The Future Medical Staff: How benefits can impact a hospital’s legacy
By: Kyle Worthy
Hospitals are searching for ways to ease the financial pressures they’re facing, and most have found that cost-cutting efforts alone cannot adequately improve operating margins. A recent Modern Healthcare article reported that identifying new sources of revenue was an urgent priority for ninety percent of healthcare executives.
Due to shrinking operating margins, many facilities are at risk of being acquired by larger hospitals; therefore, they feel that their independence hinges on their ability to find additional revenue streams. Without additional resources, the costs associated with attracting and retaining physicians in an increasingly competitive environment may exacerbate their risk of an acquisition or merger.
The good news is, compensation can be used in a number of ways to secure your medical staff and aid in the improvement of your operating margin.
Attraction and Rewards
Due to the increased competition for physician talent, it’s important for hospitals to create impactful rewards that will aid in recruitment. A client recently shared with us that the addition of one new provider can increase hospital revenue by $1.5 million. Our programs are built to provide physicians with executive-benefit type rewards that are common in the corporate world but cannot be found at many other competing hospitals. This competitive advantage in recruitment can quickly turn into increased revenue for the hospital.
Physician turnover can be even more costly than recruitment. Studies show that twenty-five percent of physicians leave an organization during their first three years of employment, and it is estimated that the loss of a single physician can cost over $500,000. We’ve found that hospitals offering a better rewards suite experience a three-year turnover rate of only 3.8%. With the cost of turnover estimated at $500,000 per provider, in a 10-member physician population, the cost savings can reach a million dollars every three years. Based on these assumptions, the hospital is saving an average of $333,000 a year.
Recovery and Endowment
The rise in physician employment has placed additional financial strain on hospitals. With all existing assets committed, it’s important to find ways to offset the cost of employment so that it does not threaten the financial viability of the organization. By incorporating a platform for cost recovery into its benefit plan design, a hospital can recover its investment in an employed medical staff and improve its operating margin. The decision to adopt this approach ensures that a hospital will be able to continue to provide care to its community for generations to come.
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