Table 1 also expresses per-RN turnover costs as that higher wages and other return measures are in-
a fraction of RN salary, ranging from 0.3 to 1.6. dicators of higher productivity and greater human
These results are generally consistent with rules of capital investments.16
thumb (turnover costs equal to 0.75 to 2.0 times de-
parting employee salary) noted by others.2,11 How- Human Capital: According to Whom?
ever, application of the rules of thumb or use of the Human capital can be viewed from 2 perspectives:
ratios in Table 1 at another HCO may be problem- the individual and the organization. Interestingly,
atic, given the wide range in possible turnover cost turnover may present individuals (or nurses) and or-
estimates when these rates are applied. These ratios ganizations (or healthcare executives) with multiple
may help an HCO to define a range of probable and often conflicting incentives and consequences.23

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Table 1. Previous Nursing Turnover Cost Studies


RN Turnover Ratio of Turnover
Author, Date Sample Rate, % Cost Categories $/RN Turnover Nursing Salary Cost to Salary∗ Total RN Turnover Cost

Jones, 19906,23 4 hospitals 26.8 Direct $10,098 $27,000 0.37 $0.6–$1.6 million
December 2, 2004

• Advertising and recruiting


• Unfilled positions
• Hiring
4:24

Indirect
• Orientation and training
• Decreased productivity
• Termination
Wise, 19907 1 hospital 23 • Accession costs $11,740 $38,400 0.31 $0.55–$1.3 million
Advisory board, 19998 6 hospitals N/A† Visible $42,000–$64,000 $37,000–$41,000 1.1–1.6 N/A†
• Separation
• Vacancy
• Recruiting
• Hiring
• Orientation
Invisible
• Lost productivity
• Learning curve
Stone et al, 20039 4 units in each N/A† • Direct $21,514 N/A† N/A† N/A†
of 6 countries • Indirect
Waldman et al, 200410 1 hospital 29 • Selection $23,487–$31,486 $32,000∗ 0.7–1.0 $6.1 million–$8.2 million
• Hiring
• Training
• Termination
• Reduced productivity

Estimated from numbers provided in report.

Not available in report.

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These differences become more apparent when hu- quality and stable workforce, such as the creation
man capital theory is considered. of a rewarding work environment, and compen-
From the individual perspective, human capital sation plans that reward individual human cap-
reflects the knowledge and skills embodied within ital investments and stable performance behav-
a person that result from prior investments in edu- iors. Returns can accrue to the organization in the
cation, training, experience, and previous jobs, all form of increased revenues, organizational perfor-
of which, theoretically, make the person more pro- mance, and/or reputation. An organization invest-
ductive and able to command higher wages than ing in nurses through training and other mechanisms
others without the same complement of human would seek to retain nurses through such activities
capital.12,16–18 Individuals make decisions about as raising wages to ensure a return on past invest-
their own human capital investments based on their ments. Conversely, nurses have less incentive to leave
perceptions of themselves relative to the market, ie, if their nursing knowledge and skills are recognized
the knowledge and skills they can offer in the mar- and valued by the HCO.
ket, the knowledge and skills they could offer with
additional investments, and the amount the market
Conceptualizing Nurse Turnover Vis-à-vis
is willing to pay for their complement of human
Human Capital Theory
capital.
Individuals invest in human capital in various Nurse turnover occurs when nurses terminate their
ways. For example, they make outlays of time and employment within an employing HCO (external
money to pay tuition for additional schooling, or to turnover), or when they change jobs or positions
gain experience in a new area of specialization, and with their employing HCO (internal turnover).
they change jobs and/or relocate, all in anticipation When nurses change jobs or move to a different posi-
of future returns in excess of the returns expected if tion within their employing organization, little effort
they made no additional investments. Returns may is generally directed at understanding or reducing
accrue to the individual in the form of higher wages, turnover because it is not viewed as an organiza-
the potential for long-term wage increases or lifetime tional loss. When nurses change jobs within their
earnings, increased benefits, and future job growth employing HCO, it suggests that there are oppor-
and opportunities. Individual investments also ben- tunities for professional growth and advancement
efit the organizations where nurses work as well as available to them with their employing HCO. For
society, which gain from nurses’ unique contribu- example, a nurse may change jobs within a HCO to
tions in the form of nursing knowledge, skills, and gain experience in a specialty area, to advance to a
services. management or educator role, or to work in an area
From an organizational perspective, human cap- with more appealing working conditions. However,
ital contributes to collective or group knowledge, losses may result from internal RN turnover, if it
skills, and abilities of employees, including their ed- costs more to replace the nurse who changes jobs
ucational backgrounds, expertise, and relationships internally than it does to fill the vacancy he or she is
that make the organization more productive and in- filling.
crease financial performance. This aggregate of hu- Turnover is viewed in HCT as an individual in-
man capital is sometimes called “social capital,” vestment for which the individual or organization
whereby the interactions in organizations are valued expects a return. For example, when a nurse decides
based on their contribution to organizational per- to change jobs or employers, he or she incurs the op-
formance and returns.19 Organizations may make portunity costs of job search and information gath-
numerous investments in employees, such as: a) de- ering, moving, and other personal losses that accom-
voting time and money to seek out and hire indi- pany changing jobs, and potential short-term salary
viduals with certain knowledge, skills, and abilities; interruptions. By changing jobs and/or employers,
b) training new employees to familiarize them with nurses are trading off the costs and benefits of staying
the organization; c) socializing new hires into their in their present job and organization with the costs
work unit; d) structuring competitive benefits; e) of- and benefits of leaving, relative to anticipated long-
fering competitive salaries; f) providing on-the-job term returns on their human capital. While nurses
training to educate employees in new techniques may be unaware of all of the costs and benefits of
and technology; and g) paying tuition for employees changing jobs, they may be willing to incur vari-
who gain additional education and increase organi- ous short-term costs if doing so offers the promise
zational capacity. of long-term gains in improved working conditions,
Organizations also invest through ongoing re- career growth and advancement opportunities, job
tention efforts targeted at maintaining a high- satisfaction, compensation, and life fulfillment.20,21

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In contrast, nurses who perceive better opportuni- cause of the departure of colleagues or disruption of
ties by remaining in their present job or organiza- the group; and/or nurses who had no intentions of
tion than elsewhere are likely to stay in their current leaving may do so because there are greater job op-
job or move to a different job within their employing portunities in the market.22,23 The result may have
organization, thereby avoiding the costs of changing detrimental effects on the quality of care, patient
jobs. and staff safety, and the cost-effectiveness of care
While turnover—and particularly external turn- delivery.
over—is typically viewed as an organizational cost,
it can also yield organizational benefits. HCOs may
Human Resource Accounting Methods
benefit from nurse turnover in that it provides oppor-
tunities to gain staffing flexibility, acquire an infu- Human capital theory has been used to derive hu-
sion of new ideas and innovations, and achieve cost man resource accounting methods13,24 for valuing
savings from the lower salaries and fringe benefits the contributions of “knowledge-workers”14 within
paid to newly hired RNs. Also, when nurses leave, organizations and examining the costs of employee
it provides HCOs the opportunity to replace depart- turnover.7,13 These methods use micro-costing, or
ing nurses with others who may perform at a higher accounting, techniques to operationalize HCT and
level or be a better “fit” with the organization’s “regard investment in nurses in the same way as capi-
needs and philosophy, and enables the organization talization of buildings, equipment, and inventory.”15
to hire new RNs with experience in a new service These methods also provide a way to examine the
area. investments made in employees who leave, based
Usually, however, nurse turnover represents a on the assumption that employee investments are
cost to HCOs that is especially challenging when valid if the returns—in terms of productivity and/or
nursing shortages exacerbate RN turnover and its revenues—exceed the total investment.
costs. Nurses’ working conditions often suffer un- Human resource accounting methods are appro-
der shortage conditions, affecting nurses’ job satis- priate for calculating the costs of nurse turnover be-
faction, morale, and productivity21 ; nurses, in turn, cause they treat the costs of replacing nurses who
may be more apt to turnover in search of improved leave as human capital losses that decrease future re-
working conditions and/or higher pay.20 Shortages turns on prior human capital investments. Replace-
also tend to create vacancies within HCOs and new ment costs include the costs of recruiting, selecting,
employment opportunities for nurses who are con- hiring, and developing a new employee to reach a
templating a job change. As nurses turnover, fewer given performance level.13 These costs relate to the
nurses may be available to staff units, and those who major constructs of HCT. For example, replacement
remain have to work harder and/or longer hours, costs reflect all investments that an HCO has made
sometime on unfamiliar units. Healthcare adminis- in hiring nurses to increase workforce capacity and
trators obviously must address RN turnover to meet productivity. This approach assumes that if replace-
staffing and patient care demands and ensure ongo- ment costs (or past investments) are known, these
ing operations, but they may do so by employing costs can be used to determine returns on invest-
increased numbers of temporary or agency nurses to ments, or the profits or losses that result from prior
fill RN vacancies. Nurses who remain in the HCO investments. The incentive for organizations is to re-
work side-by-side with temporary nurses who are tain employees because of prior investments and the
brought in to meet staffing needs, but who are of- potential loss of future returns from those invest-
ten paid more than permanent nursing staff. Even ments when an employee leaves.
if the temporary RN does not receive a higher total Human resource accounting methods recog-
compensation than permanent staff (ie, permanent nize that turnover-related costs may be incurred by
staff may receive benefits not available or provided HCOs for the obvious reasons of recruiting and hir-
to temporary nurses), the resulting environment ing new nurses. However, nurse turnover may be
may breed even greater discontent and dissatisfac- costly for less obvious reasons, such as the inability
tion among permanent staff. to hire comparably qualified RNs to replace those
Thus, the phenomenon of nurse turnover, espe- who leave, and even if comparably qualified RNs
cially during periods of shortage, may be charac- are available, a newly hired RN will need time to be-
terized as one in which turnover begets turnover. come familiar with the organization and processes.
For example, nurses may change jobs or leave the When an RN leaves an HCO, he or she also takes
workforce due to increased job stress, dissatisfac- specific knowledge of the HCO to a new employer,
tion, burnout, or other factors; nurses may leave be- which may mean a loss of “competitive advantage”

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to the original HCO over the short or long run. Ad- categories, calculation methods, and data elements
ministrators may be concerned about the turnover were modified based on the expert panel recommen-
of employees with knowledge, skills, and training dations.
that are specific to the organization, and should be Table 2 provides an overview of the updated
willing to invest in employee retention.12 NTCCM, with 2 broad categories redefined as Pre-
From an economic perspective, both the behav- hire and Post-hire nurse turnover costs. Figure 1 il-
ior of employees and organizations would suggest lustrates conceptually the relative periods of time
that low turnover should be associated with higher over which nurse turnover costs are presumed to
wages, and vice versa, all things being equal.20 This accrue. All of these NTCCM costs represent invest-
does not mean that individuals will change jobs ments that an HCO makes to put nursing staff mem-
solely based on wages, or that raising wages will bers in place and preserve or improve organizational
retain all employees in organizations. However, it productivity. The organization makes these invest-
does suggest that individuals may base turnover de- ments in anticipation of recovering those costs—in
cisions on the desire for higher wages over the long the form of future returns on investment—during the
run, and organizations concerned with turnover will tenure of the RN staff member. An HCO’s return on
look for a wage that maximizes employee retention nurse investments will depend on the nurse’s condi-
and minimizes overall costs. tional value (ie, the value of potential services nurses
can render) and the nurse’s length of tenure with the
HCO.13
The Nursing Turnover Cost Calculation
The updated NTCCM reconceptualizes nurse
Methodology
turnover costs as occurring both before (Pre-hire)
The Nursing Turnover Cost Calculation Methodol- and after (Post-hire) a new nurse is hired to replace
ogy (NTCCM) was developed over a decade ago6,25 nurses who leave, rather than the original catego-
to calculate the costs of nurse turnover by identify- rization of direct and indirect costs. The major cat-
ing the major cost components of replacing nurses egories of the NTCCM were renamed to avoid con-
who leave and estimating total and per-RN turnover fusion with economics and finance meanings of the
costs. The original NTCCM (components of which terms “direct” and “indirect,” and to reflect the tim-
are illustrated in Table 1) was based on the work of ing of the turnover cycle, and the fact that direct
Hall24 and Hoffman.26 This methodology defined costs (ie, “visible” costs that can be traced to a spe-
the 2 broad categories of nurse turnover costs as di- cific activity) and indirect costs (ie, “invisible” costs
rect and indirect. Direct costs included advertising that cannot be traced to a specific activity but are
and recruiting costs, the costs of unfilled RN posi- incurred generally across multiple activities)13 occur
tions, and hiring costs; indirect costs included ori- across all cost categories of the revised NTCCM.
entation and training costs, the costs of decreased Pre-hire costs of the NTCCM are incurred by
new RN productivity, and termination costs. Using an HCO during the process of recruiting new RNs
human resource accounting methods, total and per to replace nurses who leave, and occur prior to the
RN turnover costs were calculated for each of the 6 time that the new nurses are employed on staff. Pre-
categories. hire nurse turnover costs include: (1) advertising and
An updated version of the NTCCM recently was recruiting, or the obvious costs to market open posi-
used to measure nurse turnover costs and will be dis- tions; (2) vacancy, or losses that are incurred while
cussed in Part 2 of this series. The NTCCM was up- attempting to fill open or vacant positions resulting
dated in several ways. First, NTCCM costs and cost from RN turnover; and (3) hiring, or costs that are
categories were refined by identifying relevant omit- required to bring a new nurse on staff.
ted costs through an extensive search of the nurs- Post-hire costs are incurred after new nurses are
ing, healthcare, and business literature. Second, new hired to fill RN vacancies, but prior to an employed
calculation methods were developed and defined to nurse turning over. Posthire nurse turnover costs in-
represent new nurse turnover costs and cost cate- clude costs associated with (1) orientation and train-
gories. Third, an expert panel (composed of finan- ing while newly hired RNs become familiar with or-
cial experts with knowledge of microcosting tech- ganizational policies and procedures; (2) new RN
niques, economics experts in human capital theory, productivity, or costs incurred by the HCO during
and nurse researchers and practicing nurse execu- the period of time required for newly hired nurses to
tives with knowledge of nurse turnover and health- become 90% productive; (3) preturnover produc-
care financing) evaluated new cost categories, calcu- tivity, a new cost category that reflects productivity
lation methods, and data elements. The costs, cost changes (for individuals and workgroups) that may

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Table 2. Pre-Hire and Post-Hire Costs of the Updated Nursing Turnover Cost Calculation
Methodology (NTCCM)
Pre-Hire Costs: Costs incurred during the recruitment and Post-Hire Costs: Costs incurred after new RNs are employed to
hiring of RNs to fill RN turnover vacancies. fill RN turnover vacancies.

Advertising and recruiting: Costs associated with attracting Orientation and training: Costs incurred while familiarizing
new RNs to fill vacancies caused by prior RN turnover. new RNs with policies and procedures to prepare them to
• Recruitment personnel salaries and expenses fill RN vacancies.
• Supplies • Training personnel salaries and expenses
• Job fairs, seminars • Supplies
• Student visitation days • Equipment
• Advertising • Preceptors
Vacancy∗ : Costs incurred while attempting to fill open Decreased new RN productivity: Costs incurred during the
positions that result from RN turnover and staff time required by new RNs to become 90% as productive as
shortages. seasoned RNs and assume a patient care assignment
• Temporary nurses expected of RN staff.
• Overtime • New RN productivity during “learning” period
• Closed beds • Supervisor/co-worker productivity†
• Productivity of unit staff† Decreased pre-turnover productivity† : Costs incurred during
• Patient deferrals† the period immediately before turnover occurs.
• Adoption of new staffing programs† • Departing RN†
Hiring: Costs incurred once a prospective RN employee • Co-workers†
enters the interview process or has accepted a position • Supervisor†
within a healthcare organization to fill an RN turnover Termination: Costs that are incurred upon the departure of an
vacancy. RN employee.
• Interviewing personnel time, salaries, and expenses • Exit interview personnel time, salaries
• Employment processing • Supplies and expenses
• Bonuses • Unused vacation and sick time
• Search firm costs† • Early retirement†
• Background checks†

RN, registered nurse.



Category renamed (from “Unfilled Positions”) in updated NTCCM.

New costs or category added to update NTCCM.

occur during the 3-month period immediately be- costs in this manner helps to identify the sources and
fore turnover occurs; and (4) termination, or costs magnitude of nurse turnover costs.
incurred by a HCO upon an RN’s resignation and
departure.
Conclusions
Several steps were involved in the process by
which the updated NTCCM was employed. A data Administrators in HCOs experiencing nurse
collection tool was developed to facilitate data col- turnover are faced with trading off the costs of
lection corresponding to cost, cost categories, and turnover, including replacement costs, with the
data elements needed to calculate turnover costs. costs of retaining nurses who have organization-
The data collection tool alone does not provide specific knowledge. In many cases, HCOs may
nursing turnover cost results, but provides a way make human resource and organizational decisions
to retrieve data for the analysis component of without full knowledge of the trade-offs. Whether
the NTCCM. The actual calculation of nursing these decisions are cost beneficial for individuals or
turnover costs requires data collected by this tool organizations is largely unknown, especially under
and semistructured interviews, which were used to constrained nursing labor market conditions when
gather additional data that was necessary for calcu- there are insufficient numbers of nurses available to
lating nurse turnover costs, but was not easily cap- fill vacancies.
tured by the data collection tool. However, simply It is logical to expect, however, that in a con-
summing data from these sources will not result in strained labor market, the advantage might go to
an accurate calculation of nursing turnover costs for the nurses who leave, given that they are in short
the study period. To address this issue, a spreadsheet supply and employment opportunities may be abun-
model was developed to include a series of calcu- dant. Also, under poor working conditions, nurses
lations that were used for data entry and analysis. may leave in search of a better work environment,
Total and per-RN turnover cost estimates were then even if doing so means taking a short-term loss of
derived using these processes. Estimation of turnover wages.27 Gaining a better understanding of nurse

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Figure 1. Turnover cost accrual timeline used in this study. Timeline not drawn to scale; varies by individual.

turnover costs and benefits provides a way to begin sion making, and to develop policies and practices
designing interventions to adequately address RN aimed at nurse retention. Part 2 of this series will
turnover in ways that recognize nurses’ human cap- illustrate an application of the updated NTCCM us-
ital potential. ing data from an acute care hospital and demonstrate
Human capital theory and human resource ac- how the costs of nurse turnover can be used to build
counting methods provide a means of conceptual- a business case for nurse retention.
izing RN turnover and replacement costs, and de-
veloping methods to categorize and calculate RN
Acknowledgment
turnover costs. These methods recognize nurses as
organizational assets with knowledge, skills, and This research was supported in part by a Faculty
abilities that impact organizational productivity Research Opportunity Grant from the University of
and performance. The updated NTCCM uses these North Carolina-Chapel Hill School of Nursing. The
methods to derive more realistic and accurate esti- author also gratefully acknowledges the thought-
mates of nurse turnover costs. Nurse executives can ful comments of colleagues Drs Barbara Mark and
use the resulting information in organizational deci- Mary Lynn on an earlier version of this article.

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