Physician Shortage: Disappearing Docs

Perry Farb is, no doubt, a very good family-practice physician. Still, as he completed his training, he was astounded by the number of “faxes and e-mails [he received] daily for months,” alerting him to job opportunities.

Farb ended up at Fallon Clinic in Boston. Chief Medical Officer Marc Greenwald was happy to have him. Just before Greenwald started his job two and a half years ago, the group had 23 openings and could fill only 11 of them.

It’s a new world for those trying to recruit. The long-rumored physician shortage is upon us and likely to worsen. The newly formed Council on Physician and Nurse Supply says the United States may lack as many as 200,000 needed physicians (and 800,000 nurses) by 2020. The Bureau of Labor Statistics predicts there will be 212,000 physician openings by 2014 due to growth and net replacement of retiring physicians. That number represents more than 25 percent of the current physician work force. And this is in a country whose population continues to grow. The American Medical Association (AMA) says that as the U.S. population rose 31 percent between 1980 and 2003, its number of medical school graduates remained static.

That’s good news for those of you looking to change jobs - scarcity drives up salaries and perks - but bad news if you want to expand your practice or replace a soon-to-retire partner.

The shortage is real

There are now more people who need more care, and there are fewer physicians trained to treat them.

Many of today’s patients are baby boomers whose aging bodies require more therapy, treatment, and surgery. The National Ambulatory Healthcare Administration says people aged 66 and older average six physician office visits per year; individuals aged 46 to 65 average 5.4 visits annually; and people 25 to 35 years old average 2.2 visits a year. Increasing numbers of older patients mean heightened healthcare demand.

And older patients typically have multiple chronic conditions that require complex office visits and administrative care - often unreimbursed - such as prescription refills and phone conversations.

Of course, as boomer patients are aging, so are boomer physicians. Many of today’s practicing physicians are retiring, or soon will. The AMA’s data state that “matures” (people over age 61) and baby boomers (people between age 42 and age 60) now make up 67 percent of the existing physician population. Generation Xers (age 27 to age 41) make up only 33 percent of today’s practicing physicians.

And keep in mind that Gen X doctors (and those even younger) aren’t exactly replacing all of the work performed by older physicians. “Some of the new doctors coming out - and this is not a slam - are just not willing to see as many patients and work the same hours as the older physicians,” says Kurt Mosley, vice president of Merritt, Hawkins & Associates, a physician recruitment firm. “It’s not an apple and an apple. It’s a lifestyle issue.”

When Merritt Hawkins surveyed physicians over age 50, 64 percent said the doctors trained today are less dedicated and hardworking than the physicians who entered medicine when they did.None said they were more dedicated.

The fallout of all this is plainly evident. Patient wait times for specialist appointments are growing almost as fast as specialist recruiting incentives. For example, wait times for appointments with cardiologists reached or exceeded 21 days in six of 15 metropolitan markets surveyed by Merritt Hawkins in 2004. Patients needing to see dermatologists waited at least 21 days in 60 percent of the same markets. Specialist income is rising accordingly, from an already high average of $320,000 in 2004-2005 to $342,000 in 2005-2006. Gastroenterologists are now starting at $315,000, up from $298,000 last year.

Patient demand is clearly outpacing specialist output, forcing practices and hospitals looking to recruit physician specialists to pay top dollar.

But shortages aren’t limited to the specialties. Primary-care physicians are also feeling the effects.

Merritt Hawkins conducted 55 percent more searches for family physicians from March 31, 2005, to April 1, 2006, than during that same period the previous year. Searches for internal medicine positions rose 46 percent. In fact, the company performed more searches in internal medicine than in any other field.

“What we’ve seen is a shift back to primary care,” says Mosley. “In the past two to three years, we made an effort to get specialists. Now those specialists are asking, ‘Where are our feeders? Where is our base?’”

“Everywhere I go I hear people talking about how hard it is to get internists and that they are getting concerned about family practice,” agrees David Cornet, regional vice president for Cejka Search, another physician recruiting firm.

The pinch is being felt across all markets. The data show primary-care physicians being as heavily recruited in larger markets (e.g., cities) as in smaller, more rural towns. The need is not confined to remote Appalachian communities.

Have a recruiting plan

So if you are trying to fill a position in these tough times, what do you do?

Have a plan and sweeten the pot, say experts.

You have to be committed to the search, says Cornet. “It’s not something you can start and stop. … When you have a candidate, that is an extremely scarce resource, and if you don’t drop everything you are doing and treat it like gold then you will lose out because somebody else will.”

“It’s hard to recruit physicians in many specialties,” agrees Fallon Clinic’s Greenwald. “That being said, it’s easier now than when I came here … largely because we put in place a system. And systems tend to work.”

Indeed, Fallon has filled 50 positions in two years with its plan in place, exceeding its own expectations. What’s its secret?

Fallon starts by very precisely identifying its physician needs - not only by specialty, but also by experience and personality. “Can it be an inexperienced physician because [we have in place] others who can coach, or is the place crazy and needs an experienced physician or they will sink? We decide first who we need, and who we need means every aspect of that person,” Greenwald explains.

Once Fallon has identified several candidates, it conducts interviews using scripted questions designed to get physicians to reveal their attitudes and real experience. For example, says Greenwald, the interviewer will ask, “Tell me about a specific patient who came to you unhappy with the care they received elsewhere. How did you handle it?” rather than, “Can you deal well with worried patients?”

Fallon also has in place a proactive plan for its future recruiting needs based on its physicians’ ages, likely retirement, and expected turnover. This allows it to anticipate its needs a year or two in advance.

That approach won over Farb. Fallon’s whole process reflected his approach to medicine. “My wife and I had an idea of a group we were looking for and wanted to go up north,” he says. “The description of Fallon jumped out at us. … I could tell from the little recruitment blip that they weren’t just looking for people who wanted the most money; they were looking for caring primary docs.”

Farb says his worst interview experience was with an organization not far from Fallon. He found the physicians there to be arrogant, and they immediately put him off. “Oh my gosh, it was terrible,” he recalls. “I couldn’t wait to get out of there. The focus seemed to be what I could do for them. It really was more of an attitude. It was, ‘Who are you and what are you doing here?’”

Be prepared to woo your candidates

Like Fallon, Trinity Mother Frances Health System in Tyler, Texas, has a comprehensive recruitment plan. The multispecialty clinic, which employs roughly 250 physicians, has recruited about 67 doctors over the past two years, says David Teegarden, MD, president and chief medical officer of the group.

“We made a strategic commitment to make recruiting a professional line in the organization with management and performance accountabilities,” explains Teegarden. Two full-time recruiters work from an outside firm but are on location every day. There are weekly recruitment meetings that include marketing staff, physician leaders, credentialing people, and human resources representatives. They review spreadsheets on candidate selection and are told where each new potential hire is in their recruiting process. “It’s a very tight, process-driven endeavor,” says Teegarden.

When candidates arrive for a visit at Trinity Mother Frances, its recruiting team has already identified their key drivers - salary, schools, family concerns - and makes sure those needs are addressed. If a particular candidate is especially desired, the health system will arrange visits with local school principals, tours of parks, whatever it takes.

And Trinity Mother Frances is unafraid to sweeten a deal to land a desired candidate. Compensation itself usually stays within the going range, says Teegarden, but he adds, “We are raising signing bonuses above average if we need to.” He’ll also offer a one- or two-year salary guarantee. And newly hired physicians are encouraged to take leadership roles right away. Teegarden says he wants new recruits to feel like, “Gee, I have a chance to put my feet under the table and get involved in decision-making.”

That’s what won over new recruit Sauyu Lin. The gastroenterologist was flooded with offers as he finished his residency. He knew he wanted to be in the Southeast, near his family. But it took him a while to decide what type of practice he wanted to join.

“Because I was just coming out, I wasn’t sure that I wanted to go into solo practice. I didn’t feel like I was ready [to take on all the business aspects],” says Lin. “Then, as far as single-specialty groups, I didn’t go that way partly because there were people already there, founders and others, who had been there for years before me, so it felt like I wouldn’t have as much decision-making power, not as much voice.” For Lin, Trinity Mother Frances offered the ideal combination: the safety of a group and the opportunity to exert real influence.

Going that extra mile

Practices across the country are making whatever accommodations they have to lure the candidates they want. “More recruits than ever before are looking for lifestyle - limited hours, being able to have some balance in their lives. They’ll take less money for more life balance,” says Keith Borglum, a consultant with Professional Management and Marketing in Santa Rosa, Calif.

Mosley witnessed one situation in which “a group wanted the doctor, and he had three horses to relocate, so they relocated the horses as well as the physician. It’s whatever people can do to close the deal.”

Mosley says he is seeing increasing signing bonuses and rising relocation amounts. Signing bonuses were offered in 58 percent of the searches Merritt Hawkins represented over the past 12 months, compared with 46 percent the previous year. The average signing bonus increased from $14,030 in 2005 to $20,480 in 2006. And education loan forgiveness, offered in 14 percent of the searches the firm represented in 2005, was offered in 34 percent of its searches this year.

Other practices will offer almost immediate partnerships at rock-bottom prices. “Partnership track is continuing to shorten,” says Cornet. “It’s not uncommon to see one-year partnership tracks. … And anything longer than two years I would consider to be an outlier.” Buy-ins are also dropping; Cornet recently saw one go for $1,000.

“Four or five years ago it was, ‘Come in and put in your dues,’” says Mosley. Now Merritt Hawkins marketers are instructed to turn down clients looking to fill radiology jobs that have a three-year partnership track.

A good time to be young

In a market this tight, young physicians need to understand how much leverage they have and how to use it wisely. New job-hunting physicians should take a look at the going rate in their area and review their buy-in potential carefully. Bad deals still exist - but now there’s no reason to settle for them.

“Last week, I was teaching at the American Academy of Allergy Asthma and Immunology and many of the physicians there that were offering jobs were offering between $120,000 and $140,000 a year with bonuses, while median compensation for allergists is $350,000, and my experience is that a new practice can open and an allergist can make $350,000 within 12 to 18 months,” says Borglum. “I have allergy clients making $500,000 a year. People take those jobs sometimes because they don’t know any better.”

Borglum says he also sees plenty of bad buy-in opportunities. He warns that senior physicians can easily pick up bad advice from brokers who aren’t knowledgeable about medicine. “They go based on general business principles and are grossly overvaluing practices. … Get an expert - someone who specializes in medical practice. I see so many bad appraisals, so many. They almost never undervalue; they almost always overvalue. I see maybe one undervalued appraisal every three or four years. I see overvalued appraisals every week.”

Management consultant Paul Angotti in Castle Rock, Colo., also advises young physicians to “ask the hard questions about the strategy of the practice. For example, ‘What are your payer contracts? Are you planning to get an EMR? Why or why not? What are your goals for cash-based procedures?’ Look at strategy. If they don’t have a good strategy to survive, you’ll join a practice that may not be able to support you.”

New physician Lin says the new top issue for many young doctors today is less about getting a job than selecting the best one based on personal priorities. “There are so many jobs out there that, theoretically, if you just opened it up to all of them, you’d be just flooded,” he says. “So the first thing to do is to figure out what’s most important to you. Is it to be close to family, to be in an academic setting, or compensation? Once you’ve cut that number down - say you want to be in the Southeast in a large city - then you can look at the other parameters. … As far as getting the right deals, I think most fellows understand that, given the demand, they have a little bit more leverage than they did a couple years ago.”

Can’t hire? Get creative.

With new recruits in such demand, some practices just won’t be able to bring in new physicians. “Many recruiters are stuck in an impossible situation,” says Borglum. Even in the attractive Bay Area, he says that “to recruit a new physician with $100,000 in education debt is tough; they can’t buy a house.” Worse, in such heavy managed-care markets, reimbursement continues to be dismal.

For some practices, a better strategy may be considering growth options that don’t require hiring new physicians.

Like what? Well, you could start dropping bad managed-care contracts. You will lose some patients, but you’ll still be OK financially since you’ll retain a more lucrative patient base.

“Stop accepting the bottom 20 percent” of your plans, suggests Borglum. “If you are still too full, cut another 20 percent. I have some groups who have cut themselves down to three HMOs, and that’s it. They are paid pretty well and have negotiated an elimination of the hassle factor. For example, they get rid of preauthorizations. They improve their efficiency and get paid better. … It’s hard to do because patients will complain, and there are patients with hardships, but you can’t take care of everyone. If the physician doesn’t take care of himself, there will be no one around to take care of the patients.”

Another idea: Boost revenue to make it possible to bring in another physician. Consider adding ancillaries such as ambulatory blood pressure monitoring, Holter monitoring, or echocardiograms. “Keep more of that revenue in-house that you would normally farm out,” says Borglum. And then use the proceeds to hire an ancillary provider for added support.

Indeed, nurse practitioners and physician assistants are more abundant than physicians - at least for now - and can help expand a practice. Hospitalists - if provided by a hospital - can also boost physician efficiency by keeping practice docs focused on outpatient work. That means increasing patient access without having to hire another physician.

Do your part

A physician shortage will have serious consequences for the U.S. healthcare system. As a partner in that system, you should do your best to protect patient access while staying financially afloat. The last thing we need is to lose another practicing physician to bankruptcy. So consider carefully whether you need to grow, how to grow if recruiting remains a challenge - as it most likely will - and what you can do to protect the patients you already have. You can no longer simply assume that retiring physicians are easily replaceable. Each little proactive step to face new market realities provides more security for you and your patients.

Pamela L. Moore, PhD, CPC, is senior editor of practice management for Physicians Practice. She can be reached at pmoore@physicianspractice.com.
This article originally appeared in the October 2006 issue of Physicians Practice.