The Incredible Costs of Healthcare Job Vacancies

Written by: Alex Brown
Published on: Sep 27, 2021

female recruiter using calculator

Talent acquisition seems to be getting harder for healthcare organizations. There are more jobs to fill, a widening skills gap, and a pandemic-induced staffing shortage. These job vacancies can cost hundreds of thousands, putting a tremendous strain on the financial health of anyone from networks to independent practices – as well as the delivery of healthcare.  

What Contributes to Overall Cost-of-Vacancy?

The impact of a vacant healthcare positions can be estimated by looking at three primary factors:

  • Hard costs: payments to cover the vacant position – often at overtime rates or via contract labor – as well as costs to find, hire, and train a replacement.
  • Soft costs: lost productivity that may include a learning curve for contract labor or a reduction in care quality due to overworked staff.
  • Lost opportunities: inability to spend in other areas such as entering new markets, starting new service lines, or expanding staff levels.

Aside from these impacts, outside factors such as labor market conditions or fluctuating pay rates can multiply any quantifiable costs, making it harder to get back to normal when a new hire comes aboard.

Hiring Costs to Fill a Job Vacancy

Recruitment efforts – external or internal – contribute to a healthcare org’s hard costs. Expenses for sourcing, advertising, interviewing, and other activities that contribute to hiring are typically factored into estimated vacancy costs.

For example, AAPPR released a benchmark study, AAPPR In-House Physician and Provider Recruitment Benchmarking Report, which revealed in 2018 that the average compensation, including benefits, for agency physician recruiters was $85,000-$90,000. In addition, placement fees charged by recruitment firms can typically range from $18,000 to $30,000.

Often when there is a competitive hiring environment, a hospital recruiting top-level medical staff may also need to pay sign-on bonuses. Another related expense is the cost of relocation, which organizations may need to cover part or all of this cost. These one-time expenses add to vacancy costs.

Job Vacancy Impact on Care Delivery

As part of its soft costs for job vacancies, the quality of care can be the most-costly consequence of a vacancy – most notably for physician positions. Continuity of care is the first thing to suffer when a physician is not in place.

When a medical staff is short a physician, for example, everyone on the care delivery team may feel increased pressure, such as pressure to take on additional patients in the same amount of time or pressure to retain patients.

This added pressure during the replacement period can lead to staff burnout, unsatisfied patients and families, and less-than-optimal outcomes from patient care. As a consequence, this soft cost can be much higher than many estimate for their organizations.

Loss of Admissions and Referrals

Finally, there is the opportunity loss experienced during a healthcare job vacancy. This is especially true for departing physicians. The financial impact of one physician vacancy is often felt across multiple departments and teams.

A Merritt Hawkins survey titled 2019 Physician Inpatient/Outpatient Revenue Survey revealed that physicians generate an average of over $2.4 million in annual net inpatient and outpatient revenue for their affiliated hospitals. This loss can force healthcare organizations to make financial decisions they might not normally make. The table below shows several specialties and their revenue loss for an organization.


Revenue Loss Due To Physician Vacancy

Specialty              Annual Revenue Monthly Revenue Daily Revenue
Orthopedic Surgery $3,286,764 $273,897 $9,004
Neurosurgery $3,437,500 $286,458 $9,417
General Surgery $2,707,317 $225,609 $7,417
Cardiology (Invasive) $3,484,375 $290,364    $9,546
Internal Medicine $2,675,387 $222,948 $7,329

Source: Merritt Hawkins 2019 Physician Inpatient/Outpatient Revenue Survey


With all this in mind, healthcare organizations face an aging population, shrinking talent pools, a competitive marketplace, complications due to COVID-19, and other factors that will put even more strain on their workforces. Strong recruiting firms and hiring managers should be proactive in sourcing qualified candidates and streamlining recruitment practices so they’ll be in a solid position to handle employee churn in the future.


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