Why Eastern Maine Medical Center and Northern Light Healthcare's 403(b) Vesting Schedule Could be Used to Support Its Talent Strategy—and What Administrators Can Do About It

At Eastern Maine Medical Center, the challenges of staffing shortages are no secret. From physicians to nurse practitioners to bedside RNs, finding and keeping clinical staff is becoming harder—and more expensive. But amid rising labor costs and growing reliance on locum tenens and travel nurses, EMMC may be overlooking a high-impact, low-cost tool: a more competitive retirement plan design.

Today, EMMC requires employees to wait a full year before they can receive employer contributions in its Eastern Maine Medical Center 403(b), and then another two years before they become vested in the employer match. On paper, this may appear fiscally responsible. In practice, it may be a missed opportunity—and one that sends the wrong message to your workforce, especially in a place where there is a chronic shortage of providers.

The Hidden Cost of Delayed Vesting on the Eastern Maine Medical Center 403(b)

Let’s say you're hiring a new physician at a salary of $336,000. Under the current structure:

• That doctor can’t even begin receiving matching contributions for 12-18 months.

• The hospital match won’t begin vesting until the end of year three.

• If the physician leaves before that, they walk away with nothing from the employer side—regardless of performance or patient impact.

  
  

In today’s hiring market, this isn’t just uncompetitive—it may end up being counterproductive. Physicians and advanced practice providers are increasingly comparing total compensation, not just salary. A delay in retirement contributions is viewed as a penalty, not a perk deferred.

More importantly, when those employees leave early—as they increasingly do—the hospital loses not only the talent, but also the recruiting investment, the institutional knowledge, and the continuity of care.

A Smarter Way to Compete for Talent

What’s the alternative? One that balances fiscal responsibility with a stronger workforce strategy:

• Immediate plan eligibility upon hire (as is the case under the current 403(b) plan).

• Employer match begins day one, but with graded vesting over three years:

  • 33% vested after Year 1 (contingent on 1,000 hours worked and still employed on 12/31),

  • 66% after Year 2, (contingent on 1,000 hours worked and still employed on 12/31)

  • 100% after Year 3.

This approach gives you the flexibility to claw back employer contributions if someone leaves early—but also sends a clear signal: We’re investing in you from the start. It enhances your value proposition without bloating base salaries.

Here’s how this could look in practice:

• A physician making $336,000 could instead be offered $312,500 with an 8% match, capping out at $23,500 in employer contributions (assuming the employee maxes out their $23,500 side). A maxed out 403(b) employer contribution for highly compensated physicians gives a competitive offer for badly needed specialists.

• A nurse practitioner at $122,000 could be offered $113,000 with an 8% match, achieving the same total compensation.

• A registered nurse earning $83,000 could remain at that salary, with an 8% match bumping their total comp closer to $89,600—still competitive while aligning costs with tenure.

• Of course the concern is that a high match is excessive and will overcompensate cerain employees that aren't as hard to recruit and get - but by using the match feature it required that thos employee fund their own retirements first before the employer is on the hook for the match - and it requires 1,000 hours in the year (20 hours a week) and being an employee on 12/31 to qualify for the match. Employees who don't make it to 1,000 hours or until 12/31 won't necessarily cost the employer anything, in our estimation.

  
  

Why This Matters for Hospital Operations

High turnover is expensive. Every time a nurse leaves, you may spend $40,000–$60,000 to replace them. For physicians, that number may cost as much as $250,000. Meanwhile, retirement plan matching—when structured with smart vesting—costs significantly less and creates stickier employment.

With this model:

• You reduce reliance on costly short-term staffing (locums, travel nurses).

• You preserve institutional knowledge and team cohesion.

• You build loyalty through real, measurable incentives.

• And you still maintain control over your budget by tying match eligibility to vesting.

This isn’t just an HR issue—it’s a strategic and financial imperative.

Closing Thought

If EMMC/Northern Light Health wants to recruit and retain talent in a short supplied labor market, it can be beneficial to stop viewing retirement plans as delayed rewards. Instead, start using them as a tool to compete smarter, retain longer, and spend more efficiently.

Hospital administrators have an opportunity here: to reframe benefits not as a cost, but as a strategic investment that they can compete in—one that can pay off in stronger retention, lower hiring costs, and more stable care delivery.

Because at the end of the day, staffing stability isn't just about dollars and cents—it's about sustaining the quality and continuity of patient care.

Overall hospitals can easily compete on their vesting terms in retirement plans, and in general when providers are in short supply it can often make sense to have competitive terms for vesting (which can be clawed back later) and make salary adjustments for new employees to make that work.