As the stock market is hitting new records and real estate is on the rise, so is the physician turnover rate. As the shortage in primary care grows and demand increases, the name of the game is retention.
The good news is that the stock market is on the rise and the housing market appears to be in an upward swing — both positive signs for what had been a sagging economy.
However, the bad news is that physician turnover is also rising. According to the eighth annual Physician Retention Survey from Cejka Search and the American Medical Group Association, medical groups reported an average turnover rate of 6.8% in 2012 — an all-time high.
Lori Schutte, president of Cejka Search says that anecdotally, if not directly, the increased turnover tracks with improvements in the housing market, as well as the recovery of the stock market.
No more hesitation
Schutte says that during the recession in 2009, no one was hiring, no one was moving, and physicians were delaying their retirements.
“People who wanted to retire were delaying it because their 401(k) tanked,” Schutte says. “They would have liked to retire, but they had to work a few more years until the market recovered. The other thing we heard was doctors who may have wanted to take another job, who may have even interviewed for another job and been offered another job, couldn’t accept the job.”
Why? When a physician spoke with his or her realtor, they were informed that the house that they bought two years ago for $500,000 was now valued at $350,000. And they couldn’t afford to take that kind of hit on the house, because they owed more than $350,000 on it. So, even though they wanted the job, they couldn’t sell their house and had to stay put.
But today, says Schutte, retirements are on the rise, which she says is a direct reflection of the stock market reaching record highs.
“[Physicians are] looking at their portfolio and they’re feeling good about where they are financially,” she says. “And that, in combination with what is happening in health care today, makes this the perfect time to get out. They’re going to take the money and run.”
The end result, Schutte says, is a shortage of physicians — particularly in primary care. And demand is high.
“With the advent of medical homes and Accountable Care Organizations, everybody is trying to build for that,” Schutte says.
The problem is compounded, she adds, because fewer than 50% of internal medicine physicians stay in internal medicine. After finishing their internal medicine residency, these physicians go on to become specialists, which are in a higher income bracket.
Schutte believes that many medical practices are turning to mid-level providers to try and alleviate that pent up demand. But the bottom line, she adds, is that these developments in the health care marketplace make efficient recruitment and effective retention more important than ever for medical groups.
Have a strategy
Schutte says her firm advises clients that there isn’t a one-size-fits-all model where physician recruitment is concerned. For example, a resident is taking a job because he or she has finished their training and is looking for employment — usually with a lot of debt in the form of medical education loans.
“The average resident is coming out of training with $165,000 worth of debt, probably with a new family, and looking to build a life for themselves,” Schutte says. “They’re in a very different situation than someone who has been practicing for 15 or 20 years, has all their debt paid off, is well established, and wants to relocate to be closer to children and grandchildren. You can’t look at them and offer them the same thing.”
Schutte explains that the name of the game is retention — that it’s important to get newly hired physicians over the hump. And for most physicians, the hump is that initial two- to three-year period. When recruiting a younger physician, that could mean putting in a loan repayment program that gets them past that point.
“Telling them that you’ll pay $20,000 of their loans every year for five years is an attractive thing,” Schutte says. “You’re going to pay $100,000 for them off their loans over five years. That’s a good deal for you and for them. And it guarantees you’re going to have a physician there for five years.”
That’s attractive to a resident coming out of training, but won’t do anything for you for an older, more established physician. In that case, Schutte suggests, perhaps the established physician would welcome a leadership position, or a title, or being able to oversee a department, plus a one-time signing bonus that will attract him.
“You have to look at every individual and figure out what are their needs, what motivates them, and what is going to keep them in your organization,” Schutte says. “The [medical practices] that are going to do the best in terms of recruitment are going to be the places where people will be inspired about working there. Those are going to be the winners.”