Employee Experience Is Healthcare's New Vital Sign
Healthcare organizations that invest in their people see dramatic payoffs in quality ratings, patient trust, and Medicare reimbursements. New research from the Center for Workforce Transformation shows that hospitals with the most engaged workforces are 5x more likely to earn 4- or 5-star Centers for Medicare and Medicaid (CMS) quality ratings than their low-engagement peers — and 7x less likely to land in the bottom quartile for Medicare's Total Performance Score. The State of Healthcare Employee Experience 2025 report analyzed employee experience data from 144 U.S. hospitals and matched it with publicly reported CMS performance scores, revealing exactly how workplace culture translates into measurable clinical, operational, and financial outcomes.
This isn't just another workforce study. By matching employee experience data from 144 U.S. hospitals from the Perceptyx Benchmark Database with their publicly reported CMS performance scores, the research demonstrates exactly how workplace culture translates into measurable clinical, operational, and financial outcomes. As healthcare faces mounting pressures from workforce shortages, technological disruption, and economic strain, the findings offer a clear message: employee experience is no longer just a cultural concern — it's a vital sign for organizational health and performance.
What's Happening With Healthcare Employee Experience in 2025?
While our data shows overall engagement remains steady at 71.5%, healthcare workers express growing doubts about their organizations' futures. Confidence that their organization can compete effectively dropped 7.6 points year-over-year. Belief that their organization supports them through change fell 7.2 points. Optimism about the future declined 4.7 points, and fewer employees see their leaders' behaviors reflecting stated organizational values.
The data also reveals a workforce caught between progress and pressure. Targeted investments in benefits satisfaction (up 4.4 points), fair performance evaluations (up 6.2 points), and inclusive practices (up 4.8 points) show that when organizations focus on what matters to employees, they respond positively. Yet these gains contrast sharply with declining trust in senior leadership and growing uncertainty about organizational direction.
How Does Employee Engagement Impact Hospital Performance?
The research examined four critical CMS outcome measures: Overall Hospital Quality Star Rating, HCAHPS Hospital Rating, HCAHPS Recommend Star Rating, and Total Performance Score (TPS). Across every measure, higher employee engagement correlated with stronger outcomes. Leaders seeking to improve performance need to understand what drives that engagement.
Hospitals in the lowest engagement quartile remain stuck in mediocrity, with 88% earning only 2 or 3 stars and none achieving 5-star status. These facilities often struggle with the very factors that emerged as top engagement drivers in the research: unclear future vision, ineffective change management, and leadership behaviors that don't align with stated values. When employees don't see a clear organizational direction (down 4.7 points) or feel unsupported through change (down 7.2 points), that uncertainty manifests in inconsistent patient care and lower quality scores.
In contrast, 65% of hospitals in the top engagement tier earn 4 or 5 stars. What sets them apart? These organizations excel at the behaviors that matter most: their employees feel empowered to challenge the status quo (a top driver that improved 3.5 points), see leaders consistently modeling organizational values, and trust in the organization's ability to navigate change. Even moving from below-average to slightly above-average engagement delivers dramatic improvements, virtually eliminating 1-star ratings and significantly improving patient advocacy scores.
The practical takeaway is clear: to improve hospital performance, focus on the specific behaviors that drive engagement. Strengthen change management capabilities, ensure senior leadership actions align with organizational values, and create clear communication about the organization's future direction. When healthcare workers trust their leaders and feel equipped to handle transformation, that confidence translates directly into the quality of care patients receive and the ratings that reflect it.
Why Do Patient Recommendations Rise Faster Than Satisfaction Scores?
One of the most intriguing findings reveals that patient willingness to recommend a hospital accelerates more rapidly than general satisfaction ratings as employee engagement improves. When hospitals move from the bottom engagement quartile to the next highest, recommendation scores jump 20 points while overall ratings increase just 15 points.
This pattern suggests that hospital 'willingness to recommend' isn't just a survey metric. It’s also an emotional marker of trust, safety, and respect. In healthcare, it remains one of the most powerful drivers of patient decision-making. You don't need perfect engagement to earn patient trust, but you do need to be better than average. Hospitals with above-average engagement are nearly 5x more likely to receive top-tier recommendation scores, showing that consistently listening to employees and acting on feedback strengthens the culture that patients feel and talk about.
What Are the Warning Signs Healthcare Leaders Should Watch For?
While engagement holds steady, several concerning trends emerge. Support for change shows the steepest decline, with employees feeling less equipped to adapt (down 7.2 points) and fewer believing their input matters in decisions (down 2.9 points). This matters because handling change effectively continues to rank as a top driver of engagement, yet scores are trending downward.
Leadership trust faces a similar strain. Employees express doubts about competitiveness, mission clarity, and whether leaders' actions align with stated values. Perhaps most concerning, safety perceptions are slipping, both physical safety (down 3.8 points) and psychological safety to speak up without consequence (down 1.5 points). In an industry where safety is foundational for both care delivery and workforce well-being, these declines warrant immediate attention.
Which Investments Actually Improve Healthcare Worker Experience?
The good news: targeted investments in people practices are working. The data shows clear improvements in areas where organizations have direct control. Fairness and equity initiatives show the strongest gains, with employees reporting more confidence that performance evaluations are fair and that people can succeed regardless of background. Additionally, retention among health care employees in general is still an issue, as one in five health care workers left their organizations in 2023. However, our research shows that career development opportunities are improving, which represents a major factor in retention and workforce stability.
Empowerment has increased, with more employees saying their opinions matter and feeling encouraged to challenge the status quo, which is now one of the top drivers of engagement. Well-being investments show similar progress, including stronger manager support for work-life balance, greater satisfaction with staffing levels, and improved confidence in benefits. These improvements reflect growing trust in systems and leaders closest to day-to-day experience, particularly those in HR, Safety, Quality, and other key functional roles.
How Can Healthcare Organizations Connect EX to Outcomes?
To drive change, leaders must show stakeholders the value of investing in employee experience. The research demonstrates this connection clearly: employee engagement operates as the invisible force driving success across clinical, operational, and patient experience domains. A hospital's infection rate is a clinical metric. When that infection leads to readmission, it becomes an operational concern. If that patient felt unsupported or unsafe, it reflects in their HCAHPS rating. Three different metrics, three different domains, but all tied to how supported and empowered the care team felt.
This is the bridge between human experience and operational outcomes. Employee experience connects every behind-the-scenes decision to every patient at the bedside. Organizations need to treat engagement like a clinical metric that's strategically managed, benchmarked, and tied to continuous action. The data shows you don't need perfect engagement, however. Just moving above average drastically reduces poor performance risk and elevates hospital reputation.
What Should Healthcare Leaders Do With This Information?
Our research delivers clear guidance for healthcare leaders ready to act. First, recognize that employee experience is a vital sign requiring continuous monitoring, clear benchmarks, and fast response when declining. Like any vital sign, it needs regular monitoring and proactive action. Ignoring it risks real consequences that run the gamut: turnover, care quality, reimbursement, and more.
Second, focus investments where they matter most. The data shows that improvements closest to the employee experience, driven by managers and HR, are working. Continue building trust through fair evaluations, inclusive practices, and empowerment while addressing the growing gaps in organizational vision and change management. Third, connect the dots between culture and outcomes. Use employee feedback to predict and prevent performance issues before they impact patients.
The Bottom Line for Healthcare Organizations
In healthcare, people are your strategy. The most advanced technology and beautiful facilities mean little if your culture is crumbling. This report makes the case that investing in employee experience is one of the highest-return decisions a healthcare leader can make for quality, trust, and sustainability.
Our findings reveal that even modest engagement levels can deliver measurable gains, especially for organizations currently operating at or below average. Rising above average drastically reduces poor performance risk, improves patient trust through referrals, and helps avoid financial penalties tied to underperformance.
Ready to transform your healthcare organization's approach to employee experience? Download the full The State of Healthcare Employee Experience 2025 report for detailed insights into the EX-to-outcomes connection, year-over-year trends, and strategies for building cultures that drive performance. To learn how Perceptyx can help you leverage continuous listening and action and address behavior change at scale that can close the loop on actioning, schedule a demo to learn more about innovative solutions like Activate for Healthcare.
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