How Do You Estimate the Savings from Automation in Healthcare?

It’s a little complicated. But automation in any category brings high gains.

It’s no secret that healthcare administration is costly on every level. Facilities of all sizes are under extraordinary strain. But estimating the costs for major hospitals to address staff shortages, staff burnout, early retirement, and turnover across licensed professionals (technicians, nurses, physician assistants, and doctors) is complex. The expenses include both direct costs (e.g., hiring, training, overtime, and temporary staffing) and indirect expenses (e.g., lost productivity, reduced patient care quality, and long-term workforce planning).

 

Of course, exact costs depend on hospital size, location, and specific circumstances for each facility. But here’s an estimate based on current data and trends.

Key Factors & Assumptions:

Scope of Licensed Professionals: Automation would impact employees ranging from technicians (e.g., lab, radiology) to nurses (RNs, LPNs), physician assistants (PAs), and doctors (MDs/DOs). Each group has different salary levels, training requirements, and turnover rates.

Hospital Size: For analysis, we’ll assume that a major hospital has 300-500 beds and employs roughly 2,000-3,000 clinical staff, including licensed professionals who comprise 60-70% of that workforce (1,200-2,100 individuals).

 

Categories of cost:

 

Staff Shortages: Overtime costs, agency/travel staff, and recruitment. Hiring a single nurse costs $5,000-$10,000 in advertising and fees; PAs and technicians are similar, while physicians cost $20,000-$50,000. Addressing staff shortages requires extra reliance on overtime, agency workers, and traveling staff.

• Overtime Costs: Nurses and technicians often work extra shifts at 1.5-2x regular pay. If 10% of staff (120-210 professionals) work 10 additional hours/week at an average hourly rate of $50 (blended across roles: technicians ~$30, nurses ~$40, PAs ~$60, doctors ~$100), that’s $300,000-$525,000 annually in overtime.

• Agency/Travel Staff: Travel nurses cost $100-$150/hour versus $40-$50 for staff nurses. If a hospital hires 50 travel nurses for 13-week contracts (a common stopgap), at 40 hours/week, that’s $2.1M-$3.2M per contract cycle. Assuming 2-3 cycles/year, costs range from $4.2M—$9.6M.

• New hires and recruitment: The cost of hiring 100 new hires annually (to fill shortages) is $0.5M—$2M.

Total Estimate: $5M—$12M/year, depending on reliance on temporary staff.

 

Staff Burnout: The costs for wellness programs, workload reduction, and retention incentives.

• Wellness Programs: Programs (e.g., mental health support, stress management) cost $100-$500/employee annually. For 1,200-2,100 staff, that’s $120,000-$1.05M/year.

• Workload Reduction: Hiring additional support staff (e.g., medical assistants at $20/hour) to offload administrative tasks from licensed professionals. Adding 50 support staff at $40,000/year each totals $2M.

• Retention Incentives: Bonuses or pay increases to retain staff (e.g., $1,000-$5,000 per person). For 25% of staff (300-525 individuals), that’s $0.3M-$2.6M/year.

Total Estimate: $2.4M-$5.7M/year, varying with program scale and incentives.

 

Early Retirement: Early retirement accelerates replacement needs and disrupts expertise.

• Replacement Costs: If 5% of staff (60-105 professionals) retire early annually, recruitment and training costs mirror turnover (see below). For nurses, PAs, and technicians, replacement is $5,000-$10,000 each; for doctors, $20,000-$50,000. Total: $0.3M-$1.5M.

• Knowledge Loss: It is harder to quantify, but retraining peers or hiring consultants might add $100,000-$500,000/year in lost productivity.

• Pension/Exit Costs: These are minimal for most, though some may receive severance (e.g., $10,000/person for 20% of retirees = $120,000-$210,000).

Total Estimate: $0.5M-$2.2M/year, depending on retiree numbers and roles.

 

Turnover: Turnover encompasses hiring, onboarding, and productivity losses.

• Turnover Rates: Industry averages (2024-2025 projections) suggest 20% for nurses, 15% for technicians, 10% for PAs, and 8% for doctors. For 1,200-2,100 staff, that’s 180-315 turnovers/year.

• Direct Costs: Nurses: $52,000/turnover (recruitment + training). For 100-150 nurses, $5.2M-$7.8M. Technicians: $30,000/turnover. For 50-75, $1.5M-$2.3M. PAs: $60,000/turnover. For 20-30, $1.2M-$1.8M.Doctors: $200,000/turnover (higher due to specialization). For 10-20, $2M-$4M. The subtotal: $9.9M-$15.9M.

• Productivity Losses: New staff take 3-6 months to reach full efficiency, costing 25-50% of salary. For an average salary of $80,000 across roles, that’s $3.6M-$7.5M.

Total Estimate: $13.5M-$23.4M/year, reflecting volume and role mix.

 

Aggregate Cost Estimate

 

When we combine the standard cost categories, our estimates look like this:

• Low-End Total: $5M (shortages) + $2.4M (burnout) + $0.5M (retirement) + $13.5M (turnover) = $21.4M/year.

• High-End Total: $12M + $5.7M + $2.2M + $23.4M = $43.3M/year.

 

But Wait – There’s More

 

We should also consider that larger hospitals (e.g., 500+ beds) or those in high-shortage areas (rural, underserved) could see costs exceed $50M/year, while smaller urban hospitals might stay below $20M. External factors such as rising wages, inflation, or policy changes (e.g., loan forgiveness, training grants) could shift these figures. Costs could decrease over time with effective retention and training pipelines, but initial outlays are high.

 

In Summary, the Incentives for Automation are High

 

This analysis shows that a major hospital addressing staff shortages, burnout, early retirement, and turnover for licensed professionals likely costs between $21M and $43M annually. Conversely, the advances Curabotics brings forward can help healthcare practices of every size to run this math in reverse effectively. For every type of automation you implement, you can factor the cost of the implementation (equipment, implementation, and the training and transition process) against these numbers to estimate the rate and amount of return.

While the cost of change may feel daunting at the outset, the magnitude of savings will reveal the whole story. You will likely discover that regardless of the size of your organization, automation could be the most cost-effective investment you make. This is why Curabotics exists – and we are ready to help.

If you’re prepared to take the next step, you can reach out for an evaluation to Riyad@Curabotics.com