The cost of physician turnover

Physician turnover rates are increasing as more clinicians experience burnout and decide to retire early, leave the field or refresh their practice setting.

The Association for Advancing Physician and Provider Recruitment's report on physician and provider retention and turnover in 2022 showed around 76 percent of physician exits in organizations with the most and least providers were due to retirement. Physicians finding a new role elsewhere was also a top response.

If caught unaware, physician turnover can hit the health system's finances hard. Here are seven points:

1. Losing a physician means hospitals won't receive the revenue associated with those cases until the physician is replaced. Physicians also typically have a ramp-up period for to build a patient base. On average, physicians generate $2.4 million for affiliated hospitals each year, according to Merritt Hawkins. The highest revenue generating physicians being interventional cardiologists who generate $3.48 million per year and then orthopedic surgeons who generate $3.29 million per year.

2. Interview expenses could be $30,000 per candidate, with the interview process relevant to recruiting costs being around $250 for human resources per hour plus lost productivity during the interview, according to a report from the New England Journal of Medicine authored by Tony Stajduhar, president of Jackson Physician Search.

3. Revenue lost from the vacancy of a physician depends on the specialty; a family medicine physician that generates $1.5 million revenue for the hospital could mean a loss of $130,000 per month until the vacancy is filled, Mr. Stajduhar noted.

4. On average, it takes 4.3 months to fill an open family medicine role, and five to 10 months to fill a specialist role, NEJM reported. In that time, hospitals could lose $559,000 on the open family medicine spot and much more for medical specialists.

5. Newly hired physicians receive a myriad of financial perks. More than 90 percent of hospitals offer an average of $10,000 to $15,000 for physician relocation as needed, according to the Association for Advancing Physician and Provider Recruitment. Forty-one percent of organizations surveyed offered $75,000 to $99,000 in physician student loan repayment.

6. Ninety-one percent of organizations offered signing bonuses to new physicians, typically $20,000 to $30,000, according to the American Association for Advancing Physician and Provider Recruitment. Physician signing bonuses jumped 21 percent from 2022 to 2023 to $37,473, according to a report from AMN Healthcare. The signing bonus for the most requested specialties was much higher; family medicine physicians had an average signing bonus of $45,918 and a high of $250,000.

7. Hospitals will sometimes pay for medical malpractice insurance for physicians, which varies by state and specialty. Overall, medical malpractice premiums increased 30 percent from 2020 to 2022, according to the American Medical Association.

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