Physician compensation strategies for the latest employment trends
A recent AMA report shows that the shift to physician employment has escalated since 2018. Today, 49% of physicians are in private practice compared to 54% in 2018. This is the greatest decrease in private practicing physicians AMA has reported since they started their survey in 2012. Many physicians have left private practice for hospitals, but the number of physicians working in larger practices has also increased since 2018, jumping from 14.7% to 17.2%.
Compensation and benefits are a top deciding factor for physicians as they seek employment at larger practices and hospitals, so having attractive rewards has become more important for the healthcare organizations competing for them.
It’s important to keep in mind that an effective compensation strategy isn’t just about recruitment. It’s also about keeping physicians so you’re able to offer continuity of care and avoid the high cost of turnover. It’s estimated that the cost of replacing a single physician can reach $500,000. Given this high cost, it’s surprising that 83% of physicians report that their employer does not have a physician retention program.
Building an effective compensation program
When attempting to attract employees to their organization, employers in most industries typically think in terms of salary and qualified retirement plans. These are essential components of any compensation package, and they’re adequate for the majority of employees. But physicians are unique. For one thing, they’re highly sought after due to the physician shortage. And they also have unique financial goals, including paying back hefty student loans and having the ability to save for retirement on a percentage-of-income basis, which can be more difficult for them due to qualified plan regulations for highly compensated employees.
Due to these circumstances, when we’re designing compensation strategies to attract an in-demand physician, practice group, or service line, a more creative approach is often required.
Blending short-term and long-term rewards
We believe in offering physicians a combination of short-term and long-term rewards. Short-term rewards are attractive, especially for younger physicians who are more concerned about cash in hand than saving for the future. The long-term rewards are there to encourage loyalty and help physicians better prepare for retirement.
Organizational advantages of blended models
One of the biggest advantages to using a blended model is that these two elements, short-term and long-term rewards, are highly customizable and can be aligned with organizational goals. For instance, if more emphasis needs to be placed on recruitment, more short-term rewards can be offered, but if an organization is concerned about turnover, they might focus more heavily on long-term rewards that can improve retention.
A blended model also creates market distinction for an organization when it comes to physician recruitment and retention because it demonstrates an understanding of physicians’ unique financial goals as well as a commitment to their life-long financial health.
How MaxWorth can help
Whether you want to improve your recruitment and retention or are looking for ways to make your compensation more cost-efficient, we can help you align your rewards with your objectives.
If you’re interested in learning more about our Physician Employment Strategies, schedule a conference call with one of our plan consultants today.
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