Healthcare leaders face a growing list of challenges — financial pressures, workforce shortages, evolving technology, regulatory changes, care delivery issues, and the list goes on. Each year, the American College of Healthcare Executives (ACHE) surveys its members to understand which issues are taking the highest priority. You likely won’t be surprised to hear that the top two answers are consistently financial and workforce, but for 2025, financial ranked as the leading concern for the first time in five years, after tying with workforce challenges in 2024.
Financial challenges, stemming from skyrocketing costs alongside declining revenue, may be top of mind. However, workforce issues, including staffing shortages and burnout, are not far behind. Perhaps because, in healthcare, the workforce is directly responsible for revenue generation, so the two issues are inextricably intertwined.
Without physicians and advanced practice providers to deliver care, healthcare organizations cannot generate revenue. So, while labor and recruitment expenses may seem like an easy place to cut back, the truth is that this is exactly where you will find the highest return on investment.
I’ve written in the past about the financial implications of a physician vacancy, and the Jackson Physician Search website has a helpful tool for calculating the return on investment of a recruitment partnership. As Senior Vice President of Recruitment at Jackson Physician Search, my goal with this blog post is to help organizations draw the line between investing in recruitment and getting out of the red. If you are making budget decisions for staffing and recruitment, this post is for you.
The Cost of Physician Vacancies
When a physician leaves, the organization immediately feels the financial impact. Depending on specialty, a single physician generates between $115,000 and $225,000 per month. Over time, those losses compound, particularly when patients seek care elsewhere or referral patterns shift.
Physicians are the most significant contributors to hospital and health system revenue, generating income through direct patient care and making referrals that generate income across service lines. Even a short-term gap can translate into meaningful revenue loss. A vacancy not only impacts the physician’s patient panel, but it also extends wait times for all patients. Many will seek the short-term care they need with another organization, often permanently.
The Broader Operational Impact
Beyond lost revenue, physician vacancies create strain across the organization. Existing providers absorb additional workload, which can contribute to fatigue, reduced productivity, and ultimately turnover. At the same time, continuity of care may suffer, affecting both patient experience and long-term loyalty.
These dynamics are not always captured on a balance sheet, but they have clear financial implications. Patient leakage, lower throughput, and provider turnover all carry significant costs.
Temporary Coverage Is a Short-Term Solution
Many organizations leverage locum tenens providers to maintain access during a vacancy. While this approach can and often should be used to stabilize operations in the near term, it typically comes at a higher cost and does not fully replace the long-term value of a permanent physician.
Locum providers play an important role, but they are not a substitute for a full-time physician who can build patient relationships, drive referrals, and support strategic growth. Locum tenens usage should be viewed as one piece of a broader physician transition plan.
Rethinking Recruitment as a Strategic Investment
In a constrained financial environment, it may be tempting to view recruitment costs as an area to limit spending. However, the cost of a prolonged physician vacancy often far exceeds the investment required to fill the role efficiently. The ACHE findings reinforce the reality that financial performance and workforce stability cannot be addressed in a silo. Efforts to reduce costs without considering their impact on staffing can create unintended consequences. Delayed hiring, insufficient support, or reduced investment in recruitment and retention may provide short-term relief but often lead to greater financial strain over time.
Recruitment expenses — search support, candidate travel, onboarding, and incentives — are finite and predictable. The financial impact of a vacancy is not. Organizations that prioritize timely, effective recruitment are better positioned to protect revenue, maintain access, and support long-term growth. In this context, recruitment is not simply a hiring function; it is a financial strategy. The return on investment in physician recruitment is clear. Organizations that invest in building and maintaining a strong provider workforce are better equipped to navigate financial pressure.
Moving Forward: Decreasing Turnover and Reducing Time to Fill
As financial challenges intensify, minimizing both the number and the duration of physician vacancies becomes increasingly critical. Most importantly, minimizing the number of vacancies means prioritizing retention to reduce avoidable turnover and predict areas of risk.
Decreasing the time-to-fill metric is also critical, but this is not simply a switch one can flip when the search opens. Rather, it is a strategy implemented long before the vacancy arises that involves strengthening candidate pipelines, streamlining recruitment and onboarding processes, and aligning hiring strategies with long-term needs.
A focus on retaining physicians, predicting departures, and pipeline building allows organizations to shift from reactive hiring to strategic physician recruitment. These efforts not only reduce time-to-fill but also improve overall workforce stability and financial performance.
Bottom Line
Hospitals and health systems are facing unprecedented financial pressures that can only be eased by addressing workforce issues. Demand for care remains strong, but that care cannot be delivered without people. Thus, the organization’s success depends on the ability to recruit and retain physicians efficiently. That means addressing workforce issues as both a clinical and financial priority. The organizations that develop long-term, proactive recruitment and retention strategies will protect access, stabilize revenue, and stay competitive in a challenging market.
If you are ready to reduce the financial impact of physician vacancies at your organization, the recruitment team at Jackson Physician Search is eager to help. Reach out today to tell us about your needs.
Jackson Physician Search is proud to be part of the Jackson Healthcare family of companies. Jackson Healthcare is a Premier Corporate Partner of the American College of Healthcare Executives.
About Tara Osseck
With over 15 years of experience in the healthcare industry, Senior Vice President of Recruiting Tara Osseck specializes in matching healthcare organizations with physicians who are a strong cultural and professional fit. Her healthcare career began as a physician liaison. It quickly expanded to include physician recruitment, strategic planning, and business development, working for various hospitals throughout Memphis, Tennessee, and St. Louis, Missouri. Based in St. Louis, Osseck leads the firm’s Midwest Division, placing providers across the Midwest and Upper Midwest. She earned a bachelor’s degree from Truman State University and a master’s degree in healthcare administration and management from the University of Memphis.
