Abstract
This study tests the competing arguments that organizational turnover rates are positively associated with organizational inefficiency or, alternatively, that turnover rates are positively related to organizational inefficiency only in those organizations experiencing very high or very low rates of turnover. The findings strongly support the former argument: in a national sample of 407 hospitals, turnover among registered nurses was found to be positively and linearly associated with both operating and personnel costs per adjusted admission. However, subset analyses based on hospital size, location, and teaching status, suggest that the strength of the turnover cost relationship is contingent upon the type of institution in which turnover occurs.