The Easiest Formula to Calculate the Cost of Provider Turnover (Formula Included)

We always see this topic circulating HR conferences, consulting conversations and the healthcare community: the extremely high cost of turnover (especially in physicians and licensed professionals that care is billed for).

Not to mention the shortages, competing with travel staffing / locums, etc.

There’s no doubt these costs are high and we have seen some pretty crazy and in depth analysis and breakdowns of this. However it is either not relayed to the average practice, or is so complex and variable that it doesn’t “stick”.

We decided to put together a very basic formula that any practice owner, administrator or consultant could easily verify without having to whip up all the “unactualized” or “hidden” costs that highly vary and are difficult to really actualize.

Keep in mind that this is the minimum cost you will incur (it does not include: onboarding costs, training, patient dissatisfaction, potential increase in medical errors, higher malpractice risk, etc.)

The Basic Formula: Calculating the Loss

The simple formula to estimate losses per provider/billable clinician:

Loss = (Expected Collections – Actual Collections) x (1 – Direct Cost Percentage)

What does that mean?

• Expected Collections: The amount the provider was projected to collect
• Actual Collections: The amount the provider actually collected
• Direct Cost Percentage: The percentage of collections that go directly to patient care costs (average varies, but is typically about 20%)

Example for a Primary Care Provider in 2025:

If a provider was expected to collect $1,000,000 but only collected $800,000, with a direct cost percentage of 20%:

Loss = ($1,000,000 – $800,000) x (1 – 0.20)

= $200,000 x 0.80

= $160,000 Total Cost (~ $445 / day, ~ $13,500 / month)

This simple formula provides a quick estimate of losses, accounting for both lost revenue and reduced direct costs associated with lower patient volume.

Two Common Plans of Action

Focus on Retention

• Prioritize giving your staff excellent training, straightforward operations and tools so they can do their job better, and easier, avoiding burnout.
• Recalibrate your company culture, and how to make it present in the day to day life of all your team members.
• Set clear goals and what long term success looks like. Everyone should know where the road leads if they are loyal and hard working.
• Make sure your compensation package is competitive, or make being a part of the organization so valuable that market average compensation is enough to get the best talent. There is usually a sweet spot based on your company goals and culture to define the line between work life balance and high earning opportunity.

Increase Recruitment Activities

• Don’t rely on inbound applications only – the people you want may not be applying right now, exactly when you need them.
• Meet with talent before you need them. Be transparent that you may not need someone at this time, but allow time to meet with high level people that align well with your organization for future openings.
• Create clear, transparent and concise job descriptions and marketing towards candidates who may be interested in your opportunities.
• Invest in your talent department. A job post alone is not enough to get the position filled, unless you’re very lucky, or don’t care about finding the best person/top talent available to you.

How HealthOp Can Help

We are Arizona’s number one healthcare recruitment company. Founded by healthcare professionals and focused 100% on the Arizona healthcare market. Our structure is based on both performance and retention.

When you work with us, we find the best talent who will stay with your organization for years to come, guaranteed.