Hospital Employment of Physicians Continues to Grow

Mark Crane

July 06, 2012

July 6, 2012 — Within 2 years, more than 75% of newly hired physicians will be hospital employees, according to projections in a new report of physician recruiting incentives.

The multiyear trend toward hospital employment of physicians continues, according to Merritt Hawkins' 19th annual survey of salaries, bonuses, and other incentives customarily used to recruit physicians. The Irving, Texas-based company is a national recruiting and consulting firm.

"Sixty-three percent of Merritt Hawkins' search assignments in 2011/12 featured hospital employment of the physician, up from 56 percent the previous year and only 11 percent eight years ago," the report states.

"Fewer doctors want to go into independent private practice," Phillip Miller, vice president of communications for Merritt Hawkins, told Medscape Medical News. "That's been a major trend over the past few years. The whole medical profession is shifting away from private practice to employment."

The demand for primary care physicians remains strong. For the seventh consecutive year, family physicians and general internists were the firm's 2 most requested physician search assignments. Demand for pediatricians has also increased; pediatrics was the ninth most requested assignment. By contrast, the specialty wasn't in the top 20 in 2005–2006.

Changing practice styles are a major factor in the primary care shortage. "Many physicians are embracing part-time practice or are seeking structured hours as part of a 'controllable lifestyle'," the report states. "Female physicians, who work 18 percent fewer hours than male doctors according to the Health Resources and Services Administration (HRSA), are concentrated in primary care."

The increased demand for primary care physicians has translated into higher income offers. The average base salary or guaranteed income for family physicians increased to $189,000, up from $178,000 the previous year. The average base salary for internists ($203,000) declined slightly since last year but is up substantially since 2007–2008 ($176,000).

"The recruitment of physicians into solo practice settings has almost entirely abated," the report notes. Solo physicians accounted for just 1% of the firm's searches last year, down from 22% in 2004. "The demise of the solo doctor is now official. Basically, no one wants to be one and no one is looking for one," said Miller. "While part of a long-term trend, we found it kind of startling that that only 1% of our searches was for solo physicians."

Psychiatry was third on the list of Merritt Hawkins' most requested assignments, followed by hospital medicine and general surgery. Emergency medicine physicians, orthopaedic surgeons, obstetrician/gynecologists, pulmonologists, urologists, dermatologists, and hematologist/oncologists were also in strong demand.

Demand for radiologists and anesthesiologists has decreased. Radiology, which was Merritt Hawkins' most requested specialty in 2003, ranked only 18th in 2011–2012. For the first time since the firm began compiling data, anesthesiology was not among its 20 most-requested search assignments.

"Anesthesiology is one of the few areas in medicine where allied health professionals, in this case certified registered nurse anesthetists, are replacing physicians," said Miller. "More states are allowing them to work unsupervised. Anesthesiology still attracts medical graduates and income is still attractive. But with the slumping economy, there are fewer elective procedures and that's having an impact.

"Radiologists also are affected by the economy," he adds. "As people put things off, there's less utilization. And compensation for radiologists has been cut by Medicare."

Among other findings:

  • Salaries have almost entirely replaced income guarantees (traditionally used to recruit private practice physicians) as a compensation model. Only 7% of physician search assignments featured income guarantees, down from 21% in 2006–2007 and 41% in 2003–2004.

  • Nearly three quarters of search assignments featured a salary with production bonus. A majority of such bonuses are based on a relative value units formula. However, a growing number of production formulas feature quality-based metrics. Thirty-five percent of the search assignments offering production bonuses featured a quality-based component, up from less than 7% the previous year. "This shows where the market is heading," said Miller. "Meeting treatment protocols, avoiding hospital readmissions, etc, can get you extra money. This is part of the transition of evaluating physicians based on quality instead of volume."

  • Signing bonuses, relocation, and continuing medical education allowances remain standard in most incentive packages.

  • Housing allowances are a new form of recruiting incentive. "Due to the volatile real estate market, some physician candidates are unable to relocate without such assistance, which was offered in 5% of the recruiting assignments the firm conducted in 2011–12, a number consistent with the previous year but up from less than 1% two years ago."

  • Demand for physicians is not confined to traditionally underserved rural areas. More than one third of search assignments took place in communities of 100,000 people or more.

The Merritt Hawkins review is based on 2710 permanent physician and advanced allied professional search assignments from April 1, 2011, to March 31, 2012.

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