In a recent MGMA STAT poll, 90% of administrators reported their group’s costs were increasing faster than revenue–with staff and labor the most frequently cited area of rising costs. This certainly follows the basics of supply and demand. The provider shortage, coupled with recent increases in turnover and retirements, mean demand far outweighs supply. As a result, one might assume that healthcare providers are commanding bigger salaries, but is this what’s driving up staffing costs? Let’s investigate the assumption and then explore four ways organizations can meet rising physician compensation expectations.
Is Physician Compensation Rising Faster Than Projected?
Reports of record inflation combined with the aforementioned supply and demand imbalance might cause one to assume physicians are commanding much higher compensation. However, at this point, data does not confirm this assumption, and while the early 2022 report from Medscape suggests a bigger jump, it merely balances out the stagnation seen since 2020.
Regional VP of Recruiting Helen Falkner reports she has not seen significant increases in physician salaries in the Western region, where she is based, though she has noted some changes.
“While physician salaries continue to increase year over year, there has not been a significant increase in the last year,” she says. “However, we are seeing bigger recruitment bonuses in the form of loan repayments, signing bonuses, or even housing assistance.”
So, while physician salaries may not be increasing significantly, physicians may have increased expectations regarding initial bonus opportunities. This is consistent with physician compensation projections for 2022.
How to Keep Up with Rising Physician Compensation Expectations
Healthcare organizations may not have to offer higher ongoing salaries, but if they hope to differentiate their opportunities and win the battle for talent, they will have to find room in the budget for initial bonuses or other incentives. Of course, if revenue does not also increase, this can prove to be difficult. How can organizations keep up when the additional money simply isn’t there? Here are 4 things to consider as you craft an offer:
1. Find Ways to Offer Flexibility
One notable impact of COVID-19 on the physician job market was an increased number of physicians seeking jobs that could offer a healthier work-life balance. The pandemic caused professionals in every industry to reevaluate how they were spending their time, and this was especially true for healthcare providers. Whether they were fighting COVID from emergency rooms, urgent cares, or ICUs or struggling to meet productivity goals due to closures and hesitant patients, many physicians came out of that first year of the pandemic ready for a change. In many cases, the change they sought was a shorter work week, a more flexible schedule, or fewer hours on call.
In this way, an offer that gives physicians the flexibility to create their own schedules may be worth more than a competing offer with a higher salary or signing bonus. Consider a 4-day work week, a 7-on/7-off schedule, an option to practice telehealth or otherwise work from home once or twice a week. The value of this flexibility will vary depending on the candidate, but for many, flexibility is the most attractive thing an employer can offer.
2. Consider the Value of Time
The old saying, “Time is money,” rings especially true with today’s physician workforce–and not just for those in a productivity-based compensation model. The value of time away from patients has increased for physicians who prioritize work-life balance, a group that accounts for more of the physician workforce than ever.
Certainly, a flexible schedule is a critical part of giving physicians more time, but employers can also provide administrative support such as a dedicated medical scribe or cutting-edge technology that will put time back in a physician’s day. A generous PTO package and paid sabbaticals can also go a long way to win over physicians; therefore, an employer that not only offers but encourages physicians to take time off work is especially attractive.
3. Reevaluate Temporary Staffing Spend
The aforementioned MGMA STAT poll found medical groups are seeing costs increase faster than revenue, with staffing and labor costs making up the bulk of the additional spend. This is due, at least in part, to an increased usage of temporary labor, which of course, costs more than permanent staff.
Helen Falkner recently saw this situation with a client. They urgently needed a full-time GI physician, a notably difficult specialty to recruit, and yet, the administrator was reluctant to increase the recruitment incentive package.
“I pointed out how much more they were spending on locums each month compared to what they would pay a permanent hire,” Helen explains. She knew an attractive signing bonus would likely shorten the length of the vacancy, thereby reducing the length of time they needed a locum. “I knew the bonus would pay for itself by eliminating the need to keep paying locums.”
Helen’s theory was right. Shortly after advertising the signing bonus, they had several candidates to choose from.
4. Individualize the Offer
Perhaps the most important consideration is to remember that each physician will prioritize different things, so make an offer that meets their specific needs. Once you have identified the best candidate, make sure you have listened carefully to his or her needs so that you can personalize the offer based on what is most important to him or her. For example, if the candidate is especially concerned about finding a house in the tight real estate market, designate funds for housing assistance. If he or she has emphasized the importance of family time, make sure the offer stipulates flexible scheduling and ample time off. If the candidate has heavy student loan debt, incorporate a loan repayment bonus into the offer. If you have listened to your candidate and have a market-savvy physician recruiter on your side, you will be able to extend a competitive offer that will win over your preferred candidate.
If you are trying to fill a physician job opening, it’s imperative that you understand the changing expectations surrounding physician compensation and have a plan to meet them. The Jackson Physician Search Recruitment Consultants are well-versed in compensation trends and can help you market your job effectively and extend a competitive offer when the time is right. Contact us today.