Every behavioral-health CEO I work with is watching the same crisis unfold. They need more clinicians than the market can supply, and even when they succeed in hiring, keeping those clinicians becomes a significant challenge. More than 122 million Americans live in areas where they might struggle to access mental health resources if they were to need support.¹
State agencies agree: 43 out of 44 states responding to a national survey reported workforce shortages across therapy, psychiatry, nursing, and crisis services.²
The default response is often to ramp up recruiting or enhance HR programs. Helpful steps, but not sufficient. The deeper work lies within the financial model: how organizations pay for the workforce they need, how long they can sustain that workforce, and what the numbers reveal about retention and attrition.
In vcfo’s work with both community mental health centers and private clinics, the same patterns emerge—vacancies lead to lost revenue and higher costs. This is not just a “recruitment problem.” It is a financial design issue. HR plays a crucial role, but so does the CFO.
When Workforce Strategy Shows Up on the Income Statement
In many behavioral health settings, reimbursement rates fall short of what the labor market demands. Leading behavioral-health associations cite low pay and high cost-of-living mismatches as key drivers of the workforce gap.⁴
Most organizations budget their service offering first and then attach staffing. Today’s environment requires flipping that thinking to either start with the wage floor required to attract and retain clinicians in your market, then build the funding strategy around that number or at least consider realistic staffing as a limiting factor.
Several states have begun to deploy Medicaid-based enhancements, loan-repayment programs, and rate increases aimed specifically at workforce stabilization.⁵ When you build budgets starting with staff compensation and retention risk, the hiring plan, reimbursement strategy, and operational plan become one integrated model.
Building Workforce Plans Around Funding Reality
Too many workforce initiatives are bolted on outside the budgeting cycle. When finance and HR don’t operate in lockstep, it puts workforce plans at much greater risk.
Real retention depends on items that show up on a budget: protected supervision time, ongoing professional development, schedule flexibility, and manageable documentation burdens. The Kaiser Family Foundation guidance on behavioral health burnout specifically notes supervision, workload, and support as key retention levers.⁶
When staffing plans include those costs early rather than retrofitting after problems emerge, they become sustainable instead of temporary.
Grants, Waivers, and the “Free Money” That Isn’t
Grants and Medicaid waivers frequently appear as ideal solutions to workforce shortfalls. But many fail because the overhead isn’t fully accounted for, such as billing systems, onboarding, IT, supervision, and compliance.
Before adopting a workforce-funding opportunity, I ask:
- Can we deliver at full cost?
- What happens when the funding ends?
- Does the initiative help build a service model that payers will buy into? Grant funding is best viewed as prototype capital—not a permanent patch.
Technology as a Workforce Asset
At a recent industry conference, technology discussions kept returning to the same theme: documentation support tools, workflow automation, scribe services. The underlying driver? Non-clinical tasks consume clinician time.
One place where AI has made a meaningful contribution is in post-visit clinicians’ notes. We have heard numerous instances where the time commitment related to documenting patient sessions was significantly reduced using AI, greatly reducing clinicians’ burden of a highly tedious task. At the same time, AI and technology in general are not a magic panacea for everything. When evaluating AI and technology, do it through the lens of measurable benefit to the organization.
The ROI only holds if we include all actual costs: IT integration, training, compliance, and change management. The financial model must link technology to workforce capacity and ultimately, to revenue and margin.
Seeing the Real Cost of Turnover
Turnover is often treated as an HR KPI. From a financial lens, it is one of the clearest risk indicators.⁷ I encourage organizations to build a basic dashboard that includes the following key metrics: turnover rate by role, fully loaded cost per replacement, time-to-productivity for new hires, and the margin shift in programs due to vacancies. When that data is combined with patient-experience scores, overtime statistics, and caseload variance, the insight becomes undeniable.
Burnout, high caseloads, and staffing instability are correlated with poorer patient experiences, more visits declined or delayed, and higher costs.⁸ In behavioral health settings, where therapeutic relationships and continuity matter deeply, that correlation can play out faster and more visibly.
Whenever CEOs share patient experience or satisfaction concerns with us, we review them alongside staffing data. The overlapping trends are striking. Clinics with the most stretched staff also have the most frustrated patients. The result: rising denials, longer waits, lower throughput, and margin pressure.
So, staff well-being is not only a human resources discussion but also a finance and operational one. A behavioral health CFO needs to connect the dots among burnout, clinician turnover, patient experience, and financial viability.
What Finance Leaders Can Do Right Now
The most practical first step: build a dashboard that places turnover, vacancy, time-to-full-productivity, and average replacement cost beside operating margin. Once those workforce indicators sit next to financial indicators, conversations change.
From there: align wages with local market realities, integrate Medicaid enhancements and grants into long-term strategic planning, invest in technology that meaningfully benefits the organization rather than simply adds another cost line, and treat workforce planning as continuous financial design, not a one-time project.
Behavioral health organizations cannot simply hire their way out of the workforce shortage. However, they can design financial models that embrace recruitment, retention, and innovation to occur. The CFO is no longer in a back-office role. They are now the architects of workforce stability and organizational resilience.
Carter Freeman is the Vice President for vcfo’s Western Region. An accomplished professional with more than 30 years of senior-level financial and accounting experience, Carter embraces new situations, establishes trust and develops workable game plans. To produce results, Carter leads his clients through their challenges by assessing a set of circumstances and “cutting to the chase.”
Footnotes
- “State of the Behavioral Health Workforce November 2024,” National Center for Health Workforce Analysis, https://www.bhw.hrsa.gov/sites/default/files/bureau-health-workforce/state-of-the-behavioral-health-workforce-report-2024.pdf
- “NRI’s 2023 State Profiles: Behavioral Health Workforce Shortages,” NRI,, https://nri-inc.org/media/tghpz5uu/smha-workforce-shortages-2023.pdf
- “The Cost of Nurse Turnover in 2024,” Becker’s Hospital Review, https://www.beckershospitalreview.com/finance/the-cost-of-nurse-turnover-in-24-numbers-2024/
- “Behavioral Health Workforce Shortages and State Resource Systems,” National Conference of State Legislatures, https://documents.ncsl.org/wwwncsl/Labor/Workforce-Shortages-State-Resource-Systems.pdf
- “Trends in State Strategies to Improve the Behavioral Health Workforce,” NASHP, https://nashp.org/trends-in-state-strategies-to-improve-the-behavioral-health-workforce/
- “A Look at Strategies to Address Behavioral Health Workforce Shortages,” Kaiser Family Foundation, https://www.kff.org/mental-health/a-look-at-strategies-to-address-behavioral-health-workforce-shortages-findings-from-a-survey-of-state-medicaid-programs/
- “The Real Costs of Healthcare Staff Turnover,” Staff Relief Inc., https://staffreliefinc.com/2023/03/the-real-costs-of-healthcare-staff-turnover/
- Leonard Davis Institute of Health Economics (2023). “How Inadequate Hospital Staffing Continues to Burn Out Nurses and Threaten Patients.” University of Pennsylvania. https://ldi.upenn.edu/our-work/research-updates/how-inadequate-hospital-staffing-continues-to-burn-out-nurses-and-threaten-patients/
