Key trends affecting the physician job market include significant projected shortages, higher salaries, and increasing rates of turnover.

The physician job market is being heavily influenced by industry volatility as labor shortages, employment models, and compensation evolve with the changing times. For hospitals and health systems, there is good news and bad news. More physicians are seeking the security of employed roles, but they are less loyal to any one organization because of demand and market uncertainty, experts say.

This article highlights labor market trends for primary care providers and specialists. For insight on physician employment patterns and compensation packages, see October’s Physician Business Adviser featured story.

Physician Shortage

Health care faces a shortage of 46,000 to 90,000 physicians by 2025, according to a study released in March by data research firm IHS, Inc., for the Association of American Medical Colleges (AAMC).

Although the Affordable Care Act (ACA) often is linked to the increased ratio of demand to supply, in actuality an aging and growing population accounts for the majority of the projected demand. The ACA accounts for only 2 percent, according to the study.

The study projects workforce shortages of between 12,500 and 31,100 primary care physicians (PCPs) and between 28,200 and 63,700 specialists and subspecialists, including surgeons, in 2025.

“We’ve seen a steep increase in the acuity of need for primary care physicians really across the country,” says Steve Look, executive vice president of The Medicus Firm, a Duluth, Ga.-based physician search firm. “Oftentimes, it’s not, ‘Hey, we need one physician’; it’s, ‘Hey, we need six.’”

The number of inquiries for PCP roles has eclipsed the number of searches for specialists, Look says, which represents a major shift from a decade ago, when PCPs were in greater abundance.

Still, the shortage of specialists is worrisome. “We have as much need in just about every specialty, according to any resource you want to look at pretty much across the board. And some of the shortages are downright alarming,” says Travis Singleton, senior vice president of Dallas-based recruiting firm Merritt Hawkins, who particularly notes shortages in general surgery and psychiatry.

The physician shortage will persist, even with the increased use of advanced practice nurses, more efficient technology, and alternative care settings such as retail clinics, according to the AAMC study. And with a cap on government support for residency programs, supply is unlikely to keep pace with the increasing demand for the foreseeable future, says Tannaz Rasouli, director of government relations for the AAMC.

"There's no single solution that is going to be sufficient to meet the nation's healthcare needs," Rasouli says. "What we need is a multifaceted strategy that will try to resolve these shortages." One important element, he says, is increasing federal support to train more physicians.

Although some healthcare institutions have expanded funding for their training programs beyond funding provided by the government, “We expect that as financial pressures on hospitals increase, their ability to continue doing that is likely to decrease,” Rasouli says. “The bigger issue here is whether all of those efforts will be sufficient in light of the pretty extensive shortages that we’re expecting.”

Salaries

Salaries for nearly all physician types increased from 2013 to 2014, according to results of a survey of physician income released in July by The Medicus Firm. Average salaries for internal medicine and family practice medicine rose by 3.5 percent to $239,000 and $208,000, respectively. Among specialties and subspecialties, average increases ranged from 6.7 percent in neurology (to $270,000) to 0.25 percent (to $402,000) in medical oncology.

The overall rise in compensation, particularly for PCPs, has been due to supply and demand, Look says: “I think we’ll continue to see it as the environment becomes more and more competitive.” However, Singleton believes the supply-and-demand effect on compensation has run its course. Instead, consolidations that result in mega health systems are fueling higher salaries, he says. Whereas in years past, many physicians were employed by small-group practices that are limited in how much they can pay physicians, “Now, you have an integrated health system that is writing that check,” Singleton says.

Higher inpatient and outpatient revenue allows these health systems to pay an extra $15,000 in salary to a physician, Singleton says. “So, you’re seeing an inflation—not an artificial inflation, but a different type of inflation in salaries, again, because the demand has been there. That’s not going away.”

Advanced Practice Providers

As the PCP shortage continues, more healthcare organizations are turning to advanced practicioners to fill the gap—a trend that will continue. “When you look at searches for nurse practitioners and physician assistants (PAs) combined, they’re the fastest-growing search request for us in the last two years,” Singleton says.

According to a Merritt Hawkins review, searches for advanced practitioners, including nurse practitioners (NPs) and PAs, were the fourth-most requested search assignments in 2014. Neither role was among the top 20 search assignments according to Merritt Hawkins' 2011 review of physician recruiting incentives. (Combined PA/NP searches for the 2010 period would have ranked 22nd). Average salaries for NPs rose from $106,000 in 2013-14 to $107,000 in 2014-15, compared with $95,000 in 2011-12. For PAs, salaries also rose by $1,000, to $106,000, in 2014-15.

Salaries for APNs will continue to inch up as demand increases, Look says. “We are seeing a continued increase in recruitment for advanced practice nurses—and not just for primary care, we’re seeing it in the sub-specialty areas, as well,” he says.

Turnover

A negative consequence of the employed physician trend is higher turnover. According to The Medicus Firm’s 2015 physician practice survey, more physicians are open to new opportunities in the coming year. Thirty-four percent of physician respondents stated they will definitely not make a career change this year, compared with 43 percent last year.

Whereas physicians who practice independently have equity in the business and are less likely to leave, employed physicians feel less bound to their employers, Singleton says, and can easily move to another hospital or health system if they are dissatisfied.

“It’s an industry in disruption.” Singleton says. “We’re seeing turnover hit all-time highs. And I don’t see a lot that is going to curb that in the next few years.”

High turnover can jeopardize care, Singleton says. “I don’t care what your business is; turnover never yields better quality,” he says.


Karen Wagner is a freelance healthcare writer based in Forest Lake, Ill., and a member of HFMA’s First Illinois chapter.

Interviewed for this article: Steve Look, executive vice president, The Medicus Firm, Duluth, Ga.; Travis Singleton, senior vice president, Merritt Hawkins, Dallas; Tannaz Rasouli, director of government relations, Association of American Medical Colleges.

Publication Date: Monday, November 09, 2015