Whether the result of a resignation, retirement, or rapid growth, any physician vacancy is a problem to be solved. Some vacancies are inevitable, of course. However, organizations strive to minimize both the quantity and the length of physician vacancies. Effective physician retention programs and succession plans can minimize the number of physician vacancies. Smart recruitment strategies can decrease the time-to-fill and shorten the length of the vacancies.
Concerns about physician vacancies are valid. Each one represents lost revenue, recruitment expenses, longer patient wait times, increased risk of patient attrition, and, of course, a heavier workload for the rest of the team. When considering the true cost of a physician vacancy, many of these factors can be difficult to quantify. However, “lost revenue” can be calculated and should inform the physician recruitment plan.
Calculating Lost Revenue and the True Cost of a Physician Vacancy
As a physician recruitment partner, part of my process is ensuring that my clients understand the specific costs associated with the physician vacancy in terms of lost revenue. The Jackson Physician Search Recruitment ROI Calculator is helpful in providing an estimate. However, an organization’s internal data will be more specific. If it is not something a client has already researched, I suggest they look at how much the physician we are replacing was producing per month. If it is a new position, I recommend considering how much the new hire will likely produce once ramped up. Then, we multiply the monthly figure by the average time-to-fill (in months) to understand the lost revenue likely created by the opening.
How to Leverage Physician Revenue Data in Recruiting
Does your organization consider specialty-specific physician revenue data to guide recruitment and workforce planning? If the question has you scratching your head, you are not alone. Based on my own physician recruitment experience, spanning many years with a large midwestern healthcare system and now, as Vice President of Recruitment for Jackson Physician Search, I would venture to guess that most organizations consider physician revenue data to some degree. However, it is not always factored into their strategy to the extent it should be.
1. Setting Compensation
Most, if not all, organizations that I work with will consider physician revenue data when determining compensation packages and bonus structures. At a minimum, to calculate a salary guarantee, the organization must know what it expects the physician it’s hiring to produce.
2. Prioritizing Recruitment Efforts
Organizations may also consider revenue, at least generally, when prioritizing their recruitment efforts. For example, a search for an orthopedic surgeon will receive more attention than a search for a family medicine physician, as surgeons typically produce significantly more monthly revenue.
3. Justifying Recruitment Expenses
As noted above, the lost revenue resulting from a vacancy varies significantly depending on the specialty. However, the figure is almost always enough to generate some urgency around the recruitment process. By this, I mean that a data-driven analysis of lost revenue can be just the push decision-makers need to increase advertised recruitment incentives or to meet a candidate’s counteroffer. When staring at a $150K a month in lost revenue, that $100K signing bonus seems doable if it means shortening the time-to-fill–and of course, minimizing lost revenue.
The estimated cost of the physician vacancy can also justify the expense incurred with a physician recruitment partner. Sometimes clients were initially hesitant to invest in a physician recruitment partnership, but the resulting time saved and revenue recouped more than made up for the fees. (If curious, the aforementioned ROI calculator provides details on typical cost savings.)
4. Guiding Workforce Planning
Less common but worth mentioning, some departments use physician revenue data to determine if physicians are at or above capacity. That is, the physician is seeing as many patients as their schedule, time, and resources allow. If this is the case, the group cannot generate more revenue without either extending hours, increasing efficiency, or adding support. This awareness can be the trigger that it’s time to bring on a new provider.
The Hidden Cost Associated with Physician Vacancies
So far, we have focused on the tangible lost revenue associated with a physician vacancy. However, it’s also important to emphasize that other factors compound the cost. Hiring organizations must not overlook the following:
- Physician vacancies create longer patient wait times, which, at best, lead to unsatisfied patients and, at worst, compromise patient care.
- Some patient attrition is inevitable when a physician leaves, but the longer the vacancy lasts, the more likely patients are to seek care from a competitor.
- When a physician leaves, healthcare organizations expect other physicians and advanced practice providers in the practice to cover the workload until the group can hire a new physician. The longer the position remains vacant, the more strain is placed on the rest of the team. This can lead to resentment, burnout, and ultimately, resignations.
Of course, recruitment costs also factor into the total cost of a physician vacancy. These include marketing the physician job, travel costs for physicians to attend interviews and community tours, sign-on bonuses, student loan payoff, and relocation stipends. There are also related costs associated with the time and energy administrators and other interview team members spend meeting with physician candidates. Work hours accrued by your in-house recruitment team or fees paid to an external search partner should also factor into this total. From the onset of the vacancy until a contract is signed, a single candidate can generate $250K+ in associated recruitment costs.
Unfortunately, these costs don’t end with a signed contract. The dollars continue to mount as you account for credentialing, benefits administration, EHR system training, onboarding, and ramp-up time for the physician to build a full patient case load.
Minimize the Financial Impact of Physician Vacancies with a Physician Recruitment Partner
Any physician vacancy will affect the bottom line, but organizations can minimize the impact by shortening the vacancy with the help of a trusted physician recruitment partner. Keep in mind, the most effective partner doesn’t only focus on accelerating the process. They also place equal importance on finding the right fit. They know that making the wrong hire will only compound the cost of the initial vacancy if it results in more turnover. This is precisely why, at Jackson Physician Search, we leverage our broad network and digital recruitment expertise to find not just any candidate quickly, but a candidate who will fit, succeed, and stay with your organization long-term, helping you reduce both the length and the quantity of costly physician vacancies.
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.
