Staff turnover costs NHS 'at least £1.5bn'

High rates of staff turnover cost the NHS 'at least£1.5bn' each year, according to Department of Health director of human resources Andrew Foster.

And Mr Foster was due to tell this week's HR in the NHS conference that the cost of replacing the 270,000 staff who leave the NHS each year could be significantly higher.

He said estimates for the cost of replacing staff varied between an Audit Commission study, which put the figure at 32 per cent of their salary, to some studies that suggested it could be as much as 114 per cent of annual salary.

And he warned that in nursing, for example, the Audit Commission report ignored the additional costs of losing the productivity of experienced nurses, the learning curve of new nurses and the time existing staff spent helping new nurses.

Mr Foster dedicated at least a third of his speech to the importance of improving staff retention. This signalled a move away from the emphasis on increasing staff numbers through recruitment that has dominated HR in the NHS policy since the NHS plan in 2000.

Mr Foster's figures show that 22 per cent of allied health professionals leave their jobs in the NHS each year, and the figure is 15 per cent for nurses.

Mr Foster said that while some turnover is inevitable, in some parts of the NHS the numbers are even more worrying, particularly in London.

He estimated that London trusts could save between£720,000 and£2.6m each year through improved retention.

Mr Foster's keynote speech at the annual HR conference is seen as a preview of the government developing NHS HR policy priorities.

Mr Foster said the Agenda for Change implementation this year will be the biggest HR challenge since the NHS plan's publication.

Once that has been met, however, he said the NHS must 'introduce much more of the Japanese 'Kaizen' discipline of continuous improvement which can only be delivered through frontline staff '.

It must also strive to learn from 'private and independent' best practice in management style and 'personalisation of employment practices' if it is to deliver worldclass healthcare.

'The best of the NHS benchmarks against the best of the UK in many areas, such as flexible working, and against the best in the world in some areas such as the changing workforce programme.

But imagine the top three world classes. Some NHS employers are in bronze class, a few NHS employment practices are in the small but select silver class, but none are yet in gold class, ' he said.

Mr Foster added that trusts must also learn from the best of private and US practice to introduce balanced scorecard HR practices.

The DoH will shortly invite 100 trusts to volunteer to implement the HR balanced scorecard initiative, which is a process of measuring impact of HR policy on the quality of healthcare delivered.