AASA PHYSICIAN RECRUITING AND COMPENSATION TRENDS

AASA PHYSICIAN RECRUITING AND COMPENSATION TRENDS

OUR AGENDA 1. The state of the physician workforce 2. Physician recruiting incentives and trends

OUR FRAGILE, FRAGMENTED PHYSICIAN WORKFORCE PART 1

HOW DID WE GO FROM THIS

TO THIS?

WELCOME TO THEIR WORKING WEEK AFTER 4 YEARS OF COLLEGE, 4 YEARS OF MEDICAL SCHOOL, 3 TO 7 YEARS OR MORE OF TRAINING Third parties control their fees Tell them how to treat patients Require hours of paperwork Sue them on a whim Require them to change their practice structure/processes Make them question their career choice

PHYSICIAN SUICIDE An estimated 400 physicians commit suicide each year, the equivalent of one entire medical school class. The physician suicide rate is 20% to 30% higher than the general public s. Source: Louise Andrew, M.D. ET AL. Physician Suicide, Medscape Reference, March 8, 2012

FROM 1970-2010 WHAT HAS CHANGED AND WHAT HAS NOT

A HAMBURGER IS STILL A meat patty and lettuce on a bun 1970.25 cents 2010.$1

BUT MEDICINE IS NO LONGER A PREMIER PROFESSION Just ask Physicians The day will come when the practice of medicine will have no more appeal than digging ditches with an overseer standing next to you with a whip.

A SURVEY OF 14,000 PHYSICIANS REVEALS THE STATE OF THE UNION Coming September 24, 2012

KEY FINDING: DOCTORS ARE ON THE BRINK Physician morale and optimism are at an all time low. Physicians are disengaging from the practice of medicine, seeing fewer patients and working fewer hours Source: The Physicians Foundation/Merritt Hawkins 2012 Survey of Physicians and Health Reform

WILL THEY STRIKE?

OKAY, DOCTORS ARE UPSET. SO ARE A LOT OF PEOPLE. WHY DOES IT MATTER?

BECAUSE EVERYONE NEEDS A DOCTOR THE FIRST PERSON YOU SEE COMING IN THE LAST PERSON YOU SEE GOING OUT

BUT NOT EVERYONE IS GOING TO SEE ONE A Growing Gap: The Coming Gap Between Physician Supply & Demand (2020) Demand 1.1 Million Supply 0.9 Million Source: Council on Physician and Nurse Supply

PROJECTED SHORTAGE OF PHYSICIANS BY SPECIALTY BY 2025 Doctor Deficits Primary care 46,000 (37% deficit) Surgery.41,000 (33% deficit) Other patient care 29,000 (23% deficit) Medical specialties.8,000 (7% deficit) Source: Association of American Medical Colleges/Modern Healthcare/December 1, 2008

IN AN ERA OF PHYSICIAN SHORTAGES, HOW DOCTORS PRACTICE IS AS IMPORTANT AS HOW MANY THERE ARE AMERICA S 750,000 PATIENT CARE PHYSICIANS ARE FRAGMENTING

WHAT DO YOU PLAN TO DO IN THE NEXT ONE TO THREE YEARS? Continue as I am...49.8% Cut back on hours.22.0% Retire 13.4% Switch to concierge 6.8% Relocate to another practice/community 10.9% Cut back on patients seen 9.6% Seek a non-clinical job within healthcare 9.9% Work part-time 6.5% Work locum tenens.6.4% Seek a non-healthcare job/business.6.4% Close my practice to new patients.4.0% Seek employment with a hospital 5.6% Other..5.5% Source: The Physicians Foundation/Merritt Hawkins 2012 Survey of Physicians and Health Reform

THE COMMON DENOMINATOR? PHYSICIANS WILL PRACTICE IN A GROWING NUMBER OF WAYS.MOST OF WHICH WILL REDUCE ACCESS TO THEIR SERVICES PART-TIME CONCIERGE HOSPITAL EMPLOYED LOCUM TENENS NON-CLINICAL ROLES ELMINATE CERTAIN PAYERS (MEDICAID/MEDICARE/CHARITY) COMMUNITY HEALTH CENTERS TRADITIONAL (INDEPENDENT) Source: The Physicians Foundation/Merritt Hawkins 2012 Survey of Physicians and Health Reform

RESULT: A SILENT DEFECTION Physicians are seeing 16.5% fewer patients per day than in 2008 They are working 6% fewer hours They spend 22% of their time on non-clinical paperwork Source: A Survey of America s Physicians: Practice Patterns and Perspectives, The Physicians Foundation/Merritt Hawkins, 2012

A SILENT DEFECTION A 6% reduction in work hours = a loss of 44,250 FTEs 16.6% fewer patients seen per = over 100 million fewer patient encounters 22% of time spent on paperwork = a loss of over 165,000 FTE s

WHAT DOES THE FUTURE HOLD? Variations by respondent type: Employed physicians see 17.35% fewer patients per day than owners Female physicians see 13.7% fewer patients per day than males Physicians less than 40 see 4.04% fewer patients per day than those over 40 Source: The Physicians Foundation/Merritt Hawkins 2012 Survey of Physicians and Health Reform

THE MOVE TO EMPLOYMENT INDEPENDENT PHYSICIANS: 2000-2013 800 33% 780 760 43% 740 720 49% 700 680 57% 660 640 620 2000 2005 2009 2013 Source: Accenture Analysis. MGMA American Medical Association

THERE WILL BE TWO TYPES OF PHYSICIANS: THOSE WHO NEVER VISIT THE HOSPITAL AND THOSE WHO NEVER LEAVE IT 77% of doctors to be employed by 2013, up from 43% in 2000 Source: Accenture

MEDICAL PRACTICE IS EXPERIENCING A PROFOUND TRANSFORMATION FROM AN ART TO A TRADE Responsibility for the task, not the patient

TENS OF THOUSANDS OF FTES WILL BE LOST, JUST IN TIME FOR..HEALTH REFORM Source: Joint Economic Committee

HEALTH REFORM: 2014-2019 UP TO 32 MILLION UNINSURED COVERED PREVENTIVE SERVICES PROVIDED NO DEDUCTIBLES AND NO CO-PAYS Source: PPACA

HOW MANY MORE PCs? 32 million newly insured patients X 2 additional patients visits per year = 64 million patient visits divided by 4,000 = 16,000 additional primary care doctors Source: The Lewin Group

HOW MANY MORE SURGEONS? Our 20 specialty societies already have issued reports projecting shortages. Source: American Association of Medical Colleges

WHO WILL SEE PATIENTS? Medicare reimbursement may fall below Medicaid levels by 2019. Medicare/Medicaid now covers 110 million people. Source: The Health Care Maze, Richard Reece, M.D.

REFORM: CONSPICUOUS FOR WHAT IT DID NOT DO Does not remove the cap on GME funding Just 889 new residency slots through redistribution Source: PPACA

WHAT S EMERGING? A NEW WORKFORCE PARADIGM THE CONE OF COMPLEXITY Medical specialists Primary care physicians Pharmacists (Pharm D) Advanced practice Nurses/PAs Nurse specialists Therapists LPNs Nurses aides

STAFFING PLANS MUST INCORPORATE ALL TYPES OF PHYSICIANS Employed.(over 50% of all doctors) Independent Full-time Part-time Concierge On-site Remote (telemedicine) Locum tenens Male Female International

A NEW MARKET Physician recruitment strategies and incentives driven by a buyer s market.

PART 2: RECRUITING INCENTIVES WHAT IS YOUR BAIT?

CONTRACTS WHAT ARE THEY FOR? For Physicians, Fear of Loss Outweighs Potential For Gain THE INCOME OFFER IS ALL ABOUT CREDIBILITY

CONTRACTS WHAT ARE THEY FOR? Don t Go Into the Market if You Don t Have a Contract

CONTRACTS WHAT DO THEY COVER? STANDARD RECRUITING CONTRACTS TODAY TYPICALLY WILL COVER Work status Independent? Employee? Shareholder? Partner? Salary and production bonus the 50% model Income guarantee forgiveness clause? Educational loan forgiveness Non competes prohibited by Stark? Hours/duties/call coverage/vacation Path to partner Benefits Termination Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives

MERRITT HAWKINS 2012 REVIEW OF PHYSICIAN RECRUITING INCENTIVES Top Ten Physician Assignments: 1. Family practice 2. Internal medicine 3. Psychiatry 4. Hospitalist 5. General surgery 6. Emergency medicine 7. Orthopedic surgery 8. OB/GYN 9. Pediatrics 10.Pulmonology

MOST IN-DEMAND AS A PERCENT OF ALL PHYSICIANS PER SPECIALTY Pulmonology Hem/Onc Family medicine Endocrinology Urology General Surgery Orthopedic surgery Dermatology Psychiatry Otolaryngology Internal medicine Pediatrics Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives

SETTINGS OF SEARCH ASSIGNMENTS Hospital employed 2012 2004 63% 11% Group practice 16% 42% Partnership 8% 22% Community health center 6% N/A Solo 1% 20% Association 1% 3% Other 5% 2% Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives

IF PARTNERSHIP, TIME TO PARTNERSHIP IMMEDIATE 2% ONE YEAR 32% TWO YEARS 53% THREE YEARS 12% FOUR YEARS 1%

AVERAGE INCOME General Surgery GENERAL SURGERY Compensation ranges from $313,665 to $387,692 AMGA $387,692-1.10% MGMA $352,826 2.60% Merritt $343,000 2.10% Hay $321,100 0.00% HHCS $313,665-8.40% MGMA Academics S365,310 N/A % change Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives 2011-12 data

AVERAGE INCOME Cardiology (invasive) CARDIOLOGY (invasive) Compensation ranges from $377,153 to $519,512 AMGA $519,512 3.70% Merritt $512,000-3.80% MGMA $500,000 0.00% Hay $451,900 21.00% HHCS $377,153-7.40% MGMA Academics $374,335 N/A % change Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives 2011-12 data

AVERAGE INCOME Gastroenterology GASTROENTEROLOGY Compensation ranges from $299,432 to $481,347 MGMA $481,347 3.70% AMGA $480,475 4.30% Merritt $433,000 2.10% Hay $372,100 0.00% HHCS $299,432-15.80% MGMA Academics $319,578 N/A % change 2011-12 data Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives

AVERAGE INCOME Orthopedic Surgery ORTHOPEDIC SURGERY Compensation ranges from $423,600 to $545,628 AMGA $545,628 0.00% MGMA $520,119 4.60% Merritt $519,000 0.00% HHCS $453,544-17.00% Hay $423,600-8.50% MGMA Academics $549,627 N/A Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives % change 2011-12 data

AVERAGE INCOME Plastic Surgery PLASTIC SURGERY Compensation ranges from $303,000 to $444,312 AMGA $444,312 1.30% MGMA $420,004 9.50% HHCS $349,773-19.20% Hay $332,700-10.50% Merritt $303,000-17.00% MGMA Academics $529,378 N/A % change 2011-12 data Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives

AVERAGE INCOME Urology UROLOGY Compensation ranges from $302,191 to $461,000 Merritt $461,000 1.80% AMGA $444,121-1.10% MGMA $417,095 12.00% Hay $344,300 0.00% HHCS $302,191-23.90% MGMA Academics $424,567 N/A % change Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives 2011-12 data

TYPE OF INCENTIVE OFFERED Salary 18% Salary with production bonus Income guarantee 73% 7% (down from 41% in 2004) Other 2% Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives

IF SALARY, PLUS PRODUCTION, WHAT TYPE OF PRODUCTION BONUS? RVU BASED 54% QUALITY BASED 35% (Up from 7% last year) NET COLLECTIONS 33% GROSS BILLINGS 5% PATIENT ENCOUNTERS 5% OTHER 3% Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives

PHYSICIAN PRODUCTIVITY FROM VOLUME TO VALUE 2011 MGMA SURVEY.62% of physicians had incentivebased compensation tied to quality metrics, compared to only 21% in 2008. Only between one and ten percent of physician compensation can be achieved through reaching quality goals.

SUBJECTIVE METRICS BEING ADDED TO THE MIX Metric 2008 2009 Patient satisfaction 20% 61% Peer review 6% 18% Administrative/ governance 15% 39% Community outreach 2% 9%

THREE COMP MODELS USED BY EARLY ADOPTERS Example A Physician can earn up to 5% of his or her base as additional bonus income by: Achieving minimum average level of patients per day Exceeding practice average for patient satisfaction scores Correctly documenting in charts Appropriately coding and billing Good citizenship (peer review, community relations, etc.)

THREE COMP MODELS USED BY EARLY ADOPTERS Example B Physician can earn a fixed $20,000 bonus annually if thresholds met for: * sufficient patient satisfaction scores * accuracy of charting/emr data input * participation in quality improvement projects No fluctuation based on specialty or base salary

THREE COMP MODELS USED BY EARLY ADOPTERS Example C Physician can earn up to 10% of base as a quality bonus if thresholds met or exceeded for key quality indicators that vary by specialty and an additional 5% for a citizenship component (peer review, governance committees, etc.) ALL EXAMPLES MOVE THE NEEDLE TOWARD VALUE, BUT

VOLUME IS STILL KEY GROWING USE OF RVU S MGMA PHYSICIAN COMPENSATION AND PRODUCTION FORMULA 2007 34% of physicians have compensation tied to RVUs 2010 61% of physicians have compensation tied to RVUs

INCOME GUARANTEES A LIVING DINOSAUR Net collections 76% Gross collections 24% Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives

TERM OF INCOME GUARANTEE 1 year 45% 2 years 44% 3 years 11% Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives

RELOCATION HOSPITALS/GROUPS OFFERING RELOCATION.95% AVERAGE RELOCATION ALLOWANCE $10,035 Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives

SIGNING BONUS SEARCHES OFFERING A SIGNING BONUS.80% AVERAGE BONUS.$23,388 Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives

CONTINUING MEDICAL EDUCATION SEARCHES OFFERING CME.98% AVERAGE CME AMOUNT..$3,391 Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives

ADDITIONAL BENEFITS Health Insurance.97% Malpractice.99% Retirement..82% Disability..75% Education forgiveness..26% Housing allowance 5% Other.1% Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives

TERM OF EDUCATION FORGIVENESS 1 year 6% 2 years 27% 3 years 67% Source: Merritt Hawkins 2012 Review of Physician Recruiting Incentives

TRENDS IN ACADEMIC PHYSICIAN RECRUITING A more challenging environment 77% of academic centers rate physician recruiting a top priority followed by funding (76%) and diversity (69%)

TODAY S RECRUITMENT CHALLENGES External Challenges Other Universities and teaching facilities 137 Medical schools and teaching hospitals Financial disparity between the community market and academic market Perception Regional Bias *AMA statistics based on 2011 trainees

TODAY S RECRUITMENT CHALLENGES Internal Challenges Practice Structure Candidate Qualifications Financial Package Allocation of internal resources Academic bureaucracy Recruiting Process Sense of Urgency

TRENDS IN ACADEMIC RECRUITING The Talent Drain 47% of final year residents received over 100 or more job solicitations

COMPARING THE ACADEMIC CANDIDATE TO THE COMMUNITY CANDIDATE Motivation for seeking a change Experience CV's Trailing spouse syndrome Non-academic geographically and financially motivated to make a change fresh out of training is usually acceptable short and concise - educational and work history focused spouse will be looking for employment in various fields Academic motivated by research and collaboration opportunities previous fellowship training plus 3-5 years of teaching experience long - includes publications, presentations, lectures, and research interests more often, spouses are also academic physicians Priorities in a practice quality of life: schedule, block time for research, departmental support from university, number of faculty, environment call, volume, size of town reputation of the program and leadership based on history of contributions interview availability week's notice 1 month advanced notice

TYPICAL COMMUNITY AND ACADEMIC SEARCH TIMELINE time to evaluate a cv / decide to interview time from invitation to interview 3 days 2 weeks 2 weeks 5 weeks time from interview to offer 4 weeks 3 days

TYPICAL COMMUNITY AND ACADEMIC SEARCH TIMELINE time from offer to final acceptance time from acceptance to start 4 weeks 1 week 14 weeks 24 weeks

TYPICAL COMMUNITY AND ACADEMIC SEARCH TIMELINE Start of search to start of employment 4.5 months 9.5 months

A CHANGING LANDSCAPE Medicare cuts Community benefit reporting Value based purchasing Loss or reduction of DSH payments

If you have any questions, please contact Kurt Mosley at: Kurt.Mosley@amnhealthcare.com Follow Us:

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AASA PHYSICIAN RECRUITING AND COMPENSATION TRENDS