As demand for physicians continues to increase, so does the compensation required to attract and retain them. While it’s generally true that the younger generations place a higher value on work-life balance and flexibility than their GenX and Baby Boomer peers, a recent study of early-career physicians found that compensation is still the primary driver of first-job decisions. Other studies confirm that compensation remains a top factor in job satisfaction for physicians of all ages.
As a national physician recruitment firm, Jackson Physician Search works with healthcare organizations in all 50 states to help them find and hire physicians. Whether our clients bring us in as a partner at the very beginning of the vacancy or after the inhouse team has been searching for a while, one of the first things we will do is leverage local, regional, and national physician compensation data to determine a competitive pay range for the position, as well as appropriate recruitment incentives. This critical first step, utilizing physician compensation data, is essential to attracting candidates initially.
Physician Compensation Data Sources
Obviously, money matters, and in a tight physician job market, it’s not surprising that physician compensation–and more specifically, recruitment incentives–are trending upward. According to the Jackson Physician Search 2023 placement data (documented in a recent Physician Recruitment Report), organizations are indeed paying more to secure physicians. While a signing bonus was once a nice-to-have part of the offer, it has become the norm, present in 79% of our 2023 placements (up from 74% in 2022). So far, we have largely seen the increased demand for physicians driving up recruitment incentives, but in looking at the starting salary data, it’s clear that the percentage of organizations offering starting salaries above the MGMA median increased from 2022 to 2023. This indicates that organizations are raising salaries in order to attract candidates and offer recruitment incentives.
Of course, Jackson Physician Search placements represent one segment of a much bigger market, so it’s important to consult broader industry reports such as MGMA DataDive Provider Compensation or AMGA’s Medical Group Compensation and Productivity Survey. Historically, the MGMA report has been the gold standard when determining offers as it leverages W-2 data provided by practice managers all over the country. The Jackson Physician Search recruitment team regularly consults the MGMA DataDive to help clients determine pay ranges.
However, the market is moving faster than salary surveys can keep up with. For those specialties seeing a spike in demand, the reported data does not necessarily reflect what the current market is paying. Our recruiters know the active status of their markets and are willing to share what they learn from talking to thousands of physicians weekly. When we can demonstrate that other employers in the area are paying bigger recruitment incentives or higher base pay, clients usually agree to increase their own offerings–which almost always results in more applications.
The Obvious Obstacle to Increasing Physician Compensation
Of course, many organizations have limited resources, and offering a six-figure signing bonus or salary in the 75-90th percentile range is impractical, if not impossible. These organizations may want to start the search with a job ad offering a compensation range they feel more comfortable with. However, this puts the organization at risk of a lengthy physician vacancy, resulting in lost revenue that can easily exceed $1 million. Our Physician Recruitment ROI Calculator shows exactly how much gross revenue is lost each month due to a vacancy in 20 different specialties. When clients see the lost revenue figures in black and white, increasing compensation to shorten the search starts to seem like a wise investment.
But lost revenue isn’t the only thing to consider. The cost of temporary labor can far surpass what clients might spend to enhance the permanent offer. One recent client in Colorado was utilizing locum physicians to fill a GI vacancy while we conducted a permanent search, but the amount the client was spending on locums each month far exceeded what it was planning to pay a permanent hire. By adding a significant signing bonus to the job ad, the client was sure to shorten the length of the search and thus reduce the amount of time needed to pay a locum tenens provider–actually saving money in the long run. As predicted, the client had several candidates to choose from shortly after it increased the bonus.
The Importance of Advertising Your Best Offer
While limited resources are often the primary obstacle to increasing compensation, sometimes even those employers who are willing and able to pay more are hesitant to announce it in the job ad. They fear recruitment incentives and high compensation will attract physicians simply looking for the highest bidder rather than a long-term fit. They may also fear that putting a big number in the job ad means they are locked into it as an offer. (Psst–they aren’t!)
The reality is that compensation is typically the first way physicians filter their search. With so many opportunities available to them, compensation is an easy way to determine which ones to evaluate more closely. Organizations may have an amazing culture and/or a career-building mentor program. Still, if the advertised compensation isn’t competitive, candidates may never even see the ad, much less visit the facility to experience the culture or meet potential mentors.
Advertising your “best offer” ensures the ad will get more attention, and rest assured, putting it in black and white does not mean you are committed to an offer at that level. This is simply the amount you are willing to pay for the right candidate.
Leveraging the Data to Improve Recruitment Results
Our Physician Placement Success Stories are full of examples where compensation adjustments proved key to attracting applicants. In each of these scenarios, the hiring organizations believed they were offering fair compensation, but when our recruiters presented them with data from industry reports and real-time market trends, they agreed to an increase of either base pay or recruitment incentives. Without exception, the increases led to more applications and candidates from which to choose.
If you are searching for a physician, it’s imperative to understand the changing expectations surrounding physician compensation and have a plan to meet them. The Jackson Physician Search team of dedicated recruiters is well-versed in physician compensation reports and comp trends in the current market. Our recruitment team can help you market your job effectively and extend a competitive offer when the time is right. Contact us today.
