New Physician Compensation, Recruitment Take a Hit During Pandemic
– The physician market has become more competitive as a result of the COVID-19 pandemic, which may lead to new physician compensation reductions and incentives, at least temporarily, according to a new report.
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Prepared by Merritt Hawkins, a physician search firm and AMN Healthcare company, the 2020 Review of Physician and Advanced Practitioner Recruiting Incentives tracked a sample of 3,251 permanent physician and advanced practitioner recruiting engagements that the firm conducted from April 1, 2019, to March 31, 2020.
New recruiting engagements for physician declined by 30 percent after April 1 despite an increase in physician search engagements over the 12-month period ending on March 31, the report revealed.
Physician recruiting engagements especially increased for medical specialists during the period, with Merritt Hawkins reporting that 78 percent of its engagements were for specialists, up from 67 percent five years ago.
Still, family physicians topped the list of most requested recruiting engagement. Although the pandemic is likely to change compensation and practice patterns for primary care and specialist physicians, the report stated.
“Over our 33-year history, most physicians had little difficulty finding a job opportunity, with multiple offers to choose from,” Travis Singleton, executive vice president with Merritt Hawkins/AMN Healthcare, said in a statement. “Today, we are seeing a growing number who are unemployed with a limited number of roles available. This is unprecedented. COVID-19 essentially flipped the physician job market in a matter of 60 days.”
The healthcare industry was once a “jobs generating behemoth,” according to last year’s report. More than 16 million people worked in healthcare by the end of 2018 and the industry created one in seven new jobs that year, cited data from the US Bureau of Labor Statistics showed.
While industry experts expected the momentum to continue, the COVID-19 pandemic has led to the most dramatic US healthcare spending decline since 1959, Merritt Hawkins reported using data from the Department of Commerce.
With consumers spending significantly less on healthcare, healthcare organizations suffered dramatic revenue losses that were exacerbated by higher-than-normal expenses stemming from the pandemic.
The dire financial outlook during the pandemic has seemingly led to a hiring freeze for many organizations, creating a seller’s market for physicians, Merritt Hawkins stated.
“As a result of the 2020 coronavirus pandemic, the market for physicians has flipped – from a buyer’s market in which physicians had multiple practice opportunities from which to choose, to a seller’s market in which physicians may have to compete for job openings. This sea change took place in a matter of some 60 days,” the firm wrote in the report.
The market trend is favorable for hospitals, medical groups, and other organizations seeking physicians now or in the near future, but new physician compensation could take a hit in the meantime.
The average starting salary for family doctors was $240,000 before the pandemic, compared to an average of $423,000 for radiologists, $464,000 for urologists, $640,000 for invasive cardiologists, and $626,000 for orthopedic surgeons.
The starting salaries were generally up for most physicians prior to the pandemic, but physicians across the care spectrum should expect compensation to remain flat for new positions, the report stated.
Telehealth utilization and possible changes in telehealth reimbursement rates may impact new physician compensation as organizations pivot to more virtual care, Merritt Hawkins explained. The move to telehealth will also likely change how physician productivity and quality are measured, which was factored into new physician compensation in about 64 percent of contracts prior to the pandemic.
On average, about 11 percent of the physician’s total compensation will be based on quality, according to contracts signed from April to the end of March 2020.
But the market trends will be temporary, according to the report.
The healthcare industry will again feel the pressure from the growing physician shortage. The Association of American Medical Colleges recently projected the physician shortage to hit between 54,000 and 139,000 physicians by 2033, underscoring the short amount of time “before physician shortages again become the status quo,” Merritt Hawkins stated.
An aging and growing population, the increasing prevalence of chronic disease, social determinants of health, and the opioid crisis will continue to drive physician demand after the pandemic. Although economic recovery in specific areas will determine how fast physician demand returns, the firm stated.
“For this reason, it is important that hospitals, medical groups and other healthcare organizations focus on their physician engagement and retention strategies, so that they maintain their staffs when patient demand for services resumes,” the authors of the report wrote. “Those that are successful in creating deeper connections with their physicians as a result of the shared mission, sacrifices and stress of Covid-19 will be well positioned to address the myriad challenges that will be presented by a post-pandemic healthcare system.”