Employee Turnover: Why Medical Practices Lose Good Employees

Employee Turnover: Why Medical Practices Lose Good Employees

In the midst of the COVID 19-era Great Resignation wave of employee turnover, the struggle to maintain adequate staffing for routine operations has become a daily reality for many medical practices. A recent poll by the Medical Group Management Association (MGMA) found that nearly half of medical practices saw increasing turnover rates in the last quarter of 2021, leaving many practices short of adequate operational and clinical staff.(1) To maintain operational continuity, managing employee turnover rates is more important than ever, because lack of adequate staffing impedes a practice’s ability to provide adequate patient care. It is, therefore, crucial to understand how to retain skilled healthcare professionals, both clinical and administrative. Every medical practice manager needs to wonder—why are we losing our staff? The answer may be as simple as the structure of the practice—and as easily addressed.

Background and Study Rationale

In the wake of the COVID-19 pandemic and the Great Resignation, medical practice managers are keenly aware that turnover damages the practice’s ability to function. Yet even before the Great Resignation, most medical practice managers intuitively tried to minimize employee turnover. The general assumption is that turnover hurts the practice, and minimizing turnover becomes a natural goal. Turnover is expensive, although the financial implication isn’t always black and white, because the costs (i.e., replacement, separation, hiring, training) tend to defuse across multiple budget lines. Although it is difficult to cost out turnover, studies do show employee turnover may cost up to 5.4% of an organization’s annual operational budget.(2) Nurse turnover may cost an organization as much as 1.2 to 1.3 times the employee’s annual salary for each turnover event, and even certified nurse’s assistant turnover can cost an organization up to $2000 per turnover event when separation and replacement costs are considered.(3,4)

Turnover also negatively impacts employee satisfaction for the employees left behind. When skilled employees leave, the employees who stay with the practice face higher workloads, more stress, and generally poorer working conditions.(5) Unsurprisingly, unhappy employees tend to resign, which fuels a vicious turnover cycle—the more turnover that occurs, the unhappier the remaining employees are.

Although the impact on remaining employees is obvious, it is important to note that employee turnover negatively affects patient satisfaction as well. This is generally a given in the healthcare field; improving employee satisfaction has even been embedded in operational planning as a strategy to improve patient satisfaction.(6) More directly, studies show that patient satisfaction is directly and inversely correlated with employee turnover.(7) As employees leave, patient satisfaction suffers—even when the remaining employees are still happy with their work.

Turnover is an industry concern that all medical practices are struggling with as staffing shortages are national and growing. To maintain staffing, practices need to ensure their employment practices are competitive and designed to retain employees. The aim of this study was to help explore the perspective of medical practice administrators on how succession planning and leadership development relate to employee turnover. An unexpected result emerged within the data: although succession planning and leadership development are key factors in employee retention and turnover, organizational structure and medical practice owners play a key role as well.

Methods

Instrument

The survey questionnaire used to collect data was based on the succession planning interview guide developed by Rothwell,(8) with minor textual adaptations to tailor the instrument to medical practices and gather demographic data. The original instrument was developed to benchmark succession planning best practices, and was used and modified with Dr. Rothwell’s express written permission.

Sample

A convenience sampling approach was used to recruit study participants from the MGMA, specifically MGMA’s Financial Management Community. With the permission of the MGMA Community Manager, three posts were made to this forum over the period of one month. During the month when the survey was administered, 24 participants completed the questionnaire.

Data Collection and Analyses

Data collection was completed within one month in early 2019. The study period covered operations over the entire calendar year of 2018 (January through December). Data were collected via online survey, administered through SurveyMonkey and posted within the MGMA Financial Management Community. Descriptive statistics were used to describe the demographic characteristics of the study sample, and were analyzed using Minitab 19. Qualitative data collected via open-ended questions were analyzed using MAXQDA software for coding and analysis. Data were coded and re-coded using an inductive approach until themes emerged within the textual data.

Results

Descriptive Statistics

Table 1 summarizes the descriptive statistics for the study sample across five demographic characteristics; results include frequency analyses and chi-square tests for distributions used to describe the sample’s categorical demographic characteristics. Sample size was n=24, with a sample spread across all specialties. The majority of respondents reported 21 to 50 FTE clinical employees and 21 to 50 FTE nonclinical employees.

Respondents were located in all four regions of the United States identified by MGMA, making this a nationally representative study. Specifically, seven (29.17%) of the responding medical practices were in the East, three (12.50%) were in the Midwest, five (20.83%) were in the South, and nine (37.50%) were in the West.

Table 2 reports the turnover rate of the sample, which was 0.16 (16%), and reports turnover rate across demographic characteristics. All respondents reported turnover during the study period. Turnover rate was calculated as number of FTE employees left position divided by total FTE employees (clinical and nonclinical). This turnover rate calculation was modeled on MGMA’s calculation of turnover rate in its data archives.

Thematic Analyses

The survey instrument contained 11 open-ended questions intended to explore the perspective of medical practice administrators on operational succession planning. Data were reviewed, coded inductively, and reviewed and recoded until themes were identified within the data. Table 3 reports the results of thematic analysis across all questions and responses.

Most themes related to the need for succession planning and internal leadership development: as respondent 3 stated, “promoting from within keeps culture in alignment.” However, unexpectedly, two themes pointed to organizational and structural factors in employee retention and turnover.

First, respondents described the necessity for practice owner buy-in to support internal retention efforts. Lack of buy-in was consistently identified as a barrier to leadership development and employee retention. This theme was particularly strong in smaller medical practices. As respondent 5 said, “owners/physicians have no interest in buy-in for improvement.”

Second, organizational structure emerged as a barrier for retaining high-performing high-potential employees. As noted by respondent 9, “ . . . we have a very flat organization. There are only 3 levels (COO, supervisors, everyone else).” Another respondent, respondent 19, expressed this even more clearly: “our hierarchy is pretty flat so there isn’t a lot of room for upward advancement.”

Discussion and Recommendations

Employee turnover is costly and damaging for many organizations, but in medical practices turnover represents a significant operational hardship, because the practices typically have less staffing depth than larger organizations such as hospitals. This means that the cost of turnover disproportionately impacts medical practices. In the era of the Great Resignation, turnover also can represent a true bottleneck in the number of patients that can be seen and care that can be provided. As organizations scramble to retain qualified staff and struggle to hire replacement staff, overlooking internal factors may be a costly mistake.

The unexpected results of this study provide a unique perspective on additional strategies to retain and develop internal staff. Organizational structure and lack of a developed hierarchy can be a significant issue for motivated high-performing and high-potential employees. Even when job satisfaction is high, employees leave organizations that don’t give them a chance to grow.(9) In the increasingly competitive race to hire and retain strong employees, a flat organizational structure impedes employees’ upward mobility. Lack of development within a flat organizational structure will inevitably cause the loss of employees the practice needs to retain.

Adapting the practice’s organizational structure does not need to be a complex undertaking, and medical practices do not need an extensive leadership hierarchy. Careful examination of the practice’s organizational chart and workflows can yield insight for potential new roles. Creation of a small number of low- or even mid-level leadership roles demonstrates a commitment to internal employee growth and provides a path for upward mobility without significant financial strain for the organization. Growth in responsibilities helps challenge highly motivated employees, which, in turn, encourages employees to remain with the practice.

Without the support of the practice owners, major changes—even when simple or considered an industry best practice—do not happen.

However, although organizational structure is a simple fix in some ways, the deeper issue lies with physician ownership buy-in for employee retention practices such as succession planning and leadership development. Several respondents in this study implied a tension between their own role as medical practice administrators to implement best practices and the necessary support of the practice owner. Although practice administrators make many key operational decisions, these usually are in concert with the physician owners. As a result, financial implications and larger changes thus typically require the buy-in of the physician owner. Without the support of the practice owners, major changes—even when simple or considered an industry best practice—do not happen.

This lack of buy-in for employment best practices is concerning, particularly given the competitive nature of hiring and retaining employees in the current tight labor market. This lack of buy-in may relate to lack of managerial training—although the physician–MBA dual degree is becoming more common, most physicians receive no training during school on how to run a medical practice or other business.(10) Additional professional development and business training may be one solution for achieving buy-in, but this is likely to continue to be a challenge, because physician owners will need to independently prioritize organizational changes to achieve better retention.

Limitations and Conclusion

Minor expansions to medical practice organizational structure may be low-hanging fruit in the effort to reduce employee turnover. With that caveat that physician-owner buy-in is a necessary prerequisite to implementation of operational best practices, this study identified creating a path for advancement and development as an excellent way to retain driven, high-potential employees.

However, the study has some limitations. First, although this was a national study with participants spread across all regions of the United States, it was a small study, which may limit the generalizability of results. Data were gathered at the beginning of the pandemic, which meant that responses were (unsurprisingly) small in number. Future research should expand on this topic with a larger and more targeted study. Second, the survey instrument used was intended to gather data on operational succession planning—not organizational structure or physician-owner buy-in. This means that this study is only the beginning, and future studies should examine these constructs in greater depth.

References

1. As compensation competition continues, medical group leaders say staff turnover not easing up yet. Medical Group Management Association. www.mgma.com/data/data-stories/as-compensation-competition-continues,-medical-gro . February 3, 2022. Accessed April 24, 2022.

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3. Tilden VP, Thompson SA, Gajewski BJ, Bott MJ. End-of-life care in nursing homes: the high cost of staff turnover. Nursing Economics. 2012;30(3):163.

4. Trepanier S, Crenshaw JT. Succession planning: a call to action for nurse executives. J Nurs Manag. 2013;21:980-985.

5. Knight DK, Becan JE, Flynn PM. Organizational consequences of staff turnover in outpatient substance abuse treatment programs. J Subst Abuse Treat. 2012;42(2):143-150.

6. Stanowski AC. Influencing employees’ attitudes and changing behaviors: a model to improve patient satisfaction. Popul Health Manag. 2009;12(2):57-59.

7. Reilly G, Nyberg AJ, Maltarich M, Weller I. Human capital flows: using context-emergent turnover (CET) theory to explore the process by which turnover, hiring, and job demands affect patient satisfaction. Academy of Management Journal. 2014;57:766-790.

8. Rothwell W. Effective Succession Planning: Ensuring Leadership Continuity and Building Talent From Within. Amacom; 2015.

9. Laframboise LE. Making the case for succession planning: who’s on deck in your organization?. Nurs Leadersh (Tor Ont). 2011;24(2):68-79.

10. Perry J, Mobley F, Brubaker M. Most doctors have little or no management training, and that’s a problem. Harvard Business Review. 2017;15.