Contents

5~~£~~ra~e Different .

f~:fJ:~e~g Effect .

f~:~t~rsfcian Market .

Chapter 4PhysIcian Retention .

Chapter 5Understanding Costs/Benefi ts .

Chapter 6Complying with Regulations .

Chapter 7Demonstrating Community Need .

Chapter 8Recruiting Team, Assemble! .

Chapter 9Objective Opportunity Analysis .

~~~cll~e~!~arameters .

f~:f~~~n~lve Package .

Chapter 12PhysIcian Recruiting Contracts .

~~~cll~~!§ourcing .

Chapter 14The Arc of Persuasion .

f~:f~f:rJi~w .

f~:~~~~~?d ofInterest .

f~:R.~l~ ~} Locum Tenens .

Chapter 18ImmIgration FAQ .

The authors of this book are not physicians - and no, none of us has playedone on television. But based on the thousands of doctors we have talked to,we feel safe in saying that physicians today are different, both from otherprofessionals and from physicians the way they used to be 10 or 20 years ago.

Understanding these differences is a key to successful physicianrecruitment. You can not consistently identify appropriate physiciancandidates, create rapport with them, and convince them to relocate to yourcommunity unless you understand their unique concerns and challenges.

For this reason, not just anyone can be an effective physician recruiter,though some organizations operate as if this were the case. The U.S. Army,for example, simply reassigns nurse recruiters or recruiters of enlistedpersonnel to be physician recruiters, giving them a list of doctors to contactand a pat on the back. Even in the private sector, physician recruiters oftenhave to fend for themselves without any formal training in their craft.

This stems in large part from the fact that physician recruiting is not anestablished profession requiring a degree or any national or local certification.Anyone with a rolodex and a phone can call themselves a physician recruiter.But without knowing doctors, they will not be consistently successful.

This book is dedicated to the proposition that physician recruitment is adistinct, challenging, and rapidly evolving profession requiring a wideknowledge base, a strong work ethic, and considerable powers of persuasion.There is an art to it, but there also is a science. It is not a realm for theunprepared or the unmotivated. How can it be when physician recruiters areexpected to attract to their organizations or to their clients some of the mosthighly educated, motivated, and particular people in the world?

Consider that physicians are essentially scientists by temperament andtraining. They spend four years in college studying chemistry, biology andmath, then four years in medical school, three or more years in residencytraining, and often an additional one to three years in a specialty fellowship.That's 11 to 15 years of college and post-graduate training.

Though physician recruiting has a profound impact on a wide range ofhospital operations, the cost of this activity often is not fully understood oraccurately quantified. How much money does it take to attract and retain adoctor, how can these costs be minimized, and what is the expected return oninvestment?

By obtaining answers to these questions, one can gain insight into thephysician recruiting process and help ensure that hospitals and medicalgroups are following the most effective and cost efficient recruiting methods.

The costs of physician recruiting will vary by medical specialty. Supplyand demand trends differ among specialties and obviously some types ofphysicians command higher salaries than others. In general, however,recruiting costs break down as follows .

• Physician salary/income guarantee. A hospital or medical group's largestfinancial exposure in physician recruiting usually is represented by thesalary or income guarantee offered to attract physician candidates.Whether the physician is directly employed by the hospital, is employedby a group practice, or is established as a solo physician in thecommunity, the hospital usually will front the salary or guarantee neededto attract the physician to the service area. The chart below shows theaverage annual base salary or income guarantee offers made to physiciansin eight different medical specialties, as tracked in Merritt Hawkins &Associates 2009 Review of Physician Recruiting Incentives. Note: ACopy of the 2009 Review is included at the end of this book.

Average Base Salaries/Guarantees Offered to PhysiciansCardiology $419,000Orthopedic Surgery $481,000Internal Medicine $186,000OB/GYN $266,000Family Practice $173,000Gastroenterology $393,000General Surgery $321,000Urology $401,000

These numbers reflect the base financial package offered to recruitphysicians, and do not include signing bonuses, benefits, production bonuses,CME, educational loan forgiveness or other perks. Given these additionalincentives, the investment needed to attract physicians either out of trainingor from an established practice can be considerable.

• Staff or recruiter time and fees. Many hospitals employ full-time, in-housephysician recruiters. Others use full-service retained physician search firmsand/or contingent "headhunters" to attract physicians, sometimes as asupplement to in-house recruiting staff. Salaries and fees associated withrecruiter time can vary greatly. In-house physician recruiters often earn abase of $35,000 to $65,000 and may receive bonuses based on number ofplacements made. Recruiter fees can range from $15,000 to over $30,000per placement.

• Candidate sourcing. Certain medical specialists - cardiologists, orthopedicsurgeons, gastroenterologists - are in unprecedented demand today.Thousands of hospitals and medical groups are vying for a limited numberof physicians, increasing the difficulty and cost of finding candidates.Today, a number of sourcing methods - journal advertising, networking,direct mail, the Internet - must be employed continuously to identifysuitable physician candidates. The expense of this activity can range from$5,000 to over $15,000 per search.

• Interviewing. Hospitals and medical groups generally pay all the costsassociated with a physician interview. Travel, accommodation andentertainment costs usually range from $1,500 to $3,000 per interview.

• Relocation. This is another variable cost depending on where the physicianis relocating from. The average relocation allowance in the 3,000 plusphysician searches Merritt Hawkins & Associates conducted from March31 of 2008 to April 1 of 2009 was $10,427.

• Practice marketing. Hospitals and medical groups often pay to announcethe opening of a new physician's practice and help introduce the physicianto the community. Practice marketing costs can range from a few hundreddollars to several thousand.

Combined, these factors can drive the potential cost of one physician searchto $500,000 or more, as illustrated in the table that follows.

As we have discussed, a variety of factors have come together to makephysician recruiting a relatively more complex, challenging and strategicactivity than it has been in the past.

For compliance reasons alone, many hospitals are establishing medical staffdevelopment (MSD) committees to ensure that physician recruitment isconducted in a manner consistent with federal guidelines and to promoteboard participation and approval. Such committees also serve a variety ofother purposes, however. Tasks delegated to MSD committees typicallyinclude:

• Working with current staff on succession planning• Working with current staff on retention and satisfaction issues• Establishing recruitment goals and recommendations• Involvement in the Medical Staff Development Plan, including selection of

a consulting firm, participation in the planning process, approval of thefinal plan and presentation of the plan to physicians, the board and thecommunity at large.

• Working with the hospital CEO to establish physician candidate education,experience and related parameters

• Providing input regarding recruitment incentives, financial packages andcontracts that will ultimately be approved by the hospital's board

• Active involvement in the recruitment process and selection of outsiderecruiting firms, if necessary

• Reviewing candidate CVs during the recruitment process• Participating in candidate interviews• Approving the offer that is needed to obtain candidate commitment• Participating in any post-relocation social events and meetings to welcome

and introduce new physicians to the community

In order to be effective, MSD committees need to be comprised ofappropriate members dedicated to achieving clearly understood goals. Thefirst task is to determine who will be on the committee.

MSD committees vary in size, membership and reporting structure fromhospital to hospital, based on the size of the facility and what the committee ischarged with doing. MSD committees usually range from 4 to 10 members.In virtually all cases, the Chief Medical Officer is a member of thecommittee. In addition, the acting Chief of Staff is either a member orattends meetings to represent physicians at large. The Medical StaffCoordinator also usually is a member of the committee but is not alwaysgranted a vote.

The central figure and leader of the committee, however, is the hospitalCEO or medical group administrator. In physician recruiting today, activeCEO participation is critical to both setting goals, establishing candidateparameters, ensuring responsiveness, and driving negotiations to a successfulclose.

• Board members (with an emphasis on physicians)• Staff physicians, usually a representative sample of specialties and medical

groups• Chief Executive Officer or Group Administrator• Physician recruiter• Chief Medical Officer• Chief Nursing Officer• Chief Financial Officer• Hospital department representatives from Community Relations,

Marketing, Strategic Planning, and Patient Care

Care should be taken to appoint committee members who have a long-terminterest in the viability of health care in the community rather than those whohave a short-term interest or a particular vested interest (i.e., a physician whois anxious to recruit a partner, or, conversely, a physician anxious to forestallrecruiting efforts.)

If the committee is given the final authority to determine recruitmentpriorities, rather than just making recommendations to the Board, some legaladvisors suggest that physicians on the committee abstain from voting onrecruitment decisions that would affect their own specialty or group.

The medical staff plan documents why a need exists for a new physician,but it does not document the features and benefits of each opportunity. If youare shopping for any high ticket item, such as an automobile, you want toknow everything about it - miles per gallon, warranty, safety features, etc.before you make a purchase. A good salesperson will give you all the factsabout the car - the strengths and weaknesses - before demonstrating thevehicle in an actual test run.

In the same way, whoever is representing a practice opportunity shouldknow all the features and benefits that are likely to be of interest to physiciancandidates. This information should be gleaned during the opportunityanalysis.

In reporting to the MSD committee, the recruiter should know thefollowing:

• Why are you recruiting? Again, a rationale for the recruitment should beincluded in the medical staff plan. It is up to the recruiter representing theopportunity to be familiar with the plan. Anecdotal reasons such as "ourcommunity is growing," or "the doctors say they are really busy," aregenerally insufficient for data-driven physicians who, after all, often arebeing asked to leave one practice for another, while uprooting their familiesin the process.

There is an old saying in science: "Extraordinary claims requireextraordinary proof." The extraordinary claim you are making is that yourpractice opportunity is better than the one a physician candidate is in now,or is better than the other opportunities he or she may be considering. It ismuch more effective to say that family physicians in your community arehandling 40% more ambulatory patient encounters than the MGMA averagethan to say "our physicians are really busy."

• How long has a need for a particular physician existed? The first questionpeople ask in buying a house is, "how long has it been on the market?" If ithas been on the market a long time, why? Physician candidates examiningyour opportunity will ask the same question. If an opportunity has beenopen six months or more, it may raise red flags. Is there a lack of supportfor the search among local physicians or other political problems? Is thefinancial offer below market rates in the specialty? An objective

opportunity analysis should reveal answers to these questions so thatchanges to the recruiting strategy can be made, if necessary. It is importantto have honest answers to share with physician candidates, such as: "Dr.Smith initially did not support the search, but he has since revised hisviews. You will be meeting with Dr. Smith personally on the interview andI am confident he will express his enthusiasm about having you on themedical staff." Again, it is easier to adjust on the front end of a searchrather than waiting until the "tip of the iceberg" stage referenced in Chapter2.

• Patient volume. Recruiters should know the prospective patient volume ofthe practice opportunity, both inpatient and outpatient. How many patientsare established physicians in the community seeing? How many patientsare leaving the community for services the new physician will beproviding?

In addition to asking about patient volume, physician candidates will askthe simple question: "Who are my patients going to be?" Communitydemographic information regarding population growth, age, gender, andeconomic factors will be necessary to answer this question, as will dataabout patients of the practice the new physician may be joining.

• Payer mix/reimbursement rates. While the "golden age" of fee-for-servicemedicine may be over, some places have more "gold" in them than others.From a payer perspective, the United States is a patch quilt, not a uniformblanket. Payer mix varies considerably from region to region and a positivepayer mix can be a major incentive that will attract physicians from otherregions or states. High levels of employment leading to high levels ofprivate insurance, relatively high Medicare reimbursement rates, minimalcapitation/managed care, and low Medicaid volumes all can persuadephysicians that the grass really is greener on the other side. A positivepayer mix with relatively high reimbursement rates should be quantifiedand emphasized. Recruiters in an area with a less positive payer mixshould be able to explain why, a mediocre payer mix notwithstanding, highpatient volumes, low overhead or other factors enable physicians to make acompetitive income in the area. Of course, income is just one issue. Afavorable payer mix also means more practice autonomy and a betterchance that physicians will be able to treat patients as they see fit.

• Collection rate. Physicians are looking for efficiency in a practice and aminimum of administrative hassles. As mentioned earlier, that is one