The Economics of Burnout: Why Hospital Staffing Shortages are Costing Billions

When people talk about the high cost of healthcare in the United States, they often point to drug prices, hospital stays, or insurance premiums. Yet, they rarely consider the increasing economic consequences of physician burnout and staffing shortages, despite it being one of the largest burdens on the healthcare system.

What is physician burnout?

Physician burnout is not just being tired after a long shift. It’s a chronic occupational syndrome resulting from emotional exhaustion, depersonalization, and a diminished sense of personal accomplishment in the workplace. Amongst physicians, emotional exhaustion includes feeling depleted at the end of a workday and feeling as though they have nothing left to offer patients emotionally. Depersonalization manifests as feelings of detachment and callousness towards patients, often treating them as objects rather than as human beings. This developing sense of cynicism towards one’s work leads physicians to feel disengaged from patients and simply “go through the motions” of their day-to-day demands. Physicians in this mental state often feel a sense of reduced personal accomplishment, reporting feelings of ineffectiveness and lack of value in their work [1].

Burnout amongst physicians is widespread, with 45.2% of physicians in 2023 reporting at least one symptom of burnout during their career. This number has significantly decreased from a substantial 62.8% burnout rate in 2021 during the COVID-19 pandemic [2]. Despite this seemingly positive decrease in burnout over the past 4 years, physicians still have burnout rates that are significantly higher than any other profession [3].

How burnout translates into billions

Burnout is the leading cause of physicians leaving the workforce early. Burnout directly contributes to costs of replacement for physicians leaving the practice or reducing their hours. The cost of physician burnout includes the cost of recruitment, onboarding and training new staff, and lost revenue due to position vacancy. However, it also includes hidden costs such as medical malpractice, reduced patient satisfaction, and damage to brand reputation and patient loyalty. This total can range from $500,000 to more than $1 million per doctor, depending on specialty and location [4]. When this number is multiplied by the thousands of physicians leaving the workforce each year, this number can skyrocket into the billions of dollars. On a national scale, a conservative estimate of $4.6 billion annually is attributed to burnout-driven turnover and reduced clinical hours [5].

Staffing shortages and the economy

Staffing shortages and burnout are closely intertwined, creating a detrimental cycle that threatens both patient care and hospital finances. When hospitals operate with fewer nurses and physicians than needed, remaining staff face heavier workloads, longer shifts, and increased overtime, which drives burnout and continues the cycle [6]. This burnout, in turn, forces hospitals to spend heavily on recruitment, temporary staff, and overtime.

Conclusion

Burnout is far more than a personal wellbeing problem; it is a financial and systemic issue. Hospitals that rely on overworked, under-supported physicians may save on payroll in the short term, but the hidden costs — turnover, reduced productivity, medical errors, and penalties — quickly surpass those savings. Understanding and addressing burnout is not only necessary for the physicians in question but is essential for sustainable, high-quality, and economically efficient healthcare.

Designed by: Sebastian Mardales

References:

[1] West, C. P., Dyrbye, L. N., & Shanafelt, T. D. (2018). Physician burnout: Contributors, consequences and solutions. Journal of Internal Medicine, 283(6), 516–529. https://doi.org/10.1111/joim.12752

[2] Measuring and addressing physician burnout. (2025, May 15). American Medical Association. https://www.ama-assn.org/practice-management/physician-health/measuring-and-addressing-physician-burnout

[3] Sanford, J. (2025, April 9). U.S. physician burnout rates drop yet remain worryingly high, Stanford Medicine-led study finds. News Center. https://med.stanford.edu/news/all-news/2025/04/doctor-burnout-rates-what-they-mean.html

[4] How much physician burnout is costing your organization. (2018, October 11). American Medical Association. https://www.ama-assn.org/practice-management/physician-health/how-much-physician-burnout-costing-your-organization

[5] Han, S., Shanafelt, T. D., Sinsky, C. A., Awad, K. M., Dyrbye, L. N., Fiscus, L. C., Trockel, M., & Goh, J. (2019). Estimating the Attributable Cost of Physician Burnout in the United States. Annals of Internal Medicine, 170(11), 784–790. https://doi.org/10.7326/M18-1422

[6] Jones, D., & Allin, S. (2025). Causes and effects of hospital nursing shortages to consider potential feedback effects: An umbrella review. Human Resources for Health, 23(1), 61. https://doi.org/10.1186/s12960-025-01028-w