The average, major teaching hospital experiences an increase in risk-adjusted mortality of roughly 4 percent in the July-August period.
Nearly all managers must deal with the consequences of employee turnover within their organizations. Turnover appears in multiple forms. Many firms face a continuous stream of individual turnover in which employees leave and are replaced by new workers at various points throughout the year. In such settings, there is no one particular time during the year when managers are required to train and orient a large portion of their workforces.
In contrast, other firms bring on new employees in large numbers at discrete points in the year. For example, law and consulting firms tend to start most of their new employees in late summer or early fall. These new employees must all be trained and integrated into the firm at one time. In the law and consulting examples, the potential negative effects of the large inflow of new workers may be buffered by the fact that firms do not face the simultaneous exit of large portions of their experienced workers. Rather, departures occur in a roughly continuous manner throughout the year.
In Cohort Turnover and Productivity: The July Phenomenon in Teaching Hospitals (NBER Working Paper No. 11182), authors Robert Huckman and Jason Barro investigate a third form of turnover, the extreme, though not uncommon, scenario that they term cohort turnover. This type of turnover involves the simultaneous exit of a large number of experienced employees and a similarly sized entry of new workers. Cohort turnover raises concerns about adverse effects on productivity attributable to factors such as operational disruption or the loss of the tacit knowledge held by departing workers.
The authors consider cohort turnover among house staffs (that is, residents and fellows) in teaching hospitals. This turnover leads to a significant lack of continuity and a discrete reduction in the average experience of the labor force at teaching hospitals every summer. In addition, this changeover may disrupt established teams of doctors and other caregivers within hospitals. Either of these effects may have potentially troubling consequences for the two determinants of hospital productivity -- resource utilization and clinical quality. This "July phenomenon" is often mentioned in the lore of medical professionals.
Using data on all patient admissions from a large, multi-state sample of American hospitals over a five-year period, the authors find that both minor and major teaching hospitals experience a significant increase in resource utilization -- measured by average length of stay (LOS) -- immediately following the July turnover, and that the effect appears to last for several months. They also find that teaching hospitals with medium teaching intensity experience a significant increase in patient mortality over the same period. The confluence of increased resource utilization and increased mortality (in other words, decreased quality) during the July-August period implies that this cohort turnover reduces medical productivity.
Nevertheless, those hospitals with the highest teaching intensities (the greatest reliance on residents for the provision of care) seem to avoid the disruption of the July phenomenon with respect to average mortality rates. The authors' preliminary evidence suggests that higher supervision levels play a role in mitigating the impact of the July turnover in major teaching facilities.
The magnitude of the estimated effects is substantial and appears to last for roughly six months. The average LOS for the average, major teaching hospital increases by roughly 2 percent following the July turnover and remains between 1 percent and 2 percent higher throughout the final six months of the calendar year. Similarly, the average, major teaching hospital experiences an increase in risk-adjusted mortality of roughly 4 percent in the July-August period. This effect also remains at levels between 2 percent and 4 percent for the last six months of the calendar year. For the average major teaching hospital, this translates into between 7.8 and 13.8 "accelerated" deaths (that is, deaths that occur earlier than they would have in the absence of the July turnover) per year. Based on a total of roughly 200 major teaching hospitals in the United States, the July phenomenon is thus associated with roughly 1,500 to 2,750 accelerated deaths per year in the United States. The authors do not estimate the social cost of this increase in mortality.
Beyond their findings with respect to the July phenomenon, the authors offer empirical support for the contention that cohort turnover has negative implications for productivity on average, although these effects do not increase linearly with the intensity of turnover. Their initial evidence suggests that supervision can mitigate this negative effect. Even if firms are not able to reduce their levels of turnover, they may be able to manage its effects
-- Les Picker