10 Jun 2014Working Paper Summaries

Cohort Turnover and Productivity: The July Phenomenon in Teaching Hospitals

by Robert S. Huckman, Hummy Song and Jason R. Barro

Nearly all managers must deal with the consequences of employee turnover within their organizations. Despite the importance of this issue, several authors have observed that academic attention has been disproportionately focused on the causes rather than consequences of turnover. To investigate consequences more closely, the authors of this paper focus on the effects of turnover in a particularly high-stakes setting: teaching hospitals. Specifically, the authors examine the effects on productivity of cohort turnover-the planned simultaneous exit of a large number of experienced employees-in this case, medical residents and fellows-and a similarly sized entry of new residents and fellows. Typically, at (or slightly before) the beginning of every July, the most senior residents at teaching hospitals move on to permanent medical positions or fellowships at other hospitals, and recent medical school graduates arrive as first-year residents. The authors examine the impact of the July turnover on hospital productivity using data on all patient admissions from a large, multi-state sample of American hospitals over a 16-year period. By comparing trends in teaching hospitals to those for non-teaching hospitals over the course of the year, they find significant negative effects of the residency turnover on hospital efficiency as measured by risk-adjusted, average length of stay. Overall, the cohort turnover of resident physicians in teaching hospitals reduces medical productivity by increasing resource utilization and, to a lesser degree, decreasing quality. The authors discuss implications for labor turnover in other types of organizations. Key concepts include:

Examples of cohort turnover include turnover between military units in combat, political administrations, and residents and fellows in teaching hospitals.
The performance of major teaching hospitals relative to non-teaching facilities is at its lowest level in July, the month of the year when there tends to be cohort turnover of medical residents and fellows.
Cohort turnover has negative implications for productivity. These effects generally increase with the intensity of the turnover, though not always in a linear fashion.
Cohort turnover of resident physicians in teaching hospitals reduces medical productivity by increasing resource utilization and, to a lesser degree, decreasing quality.
The months leading up to the July turnover also appear significant. Major teaching hospitals seem to experience a gradual increase in resource utilization and a concurrent decrease in quality.

Author Abstract

We consider the impact of cohort turnover-the planned simultaneous exit of a large number of experienced employees and a similarly sized entry of new workers-on productivity in the context of teaching hospitals. Specifically, we examine the impact of the annual July turnover of residents in American teaching hospitals on levels of resource utilization and quality relative to a control group of non-teaching hospitals. We find that, despite the anticipated nature of the cohort turnover and the supervisory structures that exist in teaching hospitals, this annual cohort turnover results in increased resource utilization (i.e., longer length of hospital stay) for both minor and major teaching hospitals and decreased quality (i.e., higher mortality rates) for major teaching hospitals. Particularly in major teaching hospitals, we find evidence of a gradual trend of decreasing performance that begins several months before the actual cohort turnover and may result from a transition of responsibilities at major teaching hospitals in anticipation of the cohort turnover.