The Workforce Stability Index

Healthcare organizations have spent years improving their ability to hire. Recruiting teams have added sourcing technology, centralized processes, automation, incentives, referral programs, academic partnerships, and expanded recruitment teams. Yet many health systems still experience recurring vacancies, elevated turnover, contract-labor dependence, leadership instability, and persistent pressure on existing employees.

The issue is not simply whether organizations can fill positions. It is whether they can create and sustain a workforce capable of delivering care without repeatedly replacing the same talent.

National hospital turnover reached 18.5% in 2025, while RN turnover rose to 17.6%.1 NSI estimates that the average hospital lost approximately $5.19 million from RN turnover alone, with every one-percentage-point change in RN turnover costing or saving approximately $295,000 annually.1

That makes retention more than an employee-experience measure. It is a financial, operational, clinical, and strategic measure of workforce health.

On The Mark Perspective

Healthcare organizations do not create stability by filling positions. They create stability by keeping the right people, developing internal talent, protecting critical roles, reducing dependence on temporary labor, and building leadership environments in which employees can succeed.

Time-to-fill answers one narrow question: how quickly did we replace the vacancy? A Workforce Stability Index answers a more important one: is the organization becoming more capable of sustaining the workforce required to deliver its strategy?

The objective is not to abandon hiring metrics. It is to stop treating hiring activity as evidence of workforce health.

From Recruitment Performance to Workforce Stability

A traditional recruiting dashboard may show positions filled, time-to-fill, applicants received, offers accepted, and recruiter productivity. These measures explain how the recruiting function performed. They do not explain whether new employees remain, vacancies repeatedly reopen, critical roles stay staffed, internal talent advances, managers retain their teams, premium labor declines, or operations become less dependent on agency staffing.

A Workforce Stability Index combines those signals into a single view of organizational workforce health.

The Proposed On The Mark Workforce Stability Index

The index would score an organization, hospital, service line, or department on a scale from 0 to 100.

Index Score	Suggested Interpretation
85–100	Stable and resilient
70–84	Generally stable, with emerging risks
55–69	Vulnerable
Below 55	Material workforce instability

These ranges should initially be treated as internal management bands—not external industry benchmarks. Each organization should calibrate them against its own historical performance, labor market, staffing model, and operating priorities.

Suggested components

Component	Proposed Weight
First-year retention	25%
Critical-role vacancy	15%
Vacancy duration	15%
Agency utilization	15%
Premium labor	10%
Internal promotions and mobility	10%
Nurse-manager turnover	10%
Total	100%

The weighting intentionally gives retention the greatest influence because stability begins with preserving workforce capability—not repeatedly replenishing it.

The Seven Measures

1. First-Year Retention

What it measures: The percentage of employees who remain with the organization for at least 12 months after hire.

Formula — First-Year Retention Rate = employees from a hiring cohort still employed after 12 months ÷ employees in the original hiring cohort × 100. Executives should also review retention at 30 days, 90 days, six months, and one year to identify when instability first appears.

Why it belongs in the index: First-year turnover can reveal breakdowns in selection, realistic job expectations, orientation, onboarding, scheduling, manager support, team culture, role design, or career expectations. A role filled quickly but vacated within months should not be recorded as an uncomplicated recruiting success.

NSI reported 2025 hospital turnover of 18.5% and RN turnover of 17.6%, estimating the average cost of turnover for one bedside RN at $60,090.1 Press Ganey found that disengaged caregivers were 2.6 times more likely to leave, with turnover around 24% in less-engaged systems compared with 15% in highly engaged systems.2

Dashboard view: show first-year retention by facility, department, role, hiring manager, recruiter, candidate source, shift, employee type, and hiring cohort.

Executive alert — flag: a decline of more than three percentage points; a unit below enterprise target; a manager with repeated early attrition; a source generating strong hiring volume but weak retention; a critical-role cohort losing employees within six months.

2. Vacancy Duration

What it measures: How long budgeted positions remain unfilled and how persistently those gaps affect operations.

Suggested calculation: rather than using only average time-to-fill, measure median days vacant, and the percentage vacant more than 30, 60, 90, and 120 days. Vacancy burden can be calculated as the number of vacant positions multiplied by the days each remains vacant — revealing total operational exposure.

Why it belongs in the index: two organizations can have the same vacancy rate but very different levels of risk. One may have several recently opened positions; the other may have the same number vacant for six months, generating recurring overtime, closed capacity, manager workload, and team fatigue.

NSI reported a national RN vacancy rate of 8.6%, with 33.1% of surveyed hospitals reporting an RN vacancy rate of 10% or higher, and found that recruiting an experienced RN took an average of 78 days.1

Dashboard view: use a vacancy-aging heat map showing role, service line, location, shift, days vacant, and operational consequence.

Executive alert — flag vacancies that exceed a defined age threshold; restrict patient access; generate recurring overtime; require ongoing agency coverage; delay growth initiatives; or reopen within six months of being filled.

3. Internal Promotions and Mobility

What it measures: The organization’s ability to move, develop, and retain talent from within — internal fill rate, promotion rate, lateral-transfer rate, career-pathway participation, and the percentage of leadership positions filled internally.

Formula — Internal Fill Rate = roles filled by current employees ÷ total roles filled × 100.

Why it belongs in the index: external hiring adds talent. Internal mobility preserves it. Employees are more likely to remain when they can envision their next opportunity inside the organization rather than having to leave to advance.

LinkedIn found that employees who make internal moves are 40% more likely to remain for at least three years. Organizations with high internal mobility also experienced 53% longer employee tenure and 79% more leadership promotions per employee than organizations with low internal mobility.3

Healthcare examples: student nurse extern to graduate nurse; graduate nurse to clinical nurse; staff nurse to charge nurse; clinical nurse to nurse educator; nurse to advanced-practice pathway; recruiter to workforce-intelligence analyst; manager to director; ambulatory-to-acute-care transfer; internal resource-pool deployment.

Executive alert — flag: departments with little or no internal movement; leadership roles repeatedly filled externally; high-performing employees leaving after unsuccessful internal applications; career pathways with low conversion; internal candidates waiting longer than external candidates for decisions.

4. Agency Utilization

What it measures: The extent to which an organization depends on external contract staff to maintain normal operations.

Formula — Agency Utilization Rate = agency productive hours ÷ total productive hours × 100. Also report agency FTE equivalents, agency spend, average assignment length, agency-to-employee conversion, and contract rate versus employed rate.

Why it belongs in the index: agency staffing can be a necessary tool for temporary demand, seasonal fluctuations, new-service launches, leaves of absence, or unexpected workforce disruptions. Instability emerges when temporary labor becomes the permanent operating model — often indicating chronic vacancies, weak retention, inadequate internal float capacity, poor workforce forecasting, uncompetitive scheduling, leadership instability, or a lack of sustainable pipelines.

AHA reported that labor accounted for 56% of hospital expenses, approximately $890 billion in 2024, including purchased services and professional fees.4 A separate AHA analysis found that hospital contract-labor expense increased 258% from 2019 through 2022, illustrating how quickly temporary staffing dependence can escalate during workforce disruption.5

Executive alert — flag: agency hours rising while vacancy falls; assignments exceeding 90 or 180 days; repeated agency use for predictable base staffing; units without an agency-reduction plan; low conversion of qualified agency staff to employment; agency spend concentrated under specific leaders.

5. Critical-Role Vacancies

What it measures: The percentage of strategically important roles that are vacant. Not all vacancies create equal organizational risk — a vacant role in a readily available labor market may be manageable, while a vacant ICU nurse, behavioral-health clinician, nurse manager, surgical technologist, pharmacist, or specialist physician may constrain services, increase risk, and affect revenue.

Formula — Critical-Role Vacancy Rate = vacant critical-role positions ÷ total budgeted critical-role positions × 100.

Defining a critical role: a role may be classified as critical when prolonged vacancy could materially affect patient safety, patient access, bed capacity, regulatory compliance, revenue generation, service-line growth, leadership continuity, specialized clinical capability, or premium-labor expense.

Why it belongs in the index: an enterprise vacancy rate can improve while operational risk worsens — filling numerous easier-to-recruit positions may lower the overall vacancy percentage even as specialized clinical positions remain unfilled. That is why executives need both overall vacancy and critical-role vacancy.

NSI estimated a national shortage of approximately 158,600 RNs and found that hospitals still averaged 43 unfilled RN FTEs, even after wage adjustments and sign-on incentives.1

Executive alert — flag: any critical position vacant beyond its risk threshold; service lines with multiple simultaneous critical vacancies; roles without active candidates; vacancies directly associated with closed capacity; critical positions repeatedly filled and reopened.

6. Premium Labor

What it measures: The percentage of labor expense paid above normal base compensation to maintain staffing.

Suggested formula — Premium Labor Percentage = (overtime + incentive pay + shift premiums + contract-labor premiums) ÷ total labor expense × 100. The organization should display each component separately rather than combining all supplemental expense into one number.

Why it belongs in the index: premium labor is often the financial footprint of workforce instability — driven by persistent vacancies, turnover, absenteeism, inadequate scheduling, low internal flexibility, insufficient pipeline planning, difficult shifts, high-acuity demand, or managerial staffing practices. It can temporarily protect operations, but sustained dependence may increase fatigue, labor costs, dissatisfaction, and turnover risk — creating a reinforcing cycle.

The instability cycle: vacancy → overtime and incentive shifts → fatigue and burnout → turnover → more vacancies → agency and premium labor.

AHA reported that compensation and related labor expense accounted for 56% of total hospital costs in 2024, and that advertised RN salaries had grown 26.6% faster than inflation over the preceding four years, reflecting the cost pressure associated with maintaining staffing levels.4

Executive alert — flag: premium labor rising for three consecutive months; overtime concentrated in high-turnover departments; incentive programs continuing without evidence of improvement; premium expense increasing despite higher headcount; units where premium labor has become part of routine scheduling.

7. Nurse-Manager Turnover

What it measures: The stability of front-line nursing leadership.

Formula — Nurse-Manager Turnover Rate = nurse managers leaving their positions during the period ÷ average number of nurse-manager positions × 100. Also track vacant manager positions, interim-manager assignments, manager tenure, spans of control, internal manager promotions, and first-year manager retention.

Why it belongs in the index: nurse managers directly influence scheduling, team culture, communication, recognition, development, staffing decisions, conflict resolution, psychological safety, and employee intent to stay. Manager instability can therefore precede wider workforce instability — a department may continue filling clinical roles while losing the leadership conditions needed to retain them.

Press Ganey found that more than one-third of healthcare employees lacked confidence in senior leadership, identifying leadership alignment, trust, teamwork, safety, and employee support as important drivers of sustained engagement and performance. The same research found that hospitals in the top quartile for engagement were 4.2 times more likely to achieve top-quartile patient-experience results.2

Executive alert — flag: manager turnover above organizational target; interim assignments exceeding six months; high employee turnover following a manager departure; managers with persistently high vacancy or premium labor; new managers leaving within the first year; roles with no prepared internal successor.

How to Calculate the Index

Each component should first be converted to a score from 0 to 100. For positive measures, such as retention or internal mobility, higher performance receives a higher score. For negative measures, such as vacancy duration, agency utilization, or manager turnover, lower performance receives a higher score.

Example scoring approach

Metric	Actual Result	Target	Component Score
First-year retention	84%	90%	78
Critical-role vacancy	9%	5% or lower	62
Vacancy duration	74 days	55 days	68
Agency utilization	7%	4% or lower	60
Premium labor	11%	8% or lower	72
Internal mobility	19%	25%	76
Nurse-manager turnover	14%	10% or lower	70

The weighted calculation would be: Stability Index = (retention score × 25%) + (critical-role vacancy score × 15%) + (vacancy-duration score × 15%) + (agency-utilization score × 15%) + (premium-labor score × 10%) + (internal-mobility score × 10%) + (nurse-manager-turnover score × 10%).

Using the example above, the overall index would be approximately 70, placing the organization at the lower end of the “generally stable, with emerging risks” range.

The greater value, however, is not the single number. It is the ability to identify which components are strengthening or weakening the score.

The Dashboard Should Show More Than a Score

A useful Workforce Stability Index should display current position, drivers, risk concentration, business connection, and required action.

Action: required intervention, accountable executive, completion date, and expected impact.

Evidence at a Glance

• National hospital turnover reached 18.5%, while RN turnover reached 17.6% in 2025.1
• The average hospital lost an estimated $5.19 million from RN turnover, and each one-point movement in RN turnover represented approximately $295,000 in annual cost or savings.1
• The national RN vacancy rate was 8.6%, and recruiting an experienced RN took an average of 78 days.1
• Employees making internal moves were 40% more likely to remain for at least three years, while high-mobility organizations experienced 53% longer employee tenure.3
• Disengaged caregivers were 2.6 times more likely to leave, generating turnover of approximately 24% compared with 15% in highly engaged systems.2
• Labor remained the largest hospital expense, accounting for 56% of total costs in 2024.4

Executive Reflection

At the next executive workforce review, leaders should ask:

• Are we filling more positions because we are growing—or because we keep losing employees?
• Which departments repeatedly reopen the same roles?
• Where is manager instability contributing to employee turnover?
• Which critical vacancies are affecting patient access or operating capacity?
• Are premium labor and agency utilization declining as hiring improves?
• Do employees have credible pathways to advance internally?
• Which component presents the greatest risk to workforce stability over the next six months?
• What executive action—not recruiting activity—is required to improve the score?

The Workforce Stability Index changes the executive conversation from how many people did we hire? to how much workforce capability did we preserve, build, and sustain?