Healthcare Staffing Costs 2026

Healthcare staffing costs are the single largest expense on most hospital balance sheets, accounting for 50 to 60 percent of total operating budgets. The 2026 picture shows some relief from peak pandemic-era agency spend, but permanent labor costs, benefits, and administrative overhead have kept climbing. The data below covers what it actually costs to hire, retain, and replace clinical staff, what facilities are paying for temporary labor, and where the realistic cost reduction options are.

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Total healthcare labor spend

The Bureau of Labor Statistics and the Centers for Medicare and Medicaid Services (CMS) provide the broadest view of aggregate healthcare labor costs.

National healthcare expenditure benchmarks (2025-2026):

• U.S. national health expenditure reached $4.9 trillion in 2023, with labor costs at approximately 55-60% of hospital operating budgets across facility types
• CMS projects national health expenditure will grow at an average rate of 5.6% per year through 2031, reaching an estimated $6.8 trillion
• The American Hospital Association (AHA) reported that labor expenses increased by more than $42 billion at U.S. hospitals between 2020 and 2023, with roughly a third of that attributable to contract and agency labor
• A 2024 Kaufman Hall report found that workforce costs per adjusted discharge increased 14.5% between 2021 and 2024, outpacing revenue growth at more than half of surveyed facilities

That pressure is not evenly distributed. Rural critical-access hospitals and safety-net facilities pay market rates for clinical talent while serving populations with lower reimbursement rates. They carry the heaviest burden.

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What it costs to hire and replace nurses

The NSI National Health Care Retention and RN Staffing Report is the most cited source for nurse replacement cost benchmarks. Its methodology accounts for vacancy costs, recruiting, orientation, productivity ramp-up, and temporary coverage.

NSI nurse replacement cost data (2024):

• The average cost to replace one bedside RN is $46,100, with a range of $28,400 to $63,700 depending on specialty, region, and facility type
• ICU and operating room nurses carry higher replacement costs, often $55,000 to $88,000, due to longer orientation periods and specialized competency requirements
• The average hospital with 200 or more beds employs roughly 500 to 800 nurses; at an 18% turnover rate, that facility replaces 90 to 145 nurses per year
• At the $46,100 average, the annual turnover cost for a mid-sized hospital runs $4.1 to $6.7 million from nursing alone
• NSI data shows that each percentage-point improvement in RN turnover saves the average hospital approximately $262,500 per year

The math shifts considerably when hard-to-fill specialty roles are factored in. A single CRNA vacancy, including locum coverage during the search and the cost of a permanent hire, can reach $300,000 to $500,000 in total direct and indirect expense.

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Hospital nurse turnover rates through 2026

Turnover has come down from its post-pandemic peak but remains well above pre-2020 norms.

Turnover rate benchmarks:

• The average hospital RN turnover rate peaked at 22.7% in 2021-2022
• By 2024, it had declined to approximately 18.4%, per NSI survey data from more than 300 hospitals
• Critical care and emergency department turnover stays higher, typically 25% to 32%
• First-year RN turnover remains its own problem: roughly 17.5% of new graduate nurses leave their first employer within 12 months, a figure that has not improved despite increased orientation investment
• The average time-to-fill an RN vacancy across all specialties was 86 days in 2024, with ICU and OR roles taking 100 to 120 days

Each vacant day has a real cost. A hospital carrying an average of 40 open RN positions for 86 days pays approximately $1,200 to $1,500 per vacancy day in overtime, agency premium, and lost productivity. That adds up to roughly $4.1 to $5.2 million in annual vacancy cost just from the unfilled pipeline.

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Travel nurse and agency labor costs

When permanent staff cannot be recruited fast enough, facilities turn to temporary agency labor at a substantial markup. Pandemic-era rates have eased, but travel nurse costs are still 40 to 60 percent above pre-2020 baselines.

Travel nurse and agency cost benchmarks (2025-2026):

• Travel nurse bill rates averaged $90 to $120 per hour in 2025, compared to an average permanent RN all-in cost of approximately $60 to $75 per hour including salary, benefits, and payroll taxes
• Staffing agency markups on direct labor range from 25% to 50%, meaning the facility pays a blended cost well above the nurse's stated rate
• Hospitals that relied heavily on agency staff in 2024 reported contingent labor as 20-35% of total labor expense
• The American Staffing Association estimates healthcare accounts for approximately 35% of all temporary and contract staffing revenue in the U.S.
• Healthcare staffing agency revenues were estimated at $30 billion or more annually at the 2023-2024 peak, though they have begun to moderate as facilities convert travel contracts to permanent roles

A hospital filling 50 FTE nursing positions with agency staff instead of permanent hires pays an estimated $2.5 to $4.5 million in agency premiums annually above what a permanent-hire approach would cost for the same coverage.

For facilities dealing with the administrative overhead of managing a large clinical workforce, including scheduling, credentialing, and payroll processing, our virtual assistant for healthcare overview documents where support roles reduce that burden.

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Physician and advanced practice provider costs

Physician labor is the highest per-seat cost in clinical staffing. MGMA and AAMC data provide the most detailed specialty-level benchmarks.

Physician compensation and cost benchmarks (2024-2025):

• Median total physician compensation across all specialties was $352,000 to $401,000 annually per MGMA 2024 data, with wide variation by specialty
• Surgical specialists in neurosurgery, orthopedics, and cardiovascular surgery top $700,000 to $900,000 in median total compensation, putting vacancy cost in those roles potentially above $1.5 million when locum coverage and search costs are included
• Locum tenens bill rates for hospital medicine typically run $200 to $300 per hour in all-in facility cost; psychiatry and anesthesiology locum rates frequently exceed $400 to $600 per hour
• The locum tenens market is valued at approximately $5.5 to $6.5 billion annually, growing at 6-8% per year
• Physician recruitment fees through retained search typically range from $30,000 to $50,000 per placed candidate, with subspecialty placements in shortage fields regularly exceeding $70,000 to $100,000

Nurse practitioners and physician assistants are increasingly filling the gap between physician compensation and nursing wages. NP and PA median compensation runs $118,000 to $140,000 annually, roughly 30-35% of a physician salary for comparable primary care capacity.

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Healthcare administrative labor: the cost most budgets undercount

Clinical labor gets most of the attention, but administrative workforce costs are large and consistently underestimated.

A study in the New England Journal of Medicine calculated that administrative costs represent 34.2% of total U.S. hospital revenue, approximately $812 billion per year. That share is substantially higher than peer countries and is driven by multipayer billing complexity, prior authorization, compliance reporting, and documentation requirements.

Administrative staffing cost data:

• Medical billing and coding specialists earn a median salary of $47,180 (BLS 2023), with fully loaded employer costs of $60,000 to $68,000 including benefits and taxes
• Medical secretaries and administrative assistants in healthcare earn a median of $38,200 (BLS 2023), with total employer cost of approximately $48,000 to $55,000
• Health information management and EHR support roles range from $45,000 to $75,000 in median compensation depending on certification level and system complexity
• Prior authorization specialists have become a high-demand, high-cost role, with median compensation rising to $48,000 to $58,000 in 2024-2025 as payer complexity has increased

The gap between administrative cost growth and clinical reimbursement is pushing a shift toward outsourcing non-patient-facing functions. Our virtual assistant services page covers how healthcare organizations are using remote administrative support to reduce overhead without compromising compliance or accuracy.

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What outsourcing administrative functions actually saves

The 40-70% cost reduction range for non-clinical support functions shows up consistently across the data.

Healthcare administrative outsourcing cost comparisons:

• Outsourcing medical billing and coding to offshore or nearshore teams reduces cost by 40-60% compared to in-house U.S. staff, per industry benchmarks from HFMA and McKinsey
• Virtual administrative support including scheduling, referral management, prior auth documentation, and patient communication can be sourced for $8 to $15 per hour through offshore staffing, compared to $22 to $32 per hour for equivalent in-house U.S. roles
• A single full-time offshore administrative virtual assistant replaces approximately $55,000 to $65,000 in annual employer cost at a total engagement cost of roughly $18,000 to $30,000 per year
• Practices that have shifted administrative functions to virtual staff report reducing administrative labor costs by 35-50% while maintaining or improving turnaround times for billing, scheduling, and documentation
• Deloitte's 2024 Global Outsourcing Survey found that 72% of healthcare organizations are actively exploring or expanding outsourcing of administrative and back-office functions, up from 58% in 2021

The strongest ROI cases are in revenue cycle management, prior authorization, and patient scheduling. Volume is high, the work is rule-based, and the location of the worker has no effect on patient outcomes.

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Benefit costs and total employer burden

Salary figures understate actual employer cost. Benefits add a substantial premium across every healthcare worker category.

Healthcare employer benefit cost benchmarks:

• The BLS Employment Cost Index shows that employer benefit costs for healthcare workers average $14.57 per hour worked, or approximately 38-42% of base wages
• Health insurance premiums for employer-sponsored plans averaged $8,435 per employee for single coverage and $23,968 for family coverage in 2024 (KFF Employer Health Benefits Survey)
• Defined contribution retirement plan contributions in healthcare average 4.5-6% of payroll, adding $2,700 to $4,800 per employee annually at median wages
• Workers' compensation costs for healthcare workers run 2.5 to 3.5 times the private-sector average due to injury rates from patient handling, needle sticks, and workplace violence

Once benefits, payroll taxes, and overhead are included, the total employer cost of an RN typically exceeds the stated salary by 35-45%. A $78,000 median RN salary is a $105,000 to $113,000 actual cost per year.

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Year-over-year cost trends: 2023 to 2026

Agency and travel nurse spend peaked in 2022-2023 and declined by an estimated 18-22% through 2025 as pandemic-era bill rates fell and facilities converted agency nurses to permanent roles. Permanent clinical staff wages did not follow the same curve. They increased 5.8% on average in 2023 and 4.9% in 2024, per BLS healthcare sector wage data, outpacing general inflation both years.

Physician compensation has grown at 3.5 to 4.5% annually for the past three years, with shortage-specialty premiums running faster in psychiatry, radiology, and anesthesiology. Administrative healthcare wages grew at 4.2% in 2024, driven by tight labor markets for billing, coding, and revenue cycle roles.

Kaufman Hall modeling projects total healthcare workforce cost per FTE will grow at 3.5-4.5% annually through 2027. The net result is a structural increase in permanent labor cost, partly offset by reduced dependency on the most expensive contract labor. Facilities that locked in permanent staff conversions in 2024-2025 are better positioned than those still running 20%+ of nursing hours on travel contracts.

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What the data means for healthcare finance teams

A few conclusions hold up across the 2026 numbers:

Turnover is the highest-leverage cost variable. NSI data shows that a single percentage-point improvement in RN retention saves the average hospital $262,500 per year. Retention programs costing well below that threshold still produce measurable returns.

Agency dependency is expensive but fixable. Facilities that combined competitive permanent compensation with flexible scheduling and better manager training have materially reduced agency utilization over 24-36 month periods.

Administrative outsourcing has a strong and often underutilized ROI profile. The 40-70% cost reduction available for non-clinical support functions does not require any trade-off in output quality, and most practices that make the shift report faster turnaround times.

Benefits are consistently underestimated. Healthcare organizations that model staffing costs on salary alone are off by 35-45% before they start. For related data on outsourcing approaches and remote staffing models in healthcare, see our research library.