California system gave $100,000 bonuses to nurses for retention. Did it work?

Escondido, Calif.-based Palomar Health realized it had a nurse retention problem as the system emerged from the pandemic. Like many health systems, Palomar relied on travel nurses to fill gaps as COVID-19 surged and the system felt the strain from nursing workforce shortages.

"We knew that the rate in which we were utilizing contract labor was unsustainable to us as an organization. We wanted to do something drastic, something that was market changing that would draw nurses to us," said President and CEO Diane Hansen. "We wanted to bring nurses in for not just one year, but three, four, five years or more."

In March 2023, Ms. Hansen decided to take action. After many discussions with her executive team, Ms. Hansen decided to offer $100,000 sign-on bonuses to new nurses and $100,000 retention bonuses to current staff nurses over a three-year period.

"We went back and forth on this program because we knew if we were not successful and offered the bonuses, and then didn't reduce contract labor, we would have created our own unsustainable program," said Ms. Hansen. "We knew we had to find the sweet spot, to find the right dollar amount that would entice nurses in, and the right amount of time to tie them into the organization."

The team eventually decided on $100,000 over three years because if the nurses stayed for three years, there was a higher probability that they would stay longer. The hospital has several clinical and non-clinical staff members who have been there for 20-plus years.

"We are successful at creating a culture that makes people feel like they found a home," said Ms. Hansen. "If we can get people to stay for three years, most often we can get them to stay for much longer. We chose three years and decided then we would reassess the market and see if it really worked or if we needed to adjust."

Ms. Hansen didn't need three years to see the impact of her bonuses.

"The program was incredible in reducing reliance on travelers and agency staffing," she said. "We have been able to staff our emergency department fully with very little contract labor."

The bonuses, which new and existing nurses could opt into from March to August 2023, were a big financial lift. But it was still important to offer the bonuses not just to new sign-ons, but to current nurses as well.

"In our mind, we couldn't offer this bonus to brand new nurses if we didn't offer it to the folks who had been here with us through the pandemic," she said. "We would be incentivizing them to leave and come back. We wanted to let them know how much we valued their choice in Palomar and the fact that they stayed with us through the pandemic."

Ms. Hansen is building upon the strong culture this year by investing in leadership and team-wide wellness. She implemented a program that includes 1:1 personal wellness coaching, with a focus on physical activity, better sleep, nutrition and mental wellness. The results with her leadership team were great, and she wants to extend those benefits more broadly.

"We are in the business of healthcare, but one of our overriding roles is to teach people how to be healthier and stay out of the hospital," she said. "The fact that we can roll this out to the next level of leadership, directors and everyone else in the organization is an opportunity for us to put our money where our mouth is and focus on health and wellness."

The investment in health and wellness likely will trickle down into better patient care.

"If you can get energized, happy and connected team members taking care of themselves, that will translate into a better patient experience and overall benefit the organization," she said. "If employees are great, then the care we are providing will be great as well."

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