Valuing Physician Recruitment & Retention
Just like in any business, it is prudent for a medical clinic to retain physicians over long periods of time. Uncontrolled turnover is costly not just in real dollars, but also in staff morale, customer retention and customer satisfaction. Although medicine may be practiced universally, each clinic and office has its own way of seeing patients, documenting findings, doing and reporting labs and x-rays and after-hours coverage. Those factors are always effected negatively when a new physician is interjected into the mix.
There are many costs involved with recruiting and retaining medical staff. But focusing just on productivity, it takes time to train the physician in the specific logistics of the practice, and overall productivity decreases while the new physician is familiarizing themselves with how the clinic is operated. Generally speaking, HR experts project a cost factor of 16% to 20% of the physician’s annual salary purely as replacement costs. Add to that number recruiter and interviewing costs, and a $200,000 internist can easily cost $65,000 to replace and onboard.
But this is just what you might consider the direct costs. The indirect, staff upheaval for example (Physicians often create close bonds with staff.) And, a physician departure, depending on the reasons, may cause other staff to depart as well. Further, depending on the clinic patient structure, you may actually lose patients or at best, have to deal with disgruntled patients. What is the value, the cost, of these issues? More importantly, are you building them in to the cost of replacing a physician.
Moreover, and this is the elephant in the room, do you build them into the cost of retaining a physician.
Recruitment and retention run hand-in-hand, but too often cost is based simply on the known directs of recruitment: recruiter and relocation fees. The perspective I’ve seen too often is that other doctors will take over seeing the departing physician’s patients, so we’re not losing anything – right? Wrong.
When you build a model that measures and values ancillary staff turnover attributable to a physician departure or recruitment, that measures and values lost or unhappy patients, and then add in the recruitment and productivity costs, you will arrive at a very important number – the value of keeping physicians, of reducing turnover and realizing of the value of adding monies to your retention budget.
In order to retain physicians a clinic may need to offer more time off, less after-hours coverage and shorter hours. A critical analysis may prove these and other retention initiatives are less costly than turnover.
Cost effectiveness analysis (CEA) is a unique and clever method for analyzing this problem. Using decision tree models, and assigning not only cost but effectiveness data to the model, it will be possible to make a more informed decision as to how to recruit physicians and what economic and non-economic incentives to offer them in order to create an actual recruitment and retention program rather than just a recruitment program.
If your objective is to provide the best decision-making for your organization and take a global view of your business, expanding your sights beyond ROI, and educating other decision-makers, Cost Effectiveness Analysis can make your organization more competitive and more profitable.