What a year…again. As healthcare professionals gear up to begin year three of a global pandemic, what can administrators expect in terms of demand for physician services and compensation for their unending efforts?
While no one can say exactly what 2022 will bring in terms of the pandemic, without a doubt, the need for healthcare providers will persist. Long before COVID, a looming physician shortage threatened access to care, and the pandemic only worsened the problem, increasing physician burnout and sending many marching toward early physician retirement. As a result, organizations around the country are ramping up physician recruitment efforts.
The basics of supply and demand suggest the members of a shrinking workforce can name their price. While there is some truth in this assumption, healthcare organizations simply can’t pay physicians more than they take in. Still, most employers are doing whatever possible to offer attractive compensation packages that will win the talent they so desperately need.
It doesn’t take a crystal ball to predict that healthcare hiring and compensation will continue to trend upward, but what else can administrators and physicians expect in the months ahead? We asked two Vice Presidents of Recruiting for Jackson Physician Search to tell us a little about what they are seeing and hearing from clients and candidates with respect to physician job openings and compensation. If you are actively recruiting physicians, you’ll want to take note of these physician hiring and compensation trends in 2022.
Increased Retirements and Turnover Causing Healthcare Organizations to Open More Searches
“We are seeing a record number of new organizations retaining us for recruitment support,” says Tara Osseck, Regional VP of Recruiting for Jackson Physician Search’s Midwest Division. “We also have longstanding clients opening up a higher volume of searches than in years past. Some are hiring with the expectation of growth, but also, of course, in response to provider attrition. We see a little bit of everything driving recruitment, so we are busier than ever.”
Osseck’s observation of increased business at Jackson Physician Search reflects the fact that healthcare organizations are hiring in record numbers. Back in March of 2021, an MGMA STAT poll reported 72% of medical practices were hiring physicians. Since then, an October of 2021 STAT poll found one in three medical practices saw a physician leave or retire early in 2021 due to burnout. These physicians must be replaced, and of course, any growth the organization expects must also be accounted for with additional hiring. Medical staff planning has never been more important – or more difficult. Organizations know they need to hire physicians, but the when and who can be overwhelming.
In a Tighter Market, Healthcare Organizations are Extending More Competitive Offers
The volume of physician job openings is increasing, and yet, the number of residents coming out of training remains similar to previous years. In order to win talent from this limited pool, organizations will be forced to make more competitive offers, especially as they increasingly feel the impact of the physician shortage.
“While compensation is dependent on specialty and location, we’re seeing some offers starting to outpace the industry benchmarks,” Osseck explains. ”It’s not always enough to be in line with the MGMA or Sullivan & Cotter data. Organizations often need to go beyond those figures in order to set their offers apart.”
Another MGMA STAT poll supports Osseck’s observation. In June of 2021, one in three practices reported adding or expanding bonuses as a means of attracting and retaining physicians. Inflation is also driving increases. In December of 2021, 50% of practices said they are budgeting more than usual for cost-of-living adjustments in 2022.
Regional challenges with the housing market are also impacting physician compensation. Helen Falkner, VP of Recruiting for the Western Division explains:
“As housing costs rise around the country – and housing availability becomes a challenge – some organizations are including a temporary housing stipend in the initial offer to ease the burden of relocation for new physicians. This is likely to become the standard – especially in areas with extreme housing challenges – until the housing market begins to reverse or at least stabilize.”
Increased Value of Work-life Balance
Increased salaries, bonuses, and cost-of-living adjustments are appreciated, but money isn’t the only thing physicians want. Following the 2020 spring shutdown, recruiters saw an increase in physicians prioritizing work-life balance and autonomy. In a JPS whitepaper covering the impact of COVID-19 on physician jobs, several VPs of Recruiting reported seeing physicians prioritizing quality of life, proximity to family, and better work-life balance. While money will always matter, this shift in priorities seems to be more than a passing trend.
Some organizations will be surprised to learn that the most competitive offer isn’t always the one with the biggest number. Benefits such as four-day workweeks, minimal or no call, or the ability to practice via telehealth are increasingly the deciding factors for physicians weighing offers. Organizations are getting creative with additional paid time off – offering scheduled sabbaticals or dedicated time for physicians to participate in medical missions, either local or abroad.
“In our efforts to find physicians, we have to constantly ask ourselves, ‘What is going to make a physician apply to this job over some other job? Why should they consider this location when they were dead set on something else?’” says Falkner. “Historically, the answer to that question is some sort of eye-catching compensation. So, we highlight the signing bonus or loan repayment in the job ad, but more and more, it’s also a shorter workweek or the opportunity to practice via telehealth that can make the difference.”
The job ad must catch attention, but when it comes time to craft an offer, both Falkner and Osseck discussed the importance of customizing it to meet the specific needs of the candidate. The physician interview process gives candidates the chance to be clear about their priorities. If an organization is listening, they will know what to offer to win the physician’s acceptance.
Rebalancing the Ratio of Compensation to Productivity and Its Importance
While trends from the previous year often inform compensation plans for the future, the circumstances of 2020 were cause for exception. For example, the MGMA data shows physician compensation was relatively flat in 2020, but the dip in productivity – forced by the lockdown and patient hesitancy to seek treatment – caused the ratio of compensation to wRVUs to appear much higher than years passed. Thus, organizations won’t likely use the 2020 ratios as a benchmark for future expectations.
That said, the circumstances of 2020 caused providers once happy to accept a productivity-based compensation model to rethink the security of those plans. The pandemic put physicians in a situation where they had very little control over their own productivity, causing many to feel productivity and wRVUs should carry less weight in the compensation plan. As physicians have increasing power in the job market, we may see less emphasis on wRVUs in physician compensation models.
“Most compensation plans specify a minimum salary regardless of productivity,” Falkner explains. “But of course, the expectation to see a certain number of patients is still there. Then, of course, there are bonus opportunities beyond that. Productivity bonuses are still common, but we are increasingly seeing bonuses for quality, retention, or even access to care.”
Begin to See the Impact of the Shift to Value-based Care
Also contributing to the declining importance of wRVUs is the increased attention on value-based care. Studies show this model benefits the provider, the patient, and the health of the overall population, and yet, moving from fee-for-service reimbursement to value-based care has proven to be complicated.
While both Helen and Tara said they are seeing more clients incorporating a quality component to compensation packages, productivity continues to be the most significant factor, in part because it is easiest to measure, but also because it continues to be the basis of how organizations are reimbursed.
The unique circumstances of the moment may provide some momentum for value-based care, however. An article from consulting firm Deloitte explores how fee-for-service reimbursement and productivity-based compensation are intertwined. The author proposes that shifting the focus to quality of care rather than quantity could not only improve patient outcomes but also bring more meaning to physicians’ work and help reduce burnout.
Better Times Ahead?
The pandemic has pushed physicians to their limits, and an increased number of them are seeking to improve their circumstances with new employers. Healthcare organizations are working with physician recruitment firms to attract these candidates with the promise of better employment opportunities. Of course, what constitutes “better” is relative. Organizations must customize offers to win talent, and more importantly, they must deliver on promises made if they hope to retain their physicians.
“There’s a sense among some of the physicians I speak to that they are just another cog in the wheel and their entire worth is based on how many patients they can see in a day,” explains Osseck. “Organizations are experimenting with compensation models to counter this mentality. Ultimately, though, physician job satisfaction comes down to more than the compensation package. It will require a well thought out physician retention program – something most organizations are still lacking.”
While no one can say for sure what lies ahead in terms of physician hiring and compensation, it’s safe to say that physicians have the upper hand in job negotiations.
If you are actively recruiting and finding candidate acquisition more challenging than in the past, reach out to Jackson Physician Search today.