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The Financial Implications of Physician Vacancies

Jackson Physician Search
June 28, 2021

When faced with physician vacancies, there is often pressure to expedite the physician recruitment process. Unfortunately, a misguided sense of urgency can lead to costly mistakes. Instead, when faced with a physician vacancy, it is wise to balance urgency with a clear understanding of the type of physician best suited to succeed within the organization.

Being strategic in your physician recruitment process can be challenging, especially when the data published by the Association of American Medical Colleges (AAMC) projects mounting physician shortages through 2034. Despite the pressure to maintain continuity of care by hiring a physician as quickly as possible, it is essential to consider the underlying costs associated with increased turnover and inefficient recruitment practices.

Applying Costs to Each Physician Vacancy

To fully grasp the impact a physician vacancy will have on your organization, it is vital to have systems in place to measure and report success.

Applying ROI to your recruitment and hiring process involves the following:

  1. Calculating the costs of each vacancy in terms of immediate lost revenue and long-term patient attrition.
  2. Understanding the costs associated with the physician recruitment process.
  3. Measuring the long-term financial benefits of hiring and retaining physicians who fit.

With visibility into each of the above drivers, administrative teams can make more informed decisions about attracting and retaining physicians who are a cultural fit and are most likely to succeed as members of your physician staff.

Lost Revenue

Clearly, the most straightforward data point to track when a physician vacancy exists is lost revenue. Depending on the specialty, a healthcare organization stands to lose between $130,000 to $150,000 per month in revenue. For example, a family medicine physician generates about $1.5 million in annual revenue, while a general surgeon can easily bring in double that amount. Based on these numbers, it is easy to see why there is so much urgency to fill physician vacancies.

Despite the physician shortage, there appears to be some good news in the data. The benchmarking study published by the Association for Advancing Physician and Provider Recruitment (AAPPR) using 2019 data, shows that time-to-fill rates for physician searches has decreased in certain specialties. Examples include family medicine, internal medicine, and hospitalist physicians. Primary care is still the specialty in greatest demand, but it is good to see the needle moving in a positive direction.

That same report, however, identified allergy/immunology, rheumatology, and dermatology as the physician vacancies that were least likely to be filled.

The takeaway is that even though your organization is likely tracking and reporting time-to-fill rates for your physician vacancies, it is more meaningful when you consistently apply a dollar value to the duration. For a quick and easy tool to help you identify your lost revenue based on time-to-fill rates by specialty, try the Jackson Physician Search ROI Calculator.

Continuity of Care and Patient Attrition

Patient attrition is a major contributor to lost revenue, especially if it is permanent. Patients can be supremely loyal to their doctors, and when a trusted physician leaves a practice, a percentage of their patients will follow them.

If the physician leaves the area completely or retires, there is no guarantee that the patients will stay with the practice. A worst-case scenario has your patients turning to a competitor, because they cannot receive the services they need or can’t get onto an already crowded schedule. Never discount the revenue that can be lost when patients feel continuity of care is threatened by a physician vacancy.

Physician Recruitment Costs

The costs associated with a physician vacancy are not confined to loss of revenue. You also must consider internal costs. Some of the easily defined recruitment costs 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. Additionally, you should include the work hours accrued by your in-house recruitment team or fees paid to an external search partner. From the onset of the vacancy, until a contract is signed, a single candidate can generate up to $250,000 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.

Hidden Costs

When thinking about your physician recruitment process in terms of ROI, it is easy to see how quickly the costs can add up. However, sometimes hidden costs are even more damaging to a healthcare organization. These can be brought to light through benchmarking and a strong communication process with staff, but the damage is often below the surface.

  • Employee Morale. From the front-line nurses to the support staff to the physician team, having a long-term physician vacancy adds undue stress and increased feelings of burnout to a staff that is stretched thin. Once attitudes start to slide, it can grow like wildfire across the entire care team. This is where constant communication with the team is most beneficial.
  • Patient Care. Patient care issues are not entirely hidden, as most are typically captured and reported in some fashion. The gaps in care that don’t always rise to the surface are the ones that tend to compound and impact the bottom line over time. It could be as simple as a physician having a poor interaction with a patient that results in decreased patient satisfaction. When patients aren’t motivated to recommend your practice, future revenue is lost.
  • Increased Turnover. Healthcare is experiencing a very tight labor market, and physicians aren’t the only ones with options. Prolonged physician vacancies resulting in morale issues and quality concerns will ultimately lead to increased staff turnover from the front desk to advanced practice providers to nurses.

Recruiting for Cultural Fit

There are many long-term benefits of hiring and retaining physicians who fit, including increased productivity, more satisfied patients, and higher quality scores, just to name a few. And while some turnover is unavoidable, there is a way to “stack the deck” in your favor. Document the specific qualities and traits displayed by your current staff that embody your organization’s culture. This will serve as a hiring roadmap.

Target your physician recruitment to identify doctors who are well suited to be successful within your facility. When physicians feel connected to the organization’s mission and values, they are more engaged. Everyone feels a greater sense of satisfaction and are less inclined to leave. Even more importantly, when the staff is engaged, they perform better as a team.

Here are a few ways you can hire physicians who fit, succeed, and stay:

  • Ensure everyone involved in the interview process embodies your culture and values
  • Create an on-site interview experience tailored to each candidate
  • Find ways to make the candidate feel welcome/special
  • Sell the community as well as the opportunity
  • Engender a sense of excitement throughout the site visit
  • Always answer every question before the physician candidate leaves

Key Takeaways

Data Points

  • Each physician vacancy results in $130,000 to $150,000 per month in lost revenue, more in certain specialties.
  • Depending on the specialty, physician searches require 5 to 12 months, plus time for relocation.
  • The internal costs of a physician vacancy can easily reach $250,000.


  • The true cost of each physician vacancy should be measured to help drive recruitment and hiring decisions.
  • Recruitment processes should be tracked and reported, including interview-to-hire and time-to-fill.
  • Every healthcare organization should know their recruitment ROI by specialty.
  • Never discount the hidden costs of a physician vacancy
  • Recruit and hire for cultural fit

Benchmarking key indicators is the safest and most effective way to ensure that everyone understands how your recruitment process is performing. Transparent reporting will reveal inefficiencies and identify gaps, as well as suggest when you need to engage an external physician recruitment partner to support your internal recruitment teams. For more information, contact Jackson Physician Search.

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