The AAMC’s 2022 Physician Specialty Data Report found that nearly half of physicians currently practicing are aged 55 or older. An aging physician population places pressure on recruitment and retention in many ways. Healthcare leaders might be asking themselves: Are young people encouraged to pursue medicine? How will years of increasing physician retirement rates impact an already thin workforce?

But they might not think to ask themselves another important question: Are their benefits tailored to meet the needs of aging physicians? If not, they’re missing an opportunity to improve recruitment and retention.

The power of targeted benefits 

A focus on retirement planning will appeal to a large number of doctors given that so many of them have their sights set on securing their futures. By demonstrating a commitment to helping doctors retire on time and with dignity, an organization can create market distinction for themselves since many facilities have taken the approach of competing with short-term rewards and signing bonuses. 

It also generates goodwill with staff members when an administration shows that it both understands and empathizes with physicians’ unique retirement needs.

The need to close the gap

Physicians leaving medical school with hefty student loans tend to begin saving for retirement later than most professionals. This makes it hard for them to fully maximize their qualified retirement plans. Additionally, physicians usually fall into the category of highly compensated employees. The IRS defines a highly compensated employee as someone who earns more than $130,000 a year, and they place limits on how much these employees can contribute to qualified plans. The further you go beyond the $130,000 threshold, the more limited you are in what you can contribute. Therefore, there’s often a gap between physicians’ pre-retirement income and how much of it they’re able to replace using qualified retirement plans alone. This can force them to work longer than they’d like to, and it leaves many wondering if they’ll be able to retire at all. 

Hospitals can be a part of the solution

Given the way most private practices do business, it’s hard for independent physicians to find sources of supplemental retirement income that will help them close this gap. And with the rise in physician employment, more physicians are completely reliant on hospital-provided benefits. This puts hospitals in a unique position to help doctors retire by offering long-term incentives and tax-favorable benefits.

More sustainable than you might think

Administrators often assume that enhanced benefits will be financially unsustainable, especially in today’s environment of rising competition for staff members. But in reality, benefits geared towards physicians who are nearing retirement age can be far more cost-effective than immediate cash or short-term bonus structures. In fact, sometimes all it takes to better meet physicians’ retirement needs is an update to an existing benefit plan. 

Retention increases sustainability 

Long-term incentive programs are designed to encourage physician loyalty. According to our clients, the cost of replacing a single physician can reach $500,000. Therefore, retention alone can help ensure the sustainability of an organization’s benefits.

How MaxWorth can help

If you’re curious to find out if your benefit offerings could do more to help your physician recruitment and retention efforts, we would be happy to evaluate your current programs. We would also be happy to assist you in designing and implementing a new benefit plan that incorporates a platform for cost-recovery, which will help ensure the program’s long-term sustainability. Since physicians can’t fully appreciate a benefit plan unless it’s effectively communicated, we also help our clients by improving their communication strategies and education programs.