Healthcare News & Insights

Reimbursement not keeping up with cost of physicians

Physician recruitment is a hot business, and the competition between facilities to get the best physicians and specialists is just going to get worse. Here’s why.

About one-third of U.S. physicians plan to retire or leave the practice of medicine in the next decade, according to Jackson Healthcare’s Physician Practice Trends Survey 2012.

Not worried about what life will be like in 10 years at your facility? How about in the next six months?

Only 84% of physicians plan to continue practicing medicine into 2013. Where are the other 16% going?

  • 1% plan to completely retire or leave medicine
  • 7% are considering retiring or leaving this year, and
  • 8% plan to go part time, via contract work or locum tenens.

Some of the main reasons doctors give for why they’ll leave medicine in 2012 are:

  • Cost factors, such as medical malpractice insurance, overhead, electronic medical records, etc.
  • Requirements of healthcare reform
  • Burned out
  • Career change
  • Lifestyle choice, and
  • Retiring early because he or she is financially able.

(Note: The above reasons were ranked from most to least influential.)

Competition driving salaries up

So it appears that recruiting and hiring new physicians is something most hospitals will be doing in the not-to0-distant future.

The problem is the competition to get the best physicians is driving up salaries, but hospitals aren’t being paid more by insurance companies.

In fact, Medicare reimburses 20% less than it did 10 years ago for an aortic valve replacement, Dr. David Spahlinger, senior associate dean for clinical affairs at the University of Michigan Medical School, reported in And that money to compensate for the higher salaries has to come from somewhere.

Recruiting and retaining staff won’t be easy, unless you are one of the elite facilities in the country. And since carriers aren’t going to make up for the increases in salaries, being creative with what’s offered to attract and keep physicians will be key.

Here are some things your peers are doing, besides sign-on bonuses:

  • Medical school loan-forgiveness packages (higher dollar amounts are given for longer commitments of employment)
  • Flexible work hours for those who don’t want to work full time
  • Car bonus (the amount is tied to a certain number of years of service)
  • House bonus (the amount is tied to a certain number of years of service)
  • Retirement packages that double the amount put in by the employee
  • Autonomy and control over work environment

To keep physicians at your facility, it’s important to know what affects their job satisfaction. Here are five major influences physicians themselves have cited:

  • Patients and cases
  • The facility’s culture
  • Colleagues
  • Location, and
  • Lifestyle.



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