Hospitals feel privileged to have doctors on roster -- and prove it with some perks

Hospitals in need of referrals increasingly are driving a surge in physician recruitment. Specialists, in particular, can find sweet financial packages being dangled their way.

By Mike Norbut, amednews staff. Dec. 9, 2002.

Hillcrest Baptist Medical Center in Waco, Texas, doesn't employ physicians. But that doesn't stop the hospital from recruiting doctors of all kinds, and offering perks like income guarantees and forgiveness agreements to good candidates.

"The motivating reason is patient flow," said Tim Hogan, the hospital's administrative director. "A hospital without a loyal base of physicians is obviously not going to survive."

Specialists a hot commodity
Demand spurs incentives
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The prospects of increasing revenue from inpatient procedures and offering well-rounded care have been driving hospitals to fill specialty gaps.

More than 85% of the nation's hospitals are recruiting doctors, a figure that has gradually increased over the past few years, according to a new survey conducted by Merritt, Hawkins & Associates, an Irving, Texas-based recruitment firm.

The difficulty in finding physicians apparently is universal, though facilities in rural areas feel they have to offer higher salaries to compete with the nonfinancial incentives a metropolitan hospital has to offer.

The competition has, in some cases, meant a financial boon for physicians -- especially specialists -- who are looking to relocate. Average income offers calculated by Merritt Hawkins are consistent with other group practice salary studies, but the survey showed high-end offers for some specialists, like radiologists and cardiologists, increased tremendously over last year, while those for primary care physicians did not.

More than 85% of the nation's hospitals are recruiting doctors.

"In the smaller communities especially, there seem to be more hospitals recruiting," said Stanley Burgin, a senior consultant who is with Health Management Group LP, a firm based in Charlotte, N.C. "They know they're going to benefit by having the physician in town."

Hospital administrators are most interested in recruiting family physicians and internists, while they rate radiologists and orthopedic surgeons as being the most difficult to find, according to the survey.

The survey underlines the need for physicians at hospitals around the country, but it also emphasizes the ongoing desire to fill primary care slots, even during an era when specialists are in high demand.

Internist Carl Russell, MD, had interviews with many different recruiters before choosing to be a hospitalist with Medical Edge Health Care Group, a large, mostly primary care group just north of Dallas. The income guarantee and relocation offer he received were good, and the position was what he wanted, he said.

"There were thousands of opportunities," said Dr. Russell, who moved to Texas from Virginia earlier this year. "If you're a physician looking to relocate, there's a lot to sift through."

Some hospitals -- which often recruit physicians, not as employees, but to join a medical group with admitting privileges -- turn to internists who can perform some specialty procedures and functions, because some specialists can be simply too hard to recruit, said Joe R. Smith, vice president for Merritt Hawkins' Midwest division. That trend is not likely to continue, however, as technology develops and the public demand for specialized treatment grows, he said.

Higher salaries, better incentives

The recruitment survey complements another report by Merritt Hawkins from earlier this year, which showed physicians recruited for specific positions -- whether or not a hospital was involved -- generally received higher salary offers and better incentive packages in 2001-02 than in the previous year.

Among the top recruited specialties, anesthesiologists saw their average salary offers increase 15.8%, while offers for family physicians increased 5.8% after holding steady for the past three years. Offers to radiologists increased 5.5%, while those to cardiologists increased 2.2% and those to internists increased 2.1%.

The survey reports offers with income guarantees have slowly but gradually increased as well, from 27% to 34% over the last four years.

By offering an income guarantee, a hospital agrees if a doctor does not generate enough revenue to reach a certain agreed salary amount after a year of employment, it will loan that additional money. The hospital also generally offers a forgiveness provision, which allows a portion of debt to be erased each year, as long as the physician stays in the area for a certain time. It's usually written into the contract that if the doctor leaves early, he or she has to pay back the loan balance in full, Burgin said.

Hospitals often make income guarantees good for one year, and doctors receive a two- or three-year forgiveness deal, according to the survey.

"They can't really just give money because of regulations, but this is one way they can get around that," Burgin said. "I generally tell [physician clients] to take advantage of the offer. It's a better deal than a bank offers because of the forgiveness feature."

Upping the ante

Competition for desirable candidates has forced some hospitals to up the ante, Smith said. The high-end offer for radiologists, for example, reached $600,000 this past year, compared with $500,000 the year before. High-end offers for cardiologists also increased substantially, from $465,000 to $500,000, according to the survey.

Specialists also are enjoying some fringe benefits, like additional vacation time, signing bonuses and a shorter track to becoming a partner at the group, Smith said.

"I think it's coming down the pike where you may have to add other perks," Hogan said. "I always hear, 'Can you help with my school loans or [liability] insurance?' Until now, we haven't really done that."

Being a specialist in demand was one of the reasons Mark Jackson, MD, an interventional radiologist in Oswego, N.Y., didn't have to move to find a new position. Dr. Jackson said he saw opportunities on a few Web sites, but he found the job he wanted -- and at the terms he hoped for -- by word of mouth.

"I was prepared for the possibility of having to pack the family up and move," Dr. Jackson said. "This is where the door opened."

In contrast, high-end offers for primary care doctors have declined over the past four years, according to the survey. The earning potential for generalists does not grow the way it does for a specialist, who enjoys more technological improvements each year, Smith said.

The growing demand for specialists will only make the recruiting market tighter, hospital executives said. Hillcrest Baptist, for example, has been searching for more than a year for a gastroenterologist and an orthopedic surgeon to fill open spots with area groups, Hogan said.

Genesis HealthCare System, which operates two hospitals in Zanesville, Ohio, just east of Columbus, has been searching for an otolaryngologist for three years, said Meagan Miracle, the system's physician recruiter.

"We have to stay within the general salary parameters," she said. "Just because we want an ENT, we can't offer $800,000 for one."

Still, hospitals know they can't even think about landing specialists without first having the primary care foundation.

It's like a domino effect, said Tom Lathen, director of physician recruitment for Sunnyside Community Hospital in rural central Washington state. Lathen said he is struggling to fill two slots in family practice and one in internal medicine right now, and without those doctors, the chances of hiring the necessary specialist diminishes.

"They have to have a medical community there to meet their needs," Lathen said. "If there's no primary care base, the specialists don't get the referrals they need."

ADDITIONAL INFORMATION:

Specialists a hot commodity

Hospital administrators say overall, physician recruitment is as difficult as it was last year, or even more so. Some specialists are especially hard to find. Respondents rated how difficult it is to find these specialties:

                    Very  Somewhat  Not
                    ----  --------  ---
Radiologists         63%     29%     8%
Orthopedic surgeons  58%     34%     8%
Anesthesiologists    49%     37%    14%
Cardiologists        47%     44%     9%
Internists           13%     45%    42%
Family physicians    13%     19%    68%

Source: Merritt, Hawkins & Associates

Demand spurs incentives

Physicians in highly recruited specialties saw increases in average income offers:

                     2000-01    2001-02  Change
                    --------   --------  ------
Anesthesiology      $240,000   $278,000  15.80%
Family practice     $136,000   $144,000   5.88%
Radiology           $271,000   $286,000   5.53%
Urology             $237,000   $245,000   3.38%
Gastroenterology    $219,000   $226,000   3.19%
Orthopedic surgery  $287,000   $295,000   2.79%
General surgery     $216,000   $221,000   2.31%
Cardiology          $267,000   $273,000   2.25%
Internal medicine   $145,000   $148,000   2.07%
Ob-gyn              $227,000   $219,000  -3.52%

Source: Merritt, Hawkins & Associates survey