Georgia Physician Magazine

Recruitment, Retention and Revenue:

Three Rs of Successful Group Practice Management
by Van Allen

Recruiting a physician into your medical practice can be an expensive proposition. But what is the cost of losing a physician or failing to fill a vacancy? Georgia Physician examines the ramifications of physician recruitment and retention, from the perspective of its financial impact, by providing the framework for a strategy meant to increase the odds of successfully recruiting a new physician.

As the physician shortage continues, successful retention and recruitment are more important than ever to maintain maximum potential revenue generation.

First, you should make every reasonable effort to keep quality physicians on staff: You know the devil that you already have, but you don't know the devil that your recruiting effort will produce. Then, do the best you can to ensure that every dollar is wisely invested to bring quality candidates in the door. All your expenditures of time and money will be returned tenfold when considered against the financial ramifications of losing a physician for even a brief period.

Costs of recruitment
Consider that the cost of losing a physician affects a practice three ways:

Lost patient revenue during the period when a physician is not practicing (and the ongoing effect of patient defections)
Sub-optimal revenue during the period when a new physician is being integrated into the practice
Revenues spent to recruit and hire a new physician.

That last figure can be the most vexing, especially if the physician you are attempting to replace was a fairly recent hire.

According to the 2000 American Medical Association report, "Physician Socioeconomic Statistics," the average physician salary is $205,700. Based on that figure, a conservative estimate of total recruiting costs could be calculated as follows:

Actual lost patient revenue

Revenue loss due to patient defection during the period of practitioner absence
Sub-optimal revenue during a new provider's introduction into practice
Recruiting costs and professional fees
Potential signing bonuses and/or tuition payments
Relocation costs
Site visits

A 12-month recruitment effort following the loss of one physician could cost a practice nearly $750,000 in lost revenue.

The financial ramifications of physician loss are also affected by supply and demand. Replacing a family practitioner, for example, might cost less than this estimate, whereas losses incurred during a search for an orthopedic surgeon, or another high-demand specialist may be represented in multiples of the estimated total, depending on how long the search lasts and the particulars unique to each practice's search.

It's also worth considering that today's specialists require an investment in the cutting-edge equipment to match their cutting-edge skills. Abilities that are not used will diminish over time, so it is often necessary to provide the tools and ongoing education needed to attract a skilled physician with an environment that offers challenge and an opportunity for growth.

If all goes well and a replacement is hired within four to six months, it may still be a year before a practice's revenue stream returns to normal. If the recruiting process takes 12 to 14 months or more, the financial hangover can last for years.

Try retention first
Because of the high costs involved, it is critical to work hard to retain good physicians. First, analyze why you wish to discharge a physician, or why a physician wishes to leave the practice. Sometimes, the differences are truly irreconcilable on the basis of personality: You may both have suffered guerilla warfare for longer than you could tolerate. Sometimes, however, a minor misunderstanding has been amplified into a major imbroglio, and an effort to resolve the conflict may simply require an apology.

Your defector feels the financial opportunity will be better elsewhere. Here, consider the previous financial exercise. It is possible that in losing a physician and recruiting a new one you, will lose revenue and incur costs that far exceed the salary increase/bonus (projected over many years) that may be required to keep your colleague in the office.

When all reasonable retention efforts have been exhausted and failed, turn your attention to making good hires. Do not promise the moon. Keep in mind that most candidates who choose to investigate an opportunity have probably seen something in a practice that got them interested in the first place, so there's no reason to fabricate information.

Dealing with the new hire
Too often, once they are hired, quality physicians are not treated as highly valued, revenue-generating assets.

Made to feel like royalty during the recruiting process, they often are relegated to "second-class citizen" status almost as soon as the ink dries on the contract.

Such treatment succeeds only in transforming your prize catch into someone else's candidate, negating your recruiting investment and setting in motion the negative financial chain of events already described.

Recruiters speak to countless candidates who are leaving their situations because an employer has not lived up to what was agreed upon during the interview process, or even to what was written into their employment contract. Broken promises and exaggerated opportunity are devastating to morale and retention.

Recruitment strategies
Successful recruitment and retention are results of the faithful application of a number of basic principles.

First, articulate a vision for your practice. Work with your board and your staff and get everyone involved in mapping out a course for your group's success. Be enthusiastic about that vision and be able to communicate it to a candidate.

Inventory all the things that can be considered either positive or negative about your practice. Include everything, from the age of your equipment, your benefits and compensation package, to a detailed profile of the surrounding community. This will give you a clearer picture of what you have to offer a candidate.

Profile your ideal candidate ahead of time, so you'll be able to recognize the individual when you meet. Is your practice in a rural community? Then your candidate should be someone who can operate without a cup of Starbucks every morning. Would you be better served with someone who enjoys the challenge of helping an underserved community, or are you better able to satisfy a physician who wants to serve in a mentor role?

Plan your recruiting and retention. Spur-of-the-moment efforts are rarely successful; they reflect negatively on your practice and can put off candidates who might otherwise be interested in joining your group.

Consider your inventory, affix your ideal profile and have a plan that emphasizes the positive aspects your practice offers while catering to the needs of the candidate you want.

Practice your approach ahead of time to make certain you haven't overlooked any details. Also, evaluate your performance after each interview to allow for any adjustments you may need to make. Ask open-ended questions that encourage a candidate's candor, rather than questions that can be answered with a "yes" or "no." Be careful not to stray into personal areas, however. Run your questions by your human resources executive or consultant to prevent an embarrassing faux pas.

Honesty in recruiting should be your constant watchword. Obfuscating negative details by avoiding certain issues, painting too rosy a picture, or giving outright false information will only harm you and negatively impact retention. If you know your on-call policy is demanding, say so, but explain that your current recruiting effort is part of a plan to alleviate those demands (if that's the truth). If your equipment is a little out of date, don't deny the obvious, but explain to your candidate how you are addressing the issue. Be prepared to explain why other candidates may have left the group.

Disclose everything that is pertinent to the candidate. One of the biggest mistakes an employer can make is willfully withholding information about, or sugarcoating, the scenario a candidate is considering. The site visit should be a two- to three-day culmination of both the candidate's and the practice's discovery process.

If you are looking for a candidate to eventually become a partner in the practice, transparency is critical. Letters of confidentiality can be signed if necessary, but the last thing you want is for the candidate to accept the opportunity under false pretenses. If there is a partnership track, explain to the candidate what the requirements are prior to a partnership offer. Also, be prepared to write a contract that accurately reflects the verbal commitment made to the candidate. Share overhead numbers. If they are out of line, articulate the action plan in place to resolve the high overhead percentages.

Don't settle for a candidate who doesn't fit your realistic, if not ideal, profile. The temporary pain of going without a physician while you are searching for someone with solid long-term prospects is preferable to dealing with the problems of making a bad hire. You need more than a warm body; you need a physician who can help your practice thrive and become indispensable to the vision you have for your practice.

As an extension of a successful recruiting investment, there are two key guidelines that can help increase the overall retention rate of your group practice:

Follow through on your promises, and work every day to demonstrate that the vision your candidate signed on to is progressing. Strive to make certain that every aspect of your recruiting effort is completed
Communication is essential to building trust. There will be times when the best of intentions and good-faith efforts fail to live up to commitments made during the recruiting process. Explain why things worked out the way they did and what is being done to remedy the situation or to serve as a substitute. Involve the new hire (and everyone) in the process to encourage a continued team spirit of cooperation, while preventing isolation and a sense of betrayal.

The result of a solid, successful plan to recruit and retain good physicians is quality service and sustained revenue.

Without enough physicians on staff, your practice cannot generate sufficient revenue. Good physicians that remain in your practice are the foundation for growing revenues and expanding services. A failure to recruit and retain quality candidates means constantly chasing the revenue tail. nGP

10 Reasons Why Retention Makes Sense

A solid recruitment and retention strategy produces 10 positive results:

Reduces expenses by thousands of dollars not spent marketing your group's available positions
Encourages unity among your medical staff by giving members time to build solid working relationships with peers
Enhances image of your practice through patient retention and word-of-mouth without spending money on marketing and public relations.
Reduces stress by eliminating the need to constantly find replacement physicians for the practice
Builds respect for practice management, which gains a reputation for finding and keeping good physicians
Reduces exodus of patients whose trusted physician leaves and either takes them to the new practice or causes them to find a new physician while you are looking for a replacement
Enables growth by giving your practice the stable base it needs to expand rather than being preoccupied with filling holes
Increases market share by building long-lasting relationships with physicians who attract a loyal, growing patient base
Builds morale among staff members, who can focus on their responsibilities rather than fill in for former colleagues
And ...makes it easier to remember names when staff members stick around for a while!

Van Allen is CEO of TimeLine Recruiting, 2103 Burlington, Suite 900, Columbia, MO 65202; (573) 214-2763; vallen@timelinerecruiting.com. Reprinted with permission from The Journal of Medical Practice Management, January/February 2004, Copyright 2004, Greenbranch Publishing LLC, P.O. Box 208, Phoenix, MD 21131 (800) 933-3711, www.mpmnetwork.com; www.soundpractice.net.