Employing and Retaining Physicians in a Competitive Healthcare Marketplace

All across the country, hospitals are responding to the early-phase implementation of healthcare reform by accelerating physician hiring. Today, more than half of practicing U.S.-based physicians are employed by hospitals or integrated delivery systems, a trend fueled by the intention to create accountable care organizations.

But, will this hiring boom continue? Corazon believes the answer is yes! Widespread industry research supports this claim. In fact, according to a 2010 survey completed by the Medical Group Management Association, 74% of hospital leaders planned to increase physician employment within the next 12-36 months.

So, what is the motivation behind this increasing level of hospital employment? The rationale varies greatly, based on which side of the proverbial ‘bench’ you are seated on (Table 1).

The hospital’s main motivation is likely to gain market share, which is typically achieved through specific service line strategies encouraged by a fee-for-service payment system that rewards volume. Many hospitals today use productivity-based compensation to reward physicians, which leads to increased overall volume.

For physicians, stagnant reimbursement rates, coupled with the increasing costs of private practice and the desire for a better work/life balance have contributed to their rising interest in hospital employment.

Recruitment challenges

Whether your hospital already employs physicians or is considering the model in the future, adequate preparation is necessary to secure the right talent at the right time. Indeed, how well your organization is prepared to recruit hard-to-find specialists will dictate the ultimate success or failure of the effort.

Recruiting expert-trained specialty physicians to a new or growing hospital-employed practice is important to compete in today’s healthcare marketplace. However, as the number of hospitals offering advanced services grows, there is a greater market demand for many specialists, which is complicated by a diminishing supply.

The numbers are staggering. According to the Council of Physician and Nurse Supply, the U.S. will be lacking 200,000 physicians this coming year, with an additional 212,000 physician openings by 2014. Cardiology is just one example. Another study conducted by the University of Pittsburgh Medical Center estimates six general cardiologists per 100,000 U.S. residents. Further evidence reveals an impending shortage of general cardiologists that will peak in 2038, reaching only 46.5% (33,409 fewer cardiologists) of the projected need.

With the continuing shortage, organizations should also be looking at new graduates. Although they may not be completing fellowship until the summer of 2013, the recruitment process can typically span an average of 6-9 months. We recommend initiating a search now for physicians that will be needed on staff next summer.

Before actively initiating the recruitment of a hospital-employed physician, we recommend creating a basic needs assessment so the right candidates are screened and interviewed. When creating this assessment, be sure to consider these three questions in the context of your organization as a whole, the cardiovascular program, and the cath lab (or other department) specifically:

1) What qualities are you looking for in a physician?

A physician who is willing and able to perform the most basic duties of the position is essential. But what particular skills or credentials does your ideal candidate possess? Do you prefer a physician with roots in the community or region? Someone who is driven to be highly productive and serve as a program leader or champion? These are just some examples of questions to answer when developing an “ideal” candidate profile. If you have a clear vision of what type of physician you want to employ, screening resumes in that context will make the process much smoother and less subjective.

2) What does the hospital/physician practice have to offer a physician?

This question should be answered with both the good and the perhaps not-so-good. Does the practice offer unique procedures or patients, collegial partners, a positive culture? Are there significant internal or external issues that might affect his or her success, such as staffing difficulties, financial challenges, or strong competition? Also, is the hospital looking to advance services, which could lead to increased responsibilities, but also opportunities? Overall, what is the five-year plan for the hospital / program / department? Evaluating what the hospital truly has to “offer” a physician via employment is critical; in fact, an honest exploration of the appeal of the position may give insight into the creation of a realistic and attractive offer package.

3) Is your organization actually prepared to make an offer?

Corazon experience proves that most organizations do not have a process in place for physician contracting. Typically, we suggest making an official offer within one business week of the site visit. This timely follow-up shows the organization’s level of interest and commitment to recruitment, and the overall intent to build and/or improve the service line. This will also begin the negotiation process at the right time.

Studies have shown that four out of five top physician candidates will turn down an employment offer for various reasons. Whether a large academic center, or a small community hospital, organizations can avoid common pitfalls in order to increase the chances that an offer will be accepted.  While it is the job of the recruiter to find qualified candidates, the ultimate success of a placement depends heavily on the hospital’s commitment to the recruitment.

Some of the most common recruitment mistakes are:

Waiting too long to make initial contact. Some organizations delay contact with the candidate until everyone in the organization has reviewed the applicant’s information. Waiting too long to set next steps can lead to a bad first impression, and the physician may feel unimportant. As time passes, the risk of losing the physician from the candidate pool increases. Furthermore, most physicians, especially the most skilled and experienced practitioners, are not just looking at your facility, but at many others as well.

Leaving the first communication too open-ended. Just as a salesman needs to work at ‘closing a deal,’ the organization needs to close the initial candidate screening or interview call by scheduling a site visit as the next step.

For instance, ending a call by saying “we will be in touch soon to have you speak with…” isn’t an ideal approach. This lengthens the recruitment process, and the physician could easily become disengaged. If it’s necessary to have a physician or another administrator involved prior to scheduling the visit, then involve them in parallel by scheduling a site visit and a subsequent phone call to happen in the interim. 

Failing to customize the site visit. Tailoring the physician’s visit around personal and professional interests is one way to make the most of the on-site time. Each physician is different and may want to meet certain people or see certain things; this is the time to showcase the community and the organization.

After selecting a candidate, drafting and negotiating a fair employment agreement is the next critical step. The employment contract should be clear and concise, and describe all aspects of the position precisely and evenhandedly. We recommend an approach including the following:

• Describe what the base salary will be. If there is an annual stipend for medical directorship, include that as well. Also, be very clear on the formulas and calculations for RVUs, quality performance bonuses, etc.
• Include information on malpractice/trial coverage. The hospital is ethically obligated to pay the physician’s malpractice for any liabilities that take place during his or her employment. The hospital should also provide the physician with trial coverage.
• When discussing restrictive covenants, the hospital needs to ensure protection from competition with a reasonable arrangement. Corazon suggests limiting this covenant to 1-2 years, encompassing only the area from which the physician receives 50% of his or her business.
• Be clear on the physician’s role and responsibilities and outline the on-call schedule up front. The physician will want some control over the work environment, so any opportunities to provide scheduling options will build trust and goodwill with the new hire.

Retention challenges

Hiring the “ideal” candidate does not mean that the recruitment process is over! Retention is a very important next step to ensuring that the ideal candidate evolves into a long-term, committed, and high-performing member of the medical staff. 

Organizations that are poised to have the greatest success with physician employment will devote as much attention as possible to both recruitment AND retention. Any hospital struggling to retain physicians should initiate efforts to figure out why they are leaving.

Through our experiences working at hospitals and practices across the country, the most common reasons a physician voluntarily resigns from a hospital or practice are as follows:

• Poor cultural fit
• Relocating to be closer to family
• Seeking higher compensation
• Spouse’s job requirements
• Seeking better community fit
• Incomputable work schedule

When considering this list, ask what your organization can control, and formulate strategies to combat the dis-satisfier. Such a discussion should take place about the full process of bringing a physician on-board and keeping him or her employed. For instance, what strategies can be used during the front end of the recruitment process, and what techniques can be implemented during the retention phase?

Studies show that 46% of physicians who leave their position are most likely to do so within the first three years. Unfortunately, it is only around that time that the organization will begin to see some return on investment. To set the stage for optimum retention, welcome the new physician by helping them become an integral part of the organization as soon as the agreement is signed.
Corazon’s proven tips for assisting the new physician with becoming integrated within the organization are as follows:

1. Assist with relocation to the community, if applicable;
2. Assist with a marketing campaign related to the newly-hired physician and any new services that will result;
3. Take the time to introduce the newly-hired physician to staff, administrators, and referring physicians that he or she may not have met while onsite;
4. Review formal and informal communication channels;
5. Teach proper techniques for coding and billing.

A Case Study in Successful Recruiting

A medium-sized community hospital in the midwestern United States, located hundreds of miles from a metropolitan area, completed a demographic analysis and found there was a real and immediate community need for interventional cardiology services. The hospital understood that in order to bring high-caliber interventional talent to the growing program, an attractive hiring package would be necessary to offer the new service to the area residents.

In efforts to create a competitive compensation package, the hospital sought advice from Corazon as to current market trends, then balanced that information with the specific needs of the hospital. Using the data provided, the hospital decided to offer guaranteed salaries for three years, which included a medical directorship stipend.

The incentive / benefits package was also restructured to include:

• An increase in vacation weeks in order to provide adequate work/life balance
• Additional monies and days off for continuing medical education
• Sign-on bonuses

Lastly, the hospital thoughtfully considered the cultural fit of the new recruit…a non-negotiable for their hiring process. An extensive multi-day candidate visit was put together, including dinner with some of the existing physicians and their spouses, in order to learn what was important to the physician candidate and his family. The visit included looking at homes, visiting with school administrators and extracurricular athletic coaches, along with other activities to give insight into what life might be like in the new community, rather than just determining the fit for the job.

The hospital successfully recruited two experienced interventional cardiologists. With those physicians in place, the hospital developed a successful interventional cardiology program, which has been “live” for two years. As a result, the hospital now captures the majority of its primary market share.

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Jessica is a Senior Recruiter with Corazon, Inc., offering strategic program development in the heart, vascular, neuro, and orthopedics specialties. The firm offers consulting, recruitment, interim management, and physician practice & alignment services to hospitals and physicians across the country and in Canada. Call (412) 364-8200 to learn more or visit www.corazoninc.com. To reach Jessica, email jbarrick@corazoninc.com.