A Quick Guide to Healthcare Staffing Costs: Insights and Recommendations

Healthcare organizations are under mounting pressure to control staffing costs. As demand for services rises and the workforce ages, the cost of hiring and retaining qualified staff continues to soar.  

Let’s go over the key factors driving these rising costs, the challenges organizations face, and how specific strategies can help reduce expenses without compromising patient care. 

Understanding Staffing Costs in Healthcare 

Staffing costs are one of the largest spending factors for healthcare institutions. These costs cover everything from salaries and benefits to training, recruitment, and retention strategies.  

According to a report by Bureau of Labor Statistics healthcare occupations accounted for 13.1% of all U.S. employment in 2022, and that percentage is expected to grow as the demand for services increases. 

Several factors contribute to the rising costs: 

1. Increased Demand for Healthcare Services: The global population is aging, leading to a higher demand for medical professionals, particularly nurses, physicians, and allied health staff. As hospitals and clinics struggle to meet this demand, they often rely on expensive staffing solutions, such as travel nurses or temporary workers, which can drive up costs. 
2. Nursing Shortages: The U.S. alone is facing a nursing shortage that is projected to worsen over the next decade. The American Nurses Association (ANA) believe there could be a shortage of more than 1 million nurses by 2030. As hospitals and healthcare systems compete to attract and retain skilled nurses, salary offers and retention incentives increase, contributing to higher staffing costs. 
3. Increased Workforce Turnover: High turnover rates, especially among nurses and other clinical staff, also inflate staffing costs. Recruitment, onboarding, and training new employees require significant investments of time and money. The Nursing Solutions Inc. Annual Report estimates that turnover costs for a registered nurse can range from $37,700 to $58,400 per nurse, depending on the facility. 
4. Compliance and Regulation: Healthcare organizations are subject to numerous regulations and standards, including staffing ratios, patient safety standards, and other mandates. To ensure compliance, hospitals may need to increase staffing levels, even when facing financial constraints. 

The Impact of Rising Staffing Costs on Healthcare Providers 

Rising staffing costs have a direct impact on the financial health of healthcare institutions. Facilities are forced to make difficult decisions about resource allocation, potentially reducing funding in areas such as patient care technology, facility upgrades, or administrative staffing. Additionally, high staffing costs can lead to: 

• Reduced Profit Margins: Healthcare providers may experience reduced profitability as staffing expenses eat into their budgets. 
• Quality of Care: To reduce staff costs, some institutions may opt to understaff or overwork existing staff, potentially leading to burnout and a decline in patient care quality. 
• Operational Efficiency: Excessive reliance on costly contract workers or agencies may lead to inefficiencies, as temporary staff may not be as integrated into the facility’s operations as full-time employees. 

How PRS Global Helps Healthcare Providers Manage Staffing Costs 

At PRS Global, we understand the complexities of staffing in healthcare. By partnering with us, healthcare organizations can access a pool of qualified, pre-screened professionals across various healthcare specialties, including nurses, med techs, and other critical roles. 

 Our approach helps reduce recruitment overheads, lower turnover rates, and ensure high-quality patient care. 

Here are some ways we can help: 

• Direct-Hire Solutions: We specialize in providing permanent, direct-hire placements that align with your long-term staffing needs. This approach reduces the reliance on expensive temporary staff and lowers turnover rates. 
• Cost-Effective Recruiting: By leveraging our international reach and recruitment expertise, we help you access qualified candidates from around the world. This allows you to make more informed hiring decisions and find top talent at competitive rates. 
• Retention Strategies: We focus not just on filling positions, but on finding professionals who align with your organizational culture and values. This helps improve employee satisfaction, reduce turnover, and lower the costs associated with frequent hiring. 

Staffing costs in healthcare are one of the biggest challenges facing hospitals, clinics, and other healthcare facilities today. Understanding the factors that contribute to these costs and partnering with an experienced and trusted partner. To learn more about how we can help you manage staffing costs, read our extensive guide on building a Workforce Plan to improve staffing costs and overall workforce strategies.