The Three Rs: Recruitment, Retention, and Revenue

As the economy recovers, we know thousands of medical professionals will relocate. As a result, healthcare organizations are involved in a recruitment war. Thousands of hospitals and group practices are involved in some kind of staff recruitment effort. Once an organization initiates discussions with a physician candidate, it spends an average of seven to nine months to bring that physician on board. Most organizations must then add three to four months to compensate for a variety of delays or relocation problems.

Recruitment

Many organizations are surprised to discover the escalating costs of recruitment. Although the costs of direct recruitment average $27,300 per physician, the full cost of recruiting a physician can easily top $100,000 once the organization factors in such variables as income guarantees or salaries, moving expenses, malpractice insurance, office space, new equipment, and other practice start-up expenses. For this reason, many private practices have attempted to split the costs of recruitment with the local hospital.(1)

Organizations also are taking an increasingly scientific, bottom-line approach to recruiting. For example, to evaluate the efficiency of a recruitment program, many organizations now track conversion ratios—that is, the number of medical professionals who move from being prospects, to applicants, to candidates, to finalists, and, finally, to partners or associates. In most cases, organizations must be prepared to interview five finalist candidates before they sign the selected candidate.

Many organizations also are surprised to learn that medical professionals are not always lured only by high salaries and income guarantees. Often, they wish to evaluate practice opportunities in the context of the total community, environment, and lifestyle. Professional interests, such as hospital and peer support, cross-coverage, and office space, account for 40% of the decision. Personal interests, such as recreation, lifestyle, schools, housing, culture, and shopping, account for the remaining 60% of the decision.

Paying In-House Recruiters

To remain competitive in the recruitment war, more healthcare organizations have developed in-house recruiting functions and have hired full-time recruiters. These professionals recruit an average of six physicians annually, multiple physician assistants and nurse practitioners, and an array of other professionals. Recruiters in especially tough markets, such as rural or inner city locations, might only recruit three physicians annually, whereas those in multihospital systems might sign as many as 12 to 15 physicians annually.

But recruiters pay a price for their success. Between 30% and 40% of physician recruiting—including telephone calls to physicians’ homes—is done during evening and weekend hours, and many physician recruiters routinely work 60 to 70 hours per week. For their efforts, these recruiters are paid an average salary of about $52,000 annually.

Some of the more fortunate recruiters qualify for bonus or incentive plans. In one such plan, an in-house recruiter is paid $5000 for developing the original lead that recruited a medical professional; $3000 for relying on advertising, mass e-mail, or a referral to recruit a medical professional; $1000 for using a recruitment agency; and $500 for recruiting through other means. Another plan involves no bonus for the first three medical professionals recruited; $1000 per medical professional for numbers 4, 5, and 6; $2000 per person for medical professionals 7, 8, and 9; and $3000 per professional for numbers 10, 11, and 12. Through this schedule, an in-house recruiter who had recruited 12 medical professionals could collect a cumulative bonus of $18,000.

Small Physician Pool

Despite these incentives, recruiters face challenging odds. Of the 900,000 physicians in the United States, only a small percentage is willing to relocate at any given time. The “shelf life” of a physician, or the time a physician is on the market, is typically no more than 90 days. For example, while there may be more than 100,000 family practitioners in the nation, an organization’s total recruitment pool may be fewer than 3000 family practice physicians.

And many of these physicians make practice decisions far in advance. For example, 80% of the residents who graduate in June had probably already made commitments to organizations by January. Unfortunately, many healthcare organizations insist on waiting until the last possible moment to recruit physicians. In addition, many organizations limit their recruitment possibilities by clinging to such “criteria of exclusion” as board certification, education, gender, age, and insistence on an MD rather than a DO degree.

An organization hasn’t successfully recruited a physician until he or she has been on board for a minimum of three years.

Unfortunately, a recruiter’s work is never done. Physician recruitment does not end when a physician signs a contract, and an organization hasn’t successfully recruited a physician until he or she has been on board for a minimum of three years. The sad reality is that over 30% of newly recruited physicians leave an organization or practice opportunity within three years.

Financial Incentives

Because newly recruited physicians are so mobile, a growing number of healthcare organizations rely on sign-on bonuses of as much as $20,000 or more, with a third paid at the signing of the contract, a third paid when the physician arrives on site, and a third paid at the end of the first year. In almost every case, these sign-on bonuses must be large enough to affect a physician’s lifestyle. Neurosurgeons who earn $750,000 annually will rarely be impressed with a sign-on bonus of only $20,000. For this reason, organizations might want to think of a sign-on bonus of at least 5% to 10% of the physician’s anticipated net pre-tax income.

Other organizations have attracted physicians in the last year of their residency by offering them stipends of $1000 per month. If the physician fails to arrive on site, he or she has to return all of the stipend or sign-on bonus. And if the physician leaves within the first year of employment, half of the stipend or bonus must be returned.

Other organizations lure younger, cash-poor physicians by negotiating favorable loan rates with banks, or by offering to serve as cosigner on a mortgage that provides the physician with 100% financing. Still other organizations provide newly recruited physicians with a miscellaneous fund to cover such household basics as utility deposits. The national average cost for relocating a white-collar employee, including physicians, is $9000. But healthcare organizations should plan on relocation costs of $10,000 to $14,000 per physician if the physician is already in practice and moving a large household.

Revenue

As reimbursement declines, one way to enhance practice revenue and profitability is by adding ancillary services. Ancillaries assist in maximizing practice profitability, while providing patients with the convenience and continuity of in-house care. Integrated clinical services also can increase productivity, revenue and patient retention.

Employee retention is challenging in the current healthcare environment. Millions of dollars are invested in developing services geared toward creating a memorable and satisfactory patient experience, facilities upgrading, and creating a concierge medical environment—but a major facet of creating a satisfactory patient experience is committing to hiring, developing, and maintaining a staff of high-quality physicians and surgeons.

The high cost of turnover should take into account not only the advertisement and fees for recruitment, but also the amount of time it takes to train an employee and the cost of business lost from the time an employee leaves to the amount of time it takes to hire a new staff member.

Training and Growth

Well-trained employees feel confident and knowledgeable in their roles, and, therefore, happier in their jobs. Make sure your practice has a comprehensive employee manual and everyone has a copy of it. Give each employee a thorough job description on the first day that covers major tasks and expectations. Offer to pay for cost-effective online training programs to encourage your employees to grow professionally.

Highly driven employees need to feel their personal goals and development are being recognized and acknowledged by the practice or hospital. Employees who want to get into management tracks should be given the opportunity by increasing responsibility. Allow your employees to take on more difficult tasks and help them succeed in their goals by providing them structured work plans and routine meetings to monitor their progress. As a manager, your responsibility for developing an engaged work force starts by recognizing each individual’s personal learning style and rate of understanding.

Compensation

Compensation is one of the most important factors in retaining staff. Disgruntled employees often are upset about not being compensated properly. Offer more than an annual cost-of-living adjustment to your more productive employees. It is always worthwhile to focus your time and money on the employees who deliver the highest value. You should also make sure that your paid time off and vacation time policy is competitive.

Evaluate your benefits package and see if you can offer extra time off, flexible hours, free parking, or gym memberships. Create an employee-of-the-month program to recognize outstanding work. Set individual or group goals, and reward the achievement of those goals with gift cards, gas cards, movie tickets, or lunch.

Retention

Nurses and midlevel employees are vital players in the deliverance of healthcare. Training providers to develop and retain positive relationships with the healthcare team is an essential component of creating a positive workplace. Encourage providers to show appreciation to staff members for their hard work and commitment. Giving a thank you card for a job well done with a difficult patient or recognizing someone in front of his or her peers goes a long way in nurturing trust and self-worth. This contributes directly to employees feeling connected to their company and an increased sense of accomplishment.

Physicians should always make a point of finding time to speak to their employees. When you see them, address them by name. (Institute name tags, if you have to.) It’s fairly easy to visit with your medical assistant or nurse, but go out of your way to say “hi” to your front-office employees and your business staff. Meet with new employees briefly and find out a little about them. In addition, make sure your office manager is readily available to talk to staff members, particularly when they have an issue or new ideas.

To do well in their jobs, employees need an accurate job description and an annual review that lets them know how they are performing and what they can do to improve. When good or bad things happen to staff outside the office, be certain to let staff know promptly. Don’t drift past them in the office and let them find out some other way. By keeping staff informed, you communicate that you think they are a valuable part of the team and important to patients. In return, most employees will go the extra mile for you over and over again.

Reference

1. Hawkinson N. Invest in Your Workforce: Simple Solutions for Recruitment, Retention and Revenue Generation [PowerPoint Slides]. 2016; www.spine-search.com .