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Calculate Break-Even Point to Choose In-House or External Recruiter

Elyas Bakhtiari, for Physician Compensation & Recruitment, January 24, 2008
As a general rule, an in-house physician recruiter becomes cheaper as he or she recruits more physicians per year. If your facility consistently recruits multiple physicians per year, it's probably time to consider hiring someone to oversee those responsibilities. But how many physicians must a recruiter bring in annually to make the in-house option more cost-effective than using a search firm?

The magic number is roughly seven, though it may vary from practice to practice, according to Chris Kashnig, manager of physician recruitment with Christie Clinic in Champaign, IL. The key is to look for the break-even point at which the amount of the recruiter's salary dedicated to each search is roughly equal to the average search firm charge.

When a facility recruits seven physicians annually, the average cost per physician between the two options evens out, says Kashnig, who calculated the threshold based on average recruiter salaries and search-firm costs. Recruit more than that, and recruitment costs are generally lower when handled in-house, particularly when recruiting within a single specialty.

"If you're looking for a number of physicians in a given specialty, there are some economies of scale on the sourcing," Kashnig says. For example, if a facility needs to hire a dozen primary care physicians, one ad may net 10 responses from potential candidates, of which two or three may eventually join the practice.

Because an in-house recruiter's salary is fixed, the costs are diffused as he or she successfully recruits more searches. For example, if the average recruiter makes a $60,000 annual salary with $12,000 in fringe benefits, a facility is effectively allocating $14,400 in recruiter salary per physician if only five physicians are recruited per year.

Most other recruitment expenses don't have similar economies of scale (interview costs, for example, will be the same per physician regardless of the number being recruited), so the recruiter's salary has a significant effect on overall costs. Increase the number of recruits to 10 physicians per year using the same example, and $7,200 of the recruiter's salary goes to each physician.

Although his calculations can provide a useful benchmark, they may not apply equally to all situations, Kashnig says. Recruiting a physician can be much more difficult and costly in certain specialties or regions of the country.


Elyas Bakhtiari is the editor of Physician Compensation & Recruitment. He may be reached at ebakhtiari@hcpro.com. This story was adapted from one that first appeared in the January edition of Physician Compensation & Recruitment, a monthly newsletter by HealthLeaders Media For more information, visit www.hcmarketplace.com.