NHS Staff Retention Review: Costs & Impacts

NHS Staff Turnover Costs

• £12,000 = the cost of replacing a fully-trained Nurse (NHS)

• £3.6 million = spent each year by each Trust to replace Nurses (NHS)

• £21.7 billion = cost to NHS of not addressing retention (MSI / HWF)

• £6,371.41 = cost of recruiting a Nurse from overseas (NHS)

• £8,477.80 = cost of recruiting 21 Staff Nurses (NHS)

• £100,000 = cost of an agency Nurse each year (BBC)

• £6.2 billion = cost of agency and bank staff 2019-20 (Liason)

• £12 million = paid in 1 year by the five NI Trusts to one agency (BBC)

• £46 = the difference cited in hourly pay between one agency Nurse and an NHS Nurse on the same ward (BBC)

• £1.7 million = cost of sickness absence for an average Trust each year (MSI / HWF)

• £2.4 billion = cost per year to NHS of staff absence due to poor health (NHS)

• £1.9 billion = how much the NHS spent on locums in 3 months 2015 (BBC)

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Staffing is one of the NHS’ primary concerns. The overall NHS staff shortage is put at 110,000 posts unfilled, including 40,000 nursing vacancies. It causes Nurses' own health to be impacted, and is a major cause of staff turnover, exacerbating the problem.

Recruitment is one side of the coin, retention the other.

Recruitment can't solve the crisis, despite various Government pledges about hiring tens of thousands of Nurses.

To truly understand and articulate why retention is such an enormous issue for our healthcare system, we have to recognise the cost of getting it wrong.

So, what are the practical costs of poor retention rates?

What are the knock-on effects?

And ultimately, why is retention something that warrants far more attention, and more investment?

This piece aims to highlight the varied and complex cost of failing to retain NHS staff, and especially its nursing staff.

NHS Staff Turnover Numbers

• 10-12% = typical turnover rate of Nurses at a large acute Trust (NHS)

• 400 = number of staff the NHS loses each week (Guardian)

• 300 = number of Nurses average Trust must recruit each year (NHS)

• 110,000 = NHS posts unfilled (Guardian)

• 1 in 10 = NHS nursing roles unfilled (39,652) (Guardian)

• 25,219 = Nurses who left the register in year to March 2022 (NMC)

• 1.4 million = NHS days lost in April 2019 due to absence (Kingsfund)

How Much Does Losing Staff Cost The NHS?

Putting an exact figure on the cost of staff turnover is difficult.

We know the numbers. The Guardian put the number of people leaving the NHS at 400 per week. The NHS SBS put the turnover rate of Nurses at a typical Trust at 12%. The NMC's figures for May 2022 showed a 13% increase in the number of Nurses leaving the register in the last year over the previous year (25,219).

(And the numbers can't be put down to the pandemic. A Nuffield Trust report explained its figures were roughly the same as pre-pandemic levels, and that Covid only accounts for 14% of the Nurses who left the profession.)

So, the evidence is clear: the number of NHS staff leaving (including Nurses) is high.

But, what is the cost?

Estimating the total financial cost is very challenging. That’s primarily because an employee’s value is complex – as is the cost of replacing them.

Then there’s the well-publicised cost of interim bank or agency staff to cover for the loss.

From 2015, following some eye-watering headlines about the revenues of agencies supplying Nurses to the NHS, action was taken (leading in no small part to the creation of The NHS People Plan).

Reports in The Telegraph at that time estimated billions in revenue each year were paid to nursing agencies to supply NHS-trained staff back to itself.

The following is a quote from the BBC at the time:

The latest figures show NHS trusts in England spent £1.9bn on locum staff in just three months this summer.

The financial figures were shocking and measures were immediately introduced by the Government to curb the spend.

By 2018 the NHS had managed to cut spend on agencies by £1.2bn.

But beyond that, there are what could be termed secondary costs. These could include an initial deficit in terms of productivity while a new person gets accustomed to a new role, or increased absence of colleagues who become overstretched and overworked.

We can consider all of these factors – all of which deserve attention.

But in terms of a broad, overall cost, a report by the Modern Society Initiative and the Healthcare Workers’ Foundation (MSI / HWF) has attempted to find one.

The report suggests that NHS staff retention rates are dropping, and that the cost of not addressing this issue will be £21.7 billion.

This calculation is approximate of course, based on training costs and likely recruitment challenges in the coming years.

But it’s a useful indicator of just how enormous this issue is.

How Much Does It Cost To Train And Recruit NHS Nurses?

To break this issue down, it’s useful to analyse some of the specific costs related to the retention challenge.

A report published in NHS SBS puts the cost of replacing a fully-trained nurse at £12,000. And, as it points out, with nursing turnover of up to 12%, the costs soon rack up:

A large acute NHS trust with over 3,000 nurses, for example, will typically have a turnover rate of between 10-12%. This means needing to recruit more than 300 new nurses on an annual basis. With the total financial impact of replacing a fully-trained nurse estimated to be anything up to £12k, this equates to a minimum spend of £3.6m every year.

That doesn’t include the initial recruitment costs – the price of actually finding and attracting prospective nursing staff to train in the first place.

A case study for Hillingdon Hospitals’ NHS Foundation Trust found that it cost £8,477.80 to recruit 21 UK Nurses, and £6,371.41 to hire 1 Nurse from overseas.

Again, multiply this figure by thousands, and you get a realistic sense of the scale of the cost of recruiting to replace leavers. Especially when you consider that almost half of the new Nurses on the NMC register have joined from overseas (in the report above, the cost can exceed 10 times that of recruiting a UK Nurse).

How Much Does An Agency Nurse Cost?

Agency spending has been improved over recent years by the agency cap. However, the dependence on interim staff hasn’t gone away.

A BBC study in 2017 found that the cost of an agency Nurse to an NHS trust could easily reach £100,000 a year.

In 2018, the BBC also reported that Northern Ireland's five Trusts spent £12m with just one agency hiring staff.

And the most recent comprehensive summary of agency and bank spending across the NHS found that the cost for all staff reached £6.2 billion for 2019-20.

How Much Does Absence Cost The NHS?

The link between staff retention and staff absence has been made very clear in recent years within the NHS.

Staff absence is often a very clear indicator of someone who may leave their role (increased risk of leaving the NHS). And especially during the pandemic, the impact of under-staffing on absence has been undeniable.

But even prior to Covid 19, staff absence in the NHS was high: "Sickness absence rates in the NHS are higher than in the rest of the economy. NHS staff sickness rates rose from 3.8 per cent in April 2018 to 4.1 per cent in April 2019. This is the highest level at that time of year in more than a decade, and represents more than 1.4 million full-time equivalent (FTE) days lost in that month alone." (Kingsfund.org, 2019)

The NHS lost more than 1.4 million full-time equivalent (FTE) days in April 2019 due to sickness absence

And in August 2021, Nursing Times discovered that there had been a 37% increase in mental health related absences.

And the Government is taking the issue so seriously that the House of Commons Health and Social Care Committee has held reviews into the impact of burnout and resilience in the NHS.

But what does the absence of an NHS worker actually cost the NHS?

Well, we can refer to the interim costs mentioned above.

Needless to say, an interim worker costs far more than a full-time employee across an entire year.

But more broadly, the NHS itself has released data that suggests the cost of staff absence to the NHS is around £2.4 billion a year, with a cost of £1.7m due to sickness absence for an average Trust.

Once more, this aspect of the retention challenge represents a significant cost to the NHS.

The Costs That Can’t Be Easily Quantified

The costs outlined above should be enough to convince anyone that retaining staff is of paramount importance.

But there are deeper and more complex impacts, too.

Any organisation knows that unhappy staff are a problem.

They can be a de-motivating force, damaging multi-disciplinary teams that are so vital to providing quality care.

In a BBC report on nursing agency pay the disparity between an employed Staff Nurse and an agency Nurse doing the same job was shocking:

We heard today from a nurse who was working for £14 an hour alongside another nurse doing the same work for £60 an hour through an agency.

And then there’s the damage that high turnover does to team and organisational performance.

Any company in any sector knows the inherent value of a team full of experience – teams with staff who know the idiosyncrasies of that place of work inside out.

How do you measure the cost of damaging that? It’s probably not possible to do so – but that doesn’t mean that the cost isn’t significant.

The Cost Of Poor Retention Rates Can Spiral Quickly

In summary, high staff turnover does untold damage to NHS Trusts – and the subsequent impacts and costs are enormous.

From the agency bills and resulting spikes in absence to the damage caused to productivity, the visible and invisible costs can spiral rapidly.

As an industry, we talk frequently about the need to recruit better.

It’s time for Trusts to retain better too.

How Can The NHS Increase Retention?

There isn't one silver bullet to fix retention because the reasons people leave are varied. Let's end by looking at a Nuffield Trust report from March 2022 that lists the main reasons given by Nurses, Midwives and Nursing Associates for leaving the NHS:

• Work-life balance (quadrupled in last decade)

• Wellbeing (quadrupled in last decade)

• Lack of career development (doubled in last decade)

• Lack of reward (quadrupled in last decade)

• Unfair treatment (discrimination, bullying, harassment)

• Low levels of staffing

• Pressure and stress

• Covid (14%)

• Undervalued (recognised and valued)

• Unable to provide acceptable level of care

• Burn-out

(Retirement was given too, but the underlying reason for early retirement can be any from the above list.)

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