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Physician Turnover Costs Millions: Four Facts

December 17, 2015

Everyone is focused on physician recruitment but what about physician retention? Medical groups reported an average turnover rate of 6.8 percent in 2012. While it’s much lower than hospital average turnover of 28%, the cost is astronomical. I predict that turnover is going to continue to be a problem. Given the current wave of physician employment and practice acquisition, we’ll see many physicians, three years from now, unhappy with the deal they made or their working situation.

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Calculating the cost of physician turnover is an inexact science, but here are the basics:

  • Salary
  • Sign on bonuses, income guarantees and relocation costs
  • Recruiting costs (on the low end) are $40,000 per position
  • The lost revenue while the position is open. A primary care physician can generate over $1 Million annually for the hospital. Certain specialties generate several times this much.
  • Cost of the administrative time taken up during the separation process. On-boarding, credentialing and training costs for new physicians.
  • Decreased productivity and revenue while a new physician’s practice gets up and running.
  • Effects on patient satisfaction; Impact on continuity of quality improvement initiatives; Impact on other providers and referral patterns.

See the interesting article: American Journal of Medical Quality, Review of Physician Turnover: Rates, Causes and Consequences. The loss and replacement of a single primary care physician starts at $250,000. The real cost is over $1 Million. A few other interesting points, from the New England Journal of Medicine Career Center:

  1. A common contributor to turnover is the mismatch between physician expectations and organizational culture or rules.
  2. 54% of physicians leave their group within the first five years.
  3. Practice issues cause physicians to leave 30% of the time, the most cited reason (not compensation). Physicians often leave due to disappointment over “broken promises” about patient volume and administrative support.
  4. Only 27% of physicians report that their group has a written or formal retention plan.

What does all of this mean?

  • It is MORE expensive in the long run to move hastily and make a bad hire.
  • There are ways to ensure that the candidate fits your culture and to better align goals. Consider the last physician you brought in that didn’t work out because of his personality or behavior, or expectations simply didn’t fit your organization. What would you have given to know this before making the offer?
  • These are $1 Million positions. In other industries, we apply far more rigor to the selection and development of employees who are this valuable.

Or, we can continue with the current approach of spending all of our time and money to recruit physicians, see them leave, and start over.

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Bryan Warren Bryan Warren is the President of J3 Personica, a consulting, assessment, training, and coaching firm, and a guest blogger for PSI. Bryan is an expert in progressive talent strategies, with a particular focus on leader and physician selection and development.