Strategies for Physician Shortage

Strategies for defending against the current and future physician shortage : 

Strategies for defending against the current and future physician shortage Horton Smith & Associates 7400 West 132nd Street Overland Park, Kansas www.hortonsmithassociates.com

Presenter Information : 

2 Presenter Information Fredrick Titze Horton, MHA, CMPE President and CEO Horton, Smith, and Associates Office- (913)752-4578 Cell- (913)544-5560 Jim White, MBA Executive Vice President Horton, Smith, and Associates Office- (913)232-4008 Cell- (913)626-2834

Presenter Information : 

3 Presenter Information Fredrick Titze Horton has 20 years experience in key executive roles, with quality physician groups and with integrated delivery systems. In his role as President/CEO of three large groups, he learned first hand how efficient and successful physician recruitment positively impacts an organization. Mr. Horton has a strong understanding of governance, culture, and organization of physician entities, as well as an excellent knowledge of physician recruitment and retention trends. He is the author of numerous articles related to physician recruitment and medical group operations & governance, and he frequently presents at national conferences on physician recruitment and other issues affecting medical groups and health systems.

Presenter Information : 

4 Presenter Information Jim White has 20 years of experience in various facets of business operations, strategic planning and business development. Jim has worked with a major national pharmacy benefit manager and a national insurance carrier while leading successful sales, project management, operations and marketing teams. Jim brings a wealth of expertise in Process Improvement to Horton Smith & Associates, which enables our firm to be successful in meeting and exceeding expectations in the areas of accuracy, timeliness, and efficiency.

About Horton Smith & Associates : 

5 About Horton Smith & Associates Horton, Smith & Associates, LLC. represents an innovative approach to physician recruitment. Our firm seeks to partner with healthcare organizations in a manner that works in their setting, for their culture, and with their market-based realities. Our leadership team includes a physician who serves as our Executive Vice President and Chief Medical Officer. We believe in pay-for-performance, as reflected in our professional services contract. Horton Smith offers services beyond traditional physician recruitment. Our staff is comprised of physicians, healthcare executives, recruiters, and marketing professionals who have significant real-world healthcare experience.

National Prediction- A Severe Shortage Is Being Predicted : 

6 National Prediction- A Severe Shortage Is Being Predicted Year focused on is 2020 One school of thought: Shortage of 85,000 physicians Another school of thought: Shortage of 200,000 physicians Presently 781,000 physicians practicing These estimates were made in advance of CMS’s proposed Medicare reductions to physicians

What causes the spike in demand and the shortage? : 

7 What causes the spike in demand and the shortage? Several factors contribute

Ah, the Golden Years : 

8 Ah, the Golden Years Number of people 65 and older will increase 53% by 2020 This means that this segment will account for over 20% of our overall population in 2020 Today this segment accounts for 13% of our population

The Boomers!!! : 

9 The Boomers!!! Who are the “boomers” 78 million Born between 1946 and 1964 Probably everyone in this room 57.8 million are projected to be alive in 2030 330 people will turn 60 each hour in 2006 Boomers are the wealthiest elderly in history Boomers make up 20% of the population, but control 40% of the nation’s disposable income and 77% of private investments

Things start to wear out and break : 

10 Things start to wear out and break The growth in number of Seniors will result in a significant increase in services, below is a listing of annual physician visits by age sector: Age Visits 0-15 2.0 16-24 1.5 25-35 2.2 36-45 3.4 46-65 5.4 66+ 6.0

Population Growth : 

11 Population Growth The growth of the general population of the U.S. (from 282 million in 2000 to 335 million in 2020) will translate into increased demand for an additional 150 million physician visits

Population Growth cont. : 

12 Population Growth cont. Life Expectancy Born in 1900 47.3 Born in 1950 68.2 Born in 2000 76.9 Number of Centurions 1990 37,000 2000 50,000

Physician distribution : 

13 Physician distribution Present Situation Washington D.C. 6.4/1000 population Massachusetts 3.7/1000 population U.S. 2.6/1000 population Iowa 1.7/1000 population Idaho 1.6/1000 population Oklahoma 1.5/1000 population 20% of America lives in non-metro areas, yet only 11% of physicians practice there

Boomer Physicians : 

14 Boomer Physicians The first baby boomer turns 70 in 2016, this is a date at which we will also lose a lot of physicians to retirement. 340,000+ physicians will start to retire in 2016. There are presently 781,000 physicians practicing in the U.S. 1/3 of all physicians are 55 or older

Random bits of bad news on the supply side : 

15 Random bits of bad news on the supply side There has been only one (1) new Medical School in the last 25 years Funding for training comes primarily from Medicare Rising practice expense, malpractice cost/availability, alternative employment, and low reimbursement lead to early outs by physicians A new phenomenon, FMG’s are finding homeland opportunities > U.S. opportunities = reduced supply in the U.S.

Additionally : 

16 Additionally American College of Cardiology predicts that the need for cardiologists will increase by 66% for same period, yet the supply will only increase 1% per year Journal of AMA predicts demand for pulmonary and critical care services will increase by 66% by 2030, yet number of pulmonologists will decline Technological Advancement- general increase in visits from 1.7/person/year in 1997 to 3.0/person/year in 2003 Significant increase in obesity over the past 25 years

Shortage Results: : 

17 Shortage Results: 90% of Hospitals are currently recruiting 70% of Physician Groups are currently recruiting …and on the rise in these settings!!!

Now What? : 

18 Now What? The definition of insanity is doing the same thing over and over again and expecting different results. - Albert Einstein Conventional wisdom suggests that the first step to solving a problem is to admit there is a problem…so, now what?

A Retention Focus Is Required : 

19 A Retention Focus Is Required For most physician organizations turnover is between 5-10% Does this new environment tend to increase turnover (grass is $$greener$$ phenomenon) In new environment, departments that get depleted may never come back or at least cost a lot to bring back Retention allows for planned approach to recruitment (vs. reactive)

A Retention Focus Is Required cont. : 

20 A Retention Focus Is Required cont. Good Retention Programs: Query satisfaction Assign Mentors “Department Chair” responsibility Focus on Economic… Compensation (how to monitor in hyper-dynamic/bag of recruitment flyers to comp committee?- see below) Benefits Bonus (signing and retention) Professional Liability Coverage (becoming very important) Ancillaries $

A Retention Focus Is Required cont. : 

21 A Retention Focus Is Required cont. Good Retention Programs (cont): And Non-Economic… Call Schedule Culture and Mission/Vision/Values Physician Led/Governed Operational Environment (hospitalists, advanced access, EMR, etc.) Ancillaries (related to hassle factor) Job Share Opportunities (esp. Generation X) Vacation (esp. Generation X) Spousal Issues

Medical Staff Development Plan : 

22 Medical Staff Development Plan A Road Map to Success Can be done in-house or contracted Consider how your group will respond, will they tell an outsider what they won’t tell you Is dynamic by design Share at all levels of organization so they become routine These are $1+ million decisions Legal documentation is beneficial, especially if 501(c)3

Recruiters : 

23 Recruiters A challenging role In-house and contracted Contracted Retained- works for the recruiting organization Contingency- works for the physician Rates about the same- $20-$30k, seeing some increase, especially for difficult jobs In-house Recognize key, challenging role Consider support Recruiter’s Boot Camp (about $2k) NAPR Membership Support use of contracted Normally too large a number of jobs Maximize ability to recruit, not minimize expense MUST involve physicians, not an admin. detail

Promotion and Process-Finding the Candidates : 

24 Promotion and Process-Finding the Candidates Solid Sourcing Your Web Site Mailing Lists Training Programs Existing Physicians Contacts Ads Search Firms (see below) Web Sourcing- Practice Link, Practice Match, etc.

Shrink your recruitment timeframe : 

25 Shrink your recruitment timeframe Limit the number of site visits to one Key Players Involve the Spouse and Family Sample Contract Provided Insure rapid turnaround of interviewer’s feedback Make “Real Time”

Maximize the site visit : 

26 Maximize the site visit Assign Spousal and Candidate liaison Accommodate the candidate’s timeframe Do not neglect the social aspect of the site visit Downtime is important Plan for 2-3 days max

Maximize the site visit cont. : 

27 Maximize the site visit cont. Peer interactions are extremely important Interviewers should be varied to reflect the composition of the group Sensitivity training Leave no stone unturned Realestate Schools Houses of worship

The Package : 

The Package Compensation Call Benefits Professional liability and tail coverage Buy-in/out Non-compete/liquidated damages Shareholdership track, benefit of attaining, phantom stock? Moving Expenses Realestate Bridge Loans Bonus Relocation Firms 28

The Package cont. : 

29 The Package cont. Signing/retention bonuses Equipment (especially high tech specialties) Vacation/CME Pension and profit sharing Loan repayment Manner in which overhead is applied- specialty tithing? Ancillary opportunity (ASC, O/P Cath. Lab, Imaging, etc.) Cell phones and miscellaneous (while small, may serve as a differentiator of culture and ultimately of the position)

The Opportunity : 

30 The Opportunity Location Rural vs. Urban Distance to Metro Call arrangements New vs. replacement patient base Culture Physician owned/governed/managed/led Market position of group/department/specialty System sponsored or independent

The Opportunity cont. : 

31 The Opportunity cont. Payor relationships Growth of patient base (data provided if possible) Hospitals- number to cover, relationship, etc. Overhead and other measures of $ health Partnership track Single/Multispecialty (know how to market your organization) EMR- when and how

Use of Search Firms : 

32 Use of Search Firms Cost of firm should be weighed against: Ease of outsourcing Economic benefit of quicker recruitment Risk of failing (is it a department that can absorb the impact of failing or taking longer to achieve success)

Search Firms (continued) : 

33 Search Firms (continued) Contingency- work for physician clients Retained- work for organization clients Good firms will welcome internal recruiters as partners (and visa versa) Cost is about $20-$30k depending upon what is included, starting to see some increase for difficult to recruit to positions (such as GI in town with a population of 15,000). Still much lower than the 30% of annual compensation paid to executive search firms Due to limited price elasticity coupled with high stakes, evaluate on success, not price High quality firms will offer “market based” comparisons for: Compensation Benefits Buy-in/outs This is especially useful in hyper-dynamic market (eliminates need for bag of letters to the compensation committee) They will also assist in fine tuning the recruitment process Help mediate and keep process on track

Other Ways to Manage Through the Shortage : 

34 Other Ways to Manage Through the Shortage Internal or Micro Answers Leverage Physicians’ Access Use of Extenders with Physician direction Use of Support Staff with Physician direction Real-life example with GI Real-life example with testing Real-life positive example with PharmD program Change the Care Delivery Model- if we don’t, the new reality of supply/demand will threaten our organization’s existence, we can’t just add physicians or simply increase compensation over and over again Chronic Care Model Advanced Access Group Visits Self-care Job Sharing

Other Ways to Manage Through the Shortage : 

35 Other Ways to Manage Through the Shortage Internal or Micro Answers Work with local hospital(s) to increase Physicians access via: Mid-level providers Support Staff (Surgical Assistants) Etc. Hospitalist programs Raising compensation can only go so far or we all go broke!!!

Other Ways to Manage Through the Shortage : 

36 Other Ways to Manage Through the Shortage External or Macro Answers Support efforts to align incentives with the consumer, such as defined contribution healthplans, medical savings accounts, etc. in order to better manage demand Decrease friction between Physicians and “Extenders” MGMA Article by Gans “Why non-physician providers?” More mainstreaming of use There is more than enough demand to go around

Other Ways to Manage Through the Shortage : 

37 Other Ways to Manage Through the Shortage External or Macro Answers Support and lead malpractice reform Economic Impact “Social”, “Personal”, “Professional” Impact Real life example: Indiana vs. Pennsylvania Lobby against regs that make things worse Example: prohibition of recruitment support if group has non-compete agreements? How does prohibition of self-referral fit into this equation?

Other Ways to Manage Through the Shortage : 

38 Other Ways to Manage Through the Shortage External or Macro Answers Can we begin to “walk the walk” in relation to reimbursement or can we only “talk the talk”? The next slide came out well after the study cited earlier on the expected response to Medicare reductions.

The Shortage- Some Concluding Comments : 

39 The Shortage- Some Concluding Comments The shortage is, and will continue to be, real (it gets worse) Virtually all specialties Demand side issues Supply side issues Devastating impact if not managed Those who plan for challenge will be able to serve and achieve their Missions and Goals (clinical, operational, and financial)

Education of the Challenge : 

40 Education of the Challenge It is important to get key stakeholders bought into your individual planning function, as well as the broad based environmental issues Suggest a presentation similar to this be given to: Board of Directors Medical Staff Structure, whether independent or formally part of organization Assists w/: Expectations in general Cost and time/resources of recruitment in today’s environment Cost of competitive compensation program in hyper-dynamic and challenging recruitment environment Offer of assistance with presentation, materials, data, etc.

QA? : 

41 QA? Thank you for the opportunity to present Fredrick Titze Horton, MHA, CMPE President and CEO Horton, Smith, and Associates Office- (913)752-4578 Cell- (913)544-5560 fhorton@hortonsmithassociates.com Jim White, MBA Executive Vice President Horton, Smith, and Associates Office- (913)232-4008 Cell- (913)626-2834 jwhite@hortonsmithassociates.com