Payroll Costs in the Healthcare Sector
In brief: In the healthcare sector, payroll accounts for 60 to 80% of operating costs. Salaries are high (long, regulated training), premiums are numerous (nights, weekends, public holidays, on-call duties) and agency staff are expensive. Controlling these costs without compromising the quality of care requires optimized staff scheduling, real-time time tracking and visibility on the real cost of every shift.
Payroll Cost Structure in Healthcare
The healthcare sector has a very different payroll cost structure from retail or hospitality. Training takes longer, base salaries are higher, and premiums pile up because of 24/7 operations.
High Base Salaries
Healthcare professions require long, regulated training. In Belgium, for example:
- Doctor: 7 to 12 years of study depending on the specialisation
- Pharmacist: 5 years of study
- Bachelor-level nurse: 4 years
- Physiotherapist, occupational therapist, speech therapist: 4 to 5 years
- Care assistant: 1 to 2 years of certified training
- Laboratory or radiology technician: 3 years
These qualifications are reflected in pay scales. A bachelor-level nurse at the start of their career costs significantly more than a retail sales assistant. A deputy pharmacist or a salaried doctor even more. Pay scales rise with seniority, which automatically increases payroll costs every year.
Employer Contributions
In Belgium, employer social security contributions amount to roughly 25% of gross salary after the structural reduction. For a nurse earning €2,800 gross a month, the employer contribution is about €700. The employer cost of the salary alone is therefore €3,500 a month. This amount includes neither extra-statutory benefits nor premiums.
Sector Benefits
In Belgium, the collective agreements of the healthcare sector provide for specific benefits:
- End-of-year bonus (13th month)
- Holiday pay (single and double)
- Attractiveness bonus (in some sub-sectors, to attract candidates)
- Meal vouchers and eco vouchers (depending on the applicable agreement)
- Travel allowance
Adding up gross salary, employer contributions and benefits, the total annual cost of an employee exceeds their gross annual salary by 35 to 50%.
The Weight of Premiums
This is the cost item most specific to healthcare. 24/7 operations generate structural premiums that weigh heavily on the budget.
Night Premiums
Hours worked between 8pm and 6am carry a premium. The percentage depends on the collective agreement, but generally expect a premium of 20 to 35%. A nurse earning €18 gross an hour costs €21.60 to €24.30 an hour at night, before employer contributions. In a nursing home or a clinic, nights account for a third of shifts. The budget impact is huge.
Weekend Premiums
Saturday work may carry a premium (depending on the agreement). Sunday carries a premium of 50 or 100%, public holidays 100%. A facility open 7 days a week pays weekend premiums every week of the year, which means 104 days at a premium rate each year.
The Cumulative Cost of Premiums
Take a hospital ward with 15 nurses covering 3 shifts, 7 days a week:
- Night shifts: about 56 night hours a week with a 25% premium, a significant weekly extra cost
- Weekend shifts (Saturday and Sunday): 48 hours at a premium rate every weekend
- Public holidays: 10 days a year at a 100% premium
Over the year, premiums can account for 15 to 25% of the ward's total payroll budget. It is a cost item you have to control, not just absorb.
Medical On-Call Duties
Doctors' on-call duties (on site or on standby) have their own cost. A 12-hour on-site duty (8pm to 8am) is paid in full with night premiums. Standby duty is paid at a reduced flat rate, but each call-out is paid at the actual rate with premiums. The monthly cost of on-call duties per specialty is a budget item in its own right.
The Cost of Overtime
Structural Overruns
In a medical setting, overtime is rarely the result of bad will. It is structural:
- Handovers between shifts: 15 to 30 minutes per shift change
- Emergencies at the end of a shift: a patient arriving in A&E at 9:50pm when the shift ends at 10pm
- Unfinished care: a dressing that has been started must be finished
- Understaffing: an absent colleague is not replaced and the hours are redistributed
These overruns, often 15 to 30 minutes per shift, add up. Over a month, a nurse can build up 5 to 10 hours of overtime. With a 50% premium, the cost is out of proportion compared with properly sized staffing.
How to Reduce Overtime
The first step is to measure it. Without accurate time tracking, you do not know how much overtime is being worked. The second step is to identify the causes: chronic understaffing, poorly planned handovers or unanticipated peaks in activity. The third is to adjust the schedule accordingly.
The Cost of Agency Workers
A Cost 30 to 50% Higher
When a position cannot be covered internally (absence, vacancy, turnover), many facilities turn to temp agencies. An agency nurse costs 30 to 50% more than a permanent nurse, including agency fees. The extra cost is similar for a care assistant.
A Cost That Can Become Structural
In facilities with high turnover, agency work becomes permanent. Some wards operate with 10 to 20% agency staff at all times. The annual extra cost runs into tens of thousands of euros per ward. Reducing turnover (through fair scheduling and good HR management) is a direct investment in payroll costs. Read our guide on staff turnover and retention in healthcare.
Anticipate Rather Than React
Agency staff are sometimes unavoidable. But you can rely on them less by:
- Building a pool of regular stand-ins (cheaper than agency staff)
- Offering voluntary overtime to existing teams (cheaper than agency staff, even with a premium)
- Anticipating predictable absences (leave, training) in the schedule
- Reducing turnover through fair scheduling
Optimize Payroll Costs Without Compromising Quality
Optimize the Shift Mix
Not all shifts cost the same. A night shift costs 20 to 35% more than a day shift. A Sunday shift costs 50 to 100% more. Optimisation means sizing night and weekend staffing to what is strictly necessary (but never below the minimums) and concentrating plannable activities (training, meetings, non-urgent care) on weekday day shifts.
Reduce Overtime Through Better Scheduling
A well-sized schedule reduces overtime by 30 to 50%. How? By building handover time into shift hours. By sizing staffing to actual peaks in activity (not to averages). By having a fast replacement process that avoids overloading the team on duty.
Track Payroll Costs in Real Time
With Shyfter, the forecast labor cost appears directly in the schedule. Before publishing, you see how much each day, each shift and each department will cost. If the cost of Sunday exceeds the budget, you adjust beforehand, not afterwards.
Manage by Department
Payroll cost per department, per month, with the breakdown by item (normal hours, premiums, overtime, agency staff): this is the dashboard you need to manage. Shyfter provides this data through time tracking and the payroll export.
Maintaining regulatory compliance
Optimizing payroll costs does not mean getting around the rules. Minimum staffing, mandatory premiums, rest rules and required qualifications are not negotiable. Optimisation happens within the legal framework: better shift planning, less avoidable overtime, less reliance on agency staff and anticipated absences.
A facility that cuts costs by falling below staffing ratios exposes itself to penalties and puts patients at risk. Smart optimisation means doing better within the same constraints, not ignoring them.
The Case of Small Organisations: pharmacies, practices, opticians
A More Concentrated Payroll Cost
In a pharmacy with 8 people or a medical practice with 5, payroll weighs less in absolute terms, but every euro counts more. A deputy pharmacist who builds up 3 hours of overtime a week represents an extra monthly cost of €400 to €600 (with premiums). Over the year: €5,000 to €7,000 that was not budgeted.
Pharmacy On-Call Duties
Night and weekend on-call duties in a pharmacy are a specific cost item. The pharmacist on duty is paid with night and weekend premiums. The cost of a night duty (12 hours) with premiums can be the equivalent of 2 normal days. Over the year, on-call duties can account for 10 to 15% of the pharmacy's payroll budget.
Maximising Revenue per Slot in Practices
In a dental practice or a radiology practice, every unfilled slot is a fixed cost with no revenue. An empty chair for 30 minutes means the dental assistant's salary is running with nothing in return. Optimizing the occupancy rate of equipment and practitioners is the most direct lever on profitability.
What Shyfter Provides for Cost Management
- Forecast cost per schedule: you see the cost before publishing, not afterwards
- Actual cost from time tracking: actual hours (with overruns and premiums) give the real cost
- Breakdown by hour type: normal hours, nights, weekends, public holidays, overtime, on-call duties
- Breakdown by department: each department has its own dashboard
- Overrun alerts: you are notified when the cost of a shift or department exceeds the budget
- One-click payroll export: to your payroll provider, see the integrations page
FAQ
What percentage of turnover does the payroll represent in healthcare?
In most healthcare facilities (hospitals, nursing homes, care centers), payroll accounts for 60 to 80% of operating costs. In a medical practice or a pharmacy, the percentage is generally lower (30 to 50%) because the organization is smaller and revenue per employee is higher. In every case, it is the largest expense.
How do you calculate the real cost of a nurse?
Take the gross annual salary. Add employer contributions (in Belgium, about 25% after the structural reduction). Add mandatory benefits (13th month, holiday pay, meal vouchers, sector bonuses). Add predictable premiums (nights, weekends, public holidays, overtime). The total exceeds the gross annual salary by 40 to 55%. In Belgium, for a nurse earning €2,800 gross a month, expect a total employer cost of €48,000 to €55,000 a year.
How can you reduce reliance on agency workers?
There are three main levers. First, reduce turnover with fair and predictable scheduling (carers leave facilities where the schedule is unfair). Second, build a pool of regular stand-ins that you contact before the agency. Third, anticipate predictable absences in the schedule so that replacements are organized in advance rather than in a rush.
