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Staying Put

Rick Johnson, for HealthLeaders Media, January 24, 2008
The emphasis on physician retention has never been greater. A number of sources have told me that they expect the emerging generation of physicians to be much more inclined to jump from job to job than ever before. In fact, it is said that younger physicians expect to switch jobs at least five times over their careers. As administrators gear up for the much cited physician shortage, perhaps the most cost effective measures are those that keep doctors in place.

Lately Kevin Donovan, vice president of physician and ambulatory services for Elliot Health System, in Manchester, NH, is focusing more of his attention on coming up with ways to keep his physicians satisfied personally and financially with their jobs. Here are a few highlights from a conversation Donovan and I had recently about physician retention strategies.

Rick Johnson: What are the most common reasons physicians give for leaving?

Kevin Donovan: My experience is that physicians seldom leave for the tangible things that are relatively easy to address, such as pay, benefits, or call frequency. When physicians leave a practice these days it is more often than not due to issues of lifestyle--community fit, getting along with colleagues, or organizational philosophy. They tend to consider things like pay and benefits up front when taking a position, and they know these things can be negotiated as time goes on. But lifestyle issues--such as how supportive your colleagues are--are not as easily addressed.

RJ: What steps have you taken to retain physicians?

KD: We have taken all the steps that most organizations have as it relates to providing competitive pay and benefits within local and national markets. In addition, we have looked at ways to reward and recognize physicians for longevity coupled with successful achievement of goals. For example, recent retention initiatives will compensate physicians upon reaching certain years of service providing that they meet productivity expectations in a majority of those years. Organizations can also offer "passive income opportunities" to physicians as long as they are well within the scope of Stark and anti-kickback regulations. Examples of this include fair market value lease transactions, participating bond transactions, and other vehicles. We also offer mentorship programs, orientation efforts, community selection assistance, part-time work opportunities, and other assistance.

RJ: What have you found to be the most effective retention strategy?

KD: Turnover in the physicians' ranks often relates to "lifestyle" issues. The most effective retention strategies are those things that make a physician and his or her family feel part of the community and get them invested in their employer. You can pay a physician as much money as you want, provide them investment vehicles, and increase CME allowances, but if they are not happy in their day-to-day work and their family is not happy in their day-to-day interactions, no retention perk will keep them in that community. That is why our organization is focusing our future retention efforts on these softer components of physician retention.

RJ: How much money does it takes, on average, to retain a physician compared to the costs associated with losing a physician?

KD: The true cost of retaining a physician cannot be quantified as it takes more than just financial incentives and other perks to retain someone. The costs that are not quantified are time spent mentoring and other soft costs. Just considering our financial programs to retain a physician (including defined contribution plans, retention bonuses, CME allowances, etc.), the annual cost of retaining a physician is at least $10,000. This does not include earned time or vacation time provided to a physician. The cost of replacing a physician is approximately $50,000 and this doesn't fully take into account lost revenue opportunities and other negative aspects of turnover.

RJ: Why is your organization putting so much emphasis on physician retention?

KD: While physician retention has always been important to hospitals, the changing dynamics of the physician marketplace make it a higher priority today. As physicians exit training in this new market, many of them are looking for employment situations as opposed to starting their own practice, or even joining a few colleagues in private practice. In the past, physicians would start their own practice, develop a patient base or referring physician base, and the opportunity cost of leaving that situation was too great. Today, physicians often take their first position post-residency or fellowship with the thought process that they can leave in a few years if they don't like it. With the less risky proposition of being employed as opposed to owning a small business, the thought of leaving a community or employer is that much easier for a physician today.

Donovan will detail the physician-retention strategies he has put in place at Elliot Health System in a February 12 HealthLeaders Media audioconference. With the day-to-day oversight of the system's network of 115 physicians--including about 65 primary care and 50 specialty physicians--he works with physicians of all sorts. That's increasingly important given the recent shifts in physician demographics. I've gotten a lot of feedback about generational differences between physicians, and if you factor in the influx of female physicians and international medical graduates, as well as changes in employment preferences, today's physician workforce looks very different than it did just a few years ago.

Addressing "lifestyle" issues may seem daunting when it seems that no two physicians are alike. But as Donovan has discovered, keeping physicians happy isn't impossible. You just can't expect a one-size-fits-all solution.


Rick Johnson is a senior editor with HealthLeaders Media. He can be reached at rjohnson@healthleadersmedia.com.

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