Physician Recruitment is Changing… From Defining Physician Need to Employment Contracts that Work DAVID ANDRICK DIRECTOR OF PHYSICIAN RECRUITMENT

A Real Issue - Shortage Association of American Medical Colleges news release Oct 2009 First-year enrollment in the nation's medical schools rose this year by 2 percent over 2008 to nearly 18,400 students. Even with increasing enrollments we may fall short of the need Retirements Other career choices Population changes

The Traditional Approach  Community demographics  Physician demographics  Physician locations (Accessibility)  Activity levels by FTE Physician  Hospital coverage needs Medical Staff Planning typically includes a market based Supply and Demand analysis:  Service line needs  Physician group dynamics  Market changes, migration and infiltration  Qualitative data from interviews  Comparison to nationally accepted ratios

Community Need Changes to IRS 990 requiring greater reporting of community benefit The Reform Bill calls for Hospitals to evaluate Community Need for services Need to make sure they tie together-consistent message Leads to a more sophisticated process – including:  Community age / sex demographics – implications  Poverty levels  Insurance coverage  Available FQHC services  Epidemiology – major indices  Impacts of innovative delivery models (Accountable Care/PCMH)  Service lines and locally available care

Upgraded Need Analysis How many IP/OP admits (on avg. and detail) are required by specialty service area to break even? How many referring physicians are required to generate these referrals from the primary service area? Unnecessary out-migration of cases Changes to medical practice? What types of physician can influence referrals to specific specialties? Who has the data: Service line directors/CFO Hospital DRG/APC data Patient migration by source with DRG/APC MGMA physician production data

Changes to Medical Practice Practice models Employed/Independent Multi/Single-specialty Gatekeeper-Medical Home Telemedicine Use of NP/PA’s Changes to treatment/care modalities Use of hospitalists Use of extenders Technology/drug developments Specialist services trends Federal/State Regulations

Reform In the Works Greater emphasis on Primary Care and Prevention Patient Centered Medical Home demonstration projects (PCMH) Improved Medicaid reimbursement for Primary Care Physicians More people with access to coverage, will they use it? Accountable Care Organizations to be tested Payment bundling may affect physician contracts Malpractice will affect recruitment (TBA?)

Changes to Treatment Modalities Continuing shift to outpatient procedures Greater use of minimally invasive surgery: Gastro - endoscopic procedures Gen Surg. - use of endoscopy Cardiac - use of coronary angioplasty Orthopedics - arthroscopy and minimally invasive hip replacement Primary care use of Hospitalists for IP care Oncology increasing use of Linear Accelerator and DNA personalized treatment Robotic surgery Trends in birthing Chronic disease management

Provide Supportable Calculations Ensure consistency with Community Needs Assessments: Keep using the traditional market driven, supply/demand data: Understood by the government agencies Use a weighted impact on standard ratios resulting from changes to practice modalities Recognize community need (HRSA and/or Coverage, Service expansion) Must represent the primary service area (75% of IP) Identify Provider shortages at least over 3 year period Trended epidemiology (Regional Govt. Health Orgs) Service line need to meet future standards for care Use for Budget projections on cost

Greater Access May Be Problematic

Getting the Right Fit Physician Recruitment is a long term investment, consider: How competitive is the specialty Medical staff mix and characteristics Population to be served Community and recruit expectations Support structures available Hospital facilities and technology Hospital financial status Recruitment package

Matching Cultures Managing expectations is made easier after reality check: Have you identified the recruits motivators? What are the potential de-motivators? What is important to the family? What do your current medical staff say about the hospital and administration? Is medical staff leadership supportive? Is there a clinical quality expectation gap? Age and style of practice of peers and sub-specialists? Is it a participatory environment or top down?

Letter of Intent - “KISS” Relocation Recruitment Policies The Opportunity The Employment Contract Key discussion points :

Employment Contract Term Call coverage Indigent and charity care Outside activities Professional liability tail coverage Termination provisions Restrictive covenant Compensation Specify duties resulting in incremental compensation

From the Trenches! What’s Hot and What’s Not! Non-competes Call coverage and payment for coverage E.D. Coverage and payment CME’s MSO services for the practice Clinical service line directorships Employment “v” spin off to private practice Productivity planning Opportunities for research

From the Trenches Be careful to avoid having an environment in which the physician spends too much time worrying about the contract terms and is not focused on patients! Warning signs: Is my check ready? Does that include my bonus? Limited office hours

Employed Physicians There is no magic bullet with employment contracts: Employed physicians are high level employees. As such they will thrive with good leadership and in a good working environment where their participation is valued.

Income/Productivity Packages Straight salary Salary + Incentive RVU’s Net practice income Leasing services Paying for coverage Medical Directorships

National Averages Compensation Methods Performance Adjusted Salary43.8% Fixed Salary24.7% Shift-Hourly-Other Time Based Payment 6.2% Share of Practice Revenues19.5% Other Compensation5.8% Bonus Available Yes45.3% No54.7% Sources of Practice Revenue Avg. % of Rev from Medicare31.4% Avg. % of Rev from Medicaid16.8% Source: HSC 2008 Health Tracking Physician Survey

Reasonable Compensation It is all relative? A full-time Neurosurgeon generates an average of more than $2.8 million a year on behalf of the affiliated hospital. Invasive cardiologists ($2.2 million) Orthopedic surgeons ($2.1 million) General surgeons ($2.1 million), and Hematologists/oncologists ($1.5 million) A General Internist brings in nearly $1.7 million a year on avg. A Family physician more than $1.6 million Pediatrician more than $856,000. *Merritt Hawkins Survey 2010

Reasonable Compensation? Guidelines and sourcing information: MGMA statistics for employed physicians Level of previous experience Evidence of previous productivity References ROI of service line Need to maintain hospital viability

Physician Contracts There are always 3 contracts per physician This Years Next Years Last Years

Explaining Your Productivity Package Before presenting a proposal, explain to the recruit: What productivity packages your hospital uses Why and how they work How others have performed using them Show an example of how it could work for the recruit What is expected to happen over the first year How will changes to contract be managed in the future

Employment Model Create a strong and sustainable business model: Practice management expertise and leadership Clarity of vision Governance processes and physician responsibilities Physician engagement in initiatives Hospital strategies

After the Start The recruitment process is never really finished: Tell them what they will get Mentor program Confirm that is happening Ensure access to administration is fluid Use liaison type services Year end meetings to confirm expectations are being met Lay out expectations for new year Repeat…………………

Summary Recruitment is a Strategic Imperative Cost to recruit vs Cost of not recruiting Recruitment is a revenue building strategy Hospital strategies and community need No easing up over the next 15 years Look to the Community to help recruit Changes to how healthcare is and will be delivered requires greater need analysis Managing expectations and getting the right fit Be upfront with what you have to offer The recruitment process is never over Retention, Retention, Retention