Roadblocks to Physician Recruitment and Retention
Part One: Plan Design
For most healthcare organizations, physician recruitment and retention has never been more important or more challenging. Many don’t realize that they already have an excellent tool at their disposal: their non-qualified deferred compensation (NQDC) plans.
These plans can distinguish hospitals and health systems in the marketplace, attracting and retaining much needed staff members. Unfortunately, they often underperform due to three common roadblocks: design, communication, and financing.
First, let’s explore plan design and its role in creating an effective recruitment and retention program.
Physicians’ unique needs
Physicians have different retirement needs than the majority of employees in other industries. They usually don’t begin saving for retirement as early as other professionals due to student loans or the expense of starting or buying into a practice. Therefore, many have to play catch up late in their careers in order to reach their goals.
Additionally, due to restrictions placed on how much highly compensated employees can contribute to qualified plans, physicians can’t replace the recommended 70-80% of their pre-retirement income using qualified plans alone. If they don’t seek out additional sources of retirement income, they will have to make adjustments to their lifestyles during retirement.
Accounting for these needs
NQDC plans were designed to help highly compensated employees replace a higher percentage of their income throughout their retirement years so they won’t have to alter their lifestyles.
Physicians want to work for an organization that recognizes their retirement needs, and they feel valued when administrations want to help them prepare for the future. So, simply having a NQDC plan is a step in the right direction. However, in order for these plans to be effective, they need to be designed with physicians in mind.
Physician-centric plan design
There are features currently allowed under NQDC regulations that are especially beneficial to physicians. An advisor can help organizations recognize and utilize physician-friendly plan features, turning their NQDC plans into more powerful recruiting and retention tools.
Below are just a few of the ways a NQDC plan can be tailored to meet physicians’ needs:
- Some physicians are choosing to work well past the typical retirement age while others are retiring early. To make it easier for them to retire when they want to, sponsors can align their plans with the most liberal contribution and distribution rules allowed.
- Physicians enjoy the ability to align their distributions with financial goals such as paying off student loans, funding their children’s education, and transitioning into retirement. Sponsors can help them do this by expanding distribution options.
- Physicians are accustomed to seeing the broad investment menus that are offered by their more traditional retirement plans. Therefore they expect to see a similar menu when they enroll in a NQDC plan. Unfortunately, some NQDC plans don’t offer investment menus that are comparable to those offered by other types of retirement plans. A sponsor should design their NQDC plan so that it offers the expanded investment menu physicians are hoping to be able to use to reach their financial goals. Having an expanded menu increases the likelihood that the organization will gain widespread participation in its plan.
- Organizations can make their plans more attractive to physicians by covering administrative costs. Taking an administrative fee from participants often impacts participation rates, negatively impacting the plan’s performance.
How MaxWorth can help
Every hospital has a distinct culture and specific needs. Maybe you’re building a benefits suite to recruit a practice group. Maybe you want to retain a specific service line. No matter what your goals are, we can help you tailor your plan around them.
If you’d like to learn how we can help you improve your NQDC plan, schedule a time to speak with one of our plan consultants.
In part two of this series, we’ll discuss communication’s role in maximizing the potential of a NQDC plan.
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