2014 Merritt Hawkins Survey

2014 REVIEWOF PHYSICIAN AND ADVANCED PRACTITIONER RECRUITING INCENTIVES

An Overview of the Salaries, Bonuses, and Other Incentives CustomarilyUsed to Recruit Physicians, Physician Assistants and Nurse Practitioners

2014 Merritt Hawkins | 5001 Statesman Drive | Irving, Texas 75063 | (800) 876-0500 | merritthawkins.com

Overview

Key Findings

Merritt Hawkins 2014 Review of Physician and Advanced Practitioner Recruiting Incentives: Recruiting Assignment Characteristics and Metrics

Trends and Observations

Summary

2

3

5

15

38

An Overview of the Salaries, Bonuses, and Other Incentives Customarily Used to Recruit Physicians, Physician Assistants and Nurse Practitioners

For additional information about this survey contact:Phillip Miller(800) [email protected]

5001 Statesman DriveIrving, Texas 75063

MerrittHawkins.com

2014REVIEW

OF PHYSICIAN ANDADVANCED PRACTITIONERRECRUITING INCENTIVES

1994-2014

2014 Review of Physician and Advanced Practitioner Recruiting Incentives 2

Overview

Merritt Hawkins is a national healthcare

search and consulting firm specializing in

the recruitment of physicians in all medical

specialties and other advanced practice

clinicians. Now celebrating its 27th year of

service to the healthcare industry, Merritt

Hawkins is a company of AMN Healthcare

(NYSE: AHS), the nations largest healthcare

staffing organization and the industry

innovator of healthcare workforce solutions.

This report marks Merritt Hawkins 21st

annual Review of the search and consulting

assignments the firm conducts on behalf

of its clients. Merritt Hawkins Review is the

longest consecutively published and most

comprehensive report on physician recruiting

incentives in the industry. The Review is part of

Merritt Hawkins ongoing thought leadership

efforts, which include surveys and white papers

conducted for Merritt Hawkins proprietary use,

and surveys and white papers Merritt Hawkins

has completed on behalf of prominent third

parties, including The Physicians Foundation,

the Indian Health Service, Trinity University,

Texas Hospital Trustees, and a Subcommittee

of the Congress of the United States.

The 2014 Review is based on the

3,158 permanent physician and advanced

practitioner search assignments that

Merritt Hawkins and AMN Healthcares

sister physician staffing companies (Kendal

& Davis and Staff Care) had ongoing or

were engaged to conduct during the

12-month period from April 1, 2013, to

March 31, 2014.

The intent of the Review is to quantify

financial and other incentives offered by

our clients to physician and advanced

practitioner candidates during the course of

recruitment. Incentives cited in the Review

are based on formal contracts or incentive

packages used by hospitals, medical groups

and other facilities in real-world recruiting

assignments. Unlike other surveys,

Merritt Hawkins Review of Physician

and Advanced Practitioner Recruiting

Incentives tracks starting salaries and

other perquisites, rather than total

annual compensation. It therefore

reflects the incentives physicians and

advanced practitioners are offered in

the recruiting process, rather than total

average compensation.

The range of incentives detailed in the Review

may be used as a benchmark for evaluating

which recruitment incentives are customary

and competitive in todays physician recruiting

market. In addition, the Review is based on

a national sample of search assignments

and provides an indication of which medical

specialties are currently in the greatest

demand and the types of medical settings into

which physicians and advanced practitioners

are being recruited.

3 2014 Review of Physician and Advanced Practitioner Recruiting Incentives

Key FindingsMerritt Hawkins 2014 Review of Physician and Advanced Practitioner Recruiting Incentives reveals a number of trends within the physician and advanced practitioner recruiting market, including:

For the eighth consecutive year, family physicians were number one on the list of Merritt Hawkins most requested recruiting assignments. General internists were second on the list, also for the eighth consecutive year, highlighting the continued nationwide demand for primary care physicians

Combined, advanced practitioners, including physician assistants (PAs) and nurse practitioners (NPs), were fifth on the list of Merritt Hawkins most requested recruiting assignments, though neither were in the top 20 three years ago. The number of search assignments Merritt Hawkins conducted for PAs and NPs increased 320% over the last three years, underscoring the emerging shortage of these professionals.

Demand also remains strong for physicians providing inpatient care. After family physicians and general internists, hospitalists ranked third among Merritt Hawkins top 20 search assignments.

Lack of resources and diminished interest in inpatient psychiatry continues to stoke a staffing crisis in behavioral health. Psychiatrists were fourth on the list of Merritt Hawkins most requested search assignments, highlighting the ongoing critical shortage of physicians specializing in behavioral care.

The decline of physician private practice continues. Fewer than 10% of Merritt Hawkins search assignments were for settings featuring private practice, compared to over 45% in 2004. 64% of Merritt Hawkins search assignments were for hospital-employed settings, while solo practice, which represented 20% of Merritt Hawkins search assignment settings in 2004, represented less than 1% of Merritt Hawkins assignments in the period covered by this Review.

NPs

PAs


Concierge practice appears to be gaining momentum. Though only 1% of Merritt Hawkins search assignments were for concierge practice last year, two to three years ago Merritt Hawkins received virtually no requests to recruit into concierge settings.

A proliferating number of sites of service, including free-standing emergency departments, community health centers, retail clinics, and urgent care centers, are recruiting physicians, a sign that healthcare providers have adopted a strategy predicated on being everywhere, all the time. Like hospitals, these facilities also are employing physicians.

The use of quality/value-based physician incentives took a step back last year. Only 24% of Merritt Hawkins recruiting assignments featured production bonuses in which at least part of the bonus was based on quality/value metrics, down from 39% last year, signaling the difficulty many healthcare organizations are experiencing transitioning from volume-based incentives to quality/value-based incentives.

Relative Value Units (RVUs) continue to be the most frequently utilized volume-based production incentive and were featured in 59% of Merritt Hawkins recruiting assignments in which a production bonus was part of the incentive package, up from 57% last year.

Demand for physicians is not confined to traditionally underserved rural areas. Merritt Hawkins worked in all 50 states in 2013/14, and 41% of the firms search assignments took place in communities of 100,000 people or more.

1%

39%24%2013/14

2012/13


Merritt Hawkins 2014 Review of Physician and Advanced Practitioner Recruiting Incentives: Recruiting Assignment Characteristics and Metrics(All of the following numbers are rounded to the nearest full digit.)

Total Number of Physician/Advanced Practitioner Search Assignments Represented

The Review is based on the 3,158 permanent physician and advanced practitioner search assignments

Merritt Hawkins/AMN Healthcares physician staffing companies had ongoing or were engaged to

conduct during the 12 month period from April 1, 2013 to March 31, 2014.

Practice Settings of Physician and Advanced Practitioner Search Assignments

1

2

2010/11

Hospital

Group

Solo

Partnership

Association

Community HC/ IHS

Academics

Concierge

Other

(1,495) 56%

(505) 19%

(54) 2%

(344) 13%

(82) 3%

N/A

N/A

N/A

(187) 7%

2011/12

N/A

N/A

Hospital

Group

Solo

Partnership

Association

Community HC/ IHS

Academics

Concierge

Other (135) 5%

(1,710) 63%

(436) 16%

(28) 1%

(220) 8%

(29) 1%

(152) 6%

2012/13

Hospital

Group

Solo

Partnership

Association

Community HC/ IHS

Academics

Concierge

Other

(1,975) 64%

(493) 16%

(29) 1%

(94) 3%

(28) 1%

(305) 10%

(153) 5%

(20) 1%

N/A

(2,006) 64%


If Academic Medicine, what type of position?* (Of 188 Academic searches)

If Partnership, time to partnership eligibility (of 93 searches offering partnership)

50 States Where Search Assignments Were Conducted

AK, AL, AR, AZ, CA, CO, CT, DE, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, MD, ME, MI,

MO, MN, MS, MT, NC, ND, NE, NH, NJ, NM, NY, NV, OH, OK, OR, PA, RI, SC, SD, TN, TX,

UT, VA, VT, WA, WI, WV, WY

Number of Searches by Community Size

3

4

2013/14 2011/12 2010/11

Immediate / One Year 33 (36%) 74 (34%) 158 (46%)

58 (62%) 117 (53%) 158 (46%)Two Years

0 (0%) 27 (12%) 23 (7%)Three Years

0 (0%) 2 (1%) 0 (0%)Four Years

2 (2%) 0 (0%) 3 (


Top 20 Most Requested Searches by Medical Specialty

5

Psychiatry

Hospitalist

2013/14

714

235

231

206

128

92

89

70

61

61

58

58

54

50

32

32

29

20

18

17

2011/12

631

235

155

168

23

70

106

81

22

41

130

105

51

53

40

46

57

12

68

16

2010/11

532

295

160

133

N/A

64

92

80

N/A

79

69

104

32

35

31

26

56

7

32

14

2009/10

375

246

124

179

N/A

84

116

69

N/A

49

61

88

41

21

32

58

44

11

32

18

Family Medicine(includes FP/OB)

Internal Medicine

Nurse Practitioner

Pediatrics

Emergency Medicine

OB/GYN

Neurology

General Surgery

Orthopedic Surgery

Gastroenterology

Hematology/Oncology

Physician Assistant

Otolaryngology

Urology

Neurosurgery

Pulmonology

Endocrinology

2012/13

624

194

178

168

69

87

111

77

50

71

74

57

37

45

40

38

26

23

24

22

Cardiology


Other Clinical Specialty Recruitment Assignments

Administrative, Academic and Executive Titles Include:

Addiction MedicineAllergy & ImmunologyAnesthesiologyAnesthesiology/Pain ManagementBariatric SurgeryBone Marrow TransplantBreast SurgeryCertified Registered Nurse AnesthetistChief of Community MedicineClinical GeneticsClinical Lab ScientistColon & Rectal SurgeryFacial Plastic Surgery/ENTGenitourinaryGynecological OncologyGynecologyHospice-Palliative MedicineInfectious DiseaseIntensivistInternal Medicine/PediatricsMaternal Fetal MedicineMedical Director

Medical HumanitiesMOHS SurgeryMolecular ResearchNeonatologyNephrologyNuclear MedicineObstetricsOccupational MedicineOphthalmologyOral & Maxiofacial SurgeryPain ManagementPathologyPediatric AnesthesiologyPediatric CardiologyPediatric Emergency MedicinePediatric EndocrinologyPediatric GastroenterologyPediatric OphthalmologyPediatric PhysiatryPediatric PulmonologyPediatric SurgeryPediatric, Development-Behavioral

PediatricsPhysiatry PhysicistPlastic SurgeryPodiatryRadiation OncologyRadiologyRadiology, Neuro-interventionalReproductive EndocrinologyRetina SurgeryRetinal DisordersRheumatologySleep MedicineSurgical OncologyThoracic SurgeryTransplant SurgeryUrgent CareUrological GynecologyUrological OncologyVascular & Interventional RadiologyVascular Surgery

Dean, College of MedicineDean, College of Public Health and Human ProfessionsDean, College of PharmacyDean, College of Public HealthDean, College of Nursing Dean of Dentistry

Chair, Department of Internal MedicineChair, Department of CardiologyChair, Department of AnesthesiologyChair, Department of Family MedicineChair, Department of SurgeryChair, Department of Orthopedic SurgeryChair, Department of PediatricsChair, Department of PMFRChair, Department of NeurologyChair, Department of GastroenterologyChair, Department of Pediatric RadiologyChair, Department of Pediatric Surgery

Chair, Department of Pediatric OncologyChair, Department of Obstetrics/GynecologyChair, Department of PathologyChair, Department of Psychiatry and Behavioral ServicesChair, Department of OphthalmologyChair, Department of OtolaryngologyChair, Department of Radiation OncologyChair, Department of Transplant Surgery

Associate Dean, Diversity & EquityAssociate Dean, Admissions and Student AffairsAssociate Dean, Education and Health Professionals Associate Dean for ResearchAssociate Dean, Graduate Medical Education

Assistant Professor Chief Medical OfficerFull Professor Associate Department ChairClinical DirectorMedical DirectorAssociate ProfessorExecutive Residency Director Chief Executive OfficerDivision ChairVice President, Medical AffairsSenior Researcher Director of Community MedicineChief Diversity OfficerDirector of the Center for Institutional DiversityChief Information OfficerVice President, Medical ServicesDirector of Quality and Accreditation Chief Nursing OfficerResidency Director

6

7


Income Offered to Top 20 Recruited Specialties (Base salary or guaranteed income only, does not include production bonus or benefits)8

Low

$145,000

$150,000

$160,000

$160,000

$165,000

Average

$229,000

$227,000

$221,000

$217,000

$208,000

High

$350,000

$350,000

$400,000

$305,000

$295,000

Hospitalist

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$220,000

$210,000

$170,000

$160,000

$185,000

Average

$311,000

$288,000

$264,000

$255,000

$247,000

High

$400,000

$450,000

$380,000

$380,000

$380,000

EmergencyMedicine

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$150,000

$165,000

$160,000

$160,000

$150,000

Average

$217,000

$218,000

$224,000

$220,000

$209,000

High

$350,000

$300,000

$300,000

$275,000

$310,000

Psychiatry

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$145,000

$130,000

$150,000

$130,000

$145,000

Average

$198,000

$208,000

$203,000

$205,000

$191,000

High

$360,000

$325,000

$345,000

$285,000

$250,000

InternalMedicine

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$130,000

$145,000

$130,000

$120,000

$145,000

Average

$188,000

$179,000

$189,000

$183,000

$180,000

High

$240,000

$300,000

$220,000

$250,000

$265,000

Pediatrics

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$140,000

$130,000

$120,000

$130,000

$140,000

Average

$199,000

$185,000

$189,000

$178,000

$175,000

High

$293,000

$325,000

$300,000

$290,000

$255,000

FamilyMedicine

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$215,000

$225,000

$180,000

$220,000

$175,000

Average

$288,000

$286,000

$268,000

$282,000

$272,000

High

$380,000

$350,000

$440,000

$360,000

$350,000

OB/GYN

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$70,000

$75,000

$70,000

N/A

N/A

Average

$106,000

$105,000

$95,000

N/A

N/A

High

$150,000

$150,000

$121,000

N/A

N/A

NursePractitioner

2013/14

2012/13

2011/12

2010/11

2009/10


Low

$71,000

$85,000

$75,000

N/A

N/A

Average

$105,000

$118,000

$99,000

N/A

N/A

High

$150,000

$160,000

$130,000

N/A

N/A

PhysicianAssistant

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$400,000

$250,000

$275,000

$270,000

$315,000

Average

$442,000

$447,000

$396,000

$420,000

$420,000

High

$500,000

$550,000

$600,000

$525,000

$600,000

Cardiology(non-invasive)

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$250,000

$300,000

$300,000

$230,000

$230,000

Average

$372,000

$398,000

$412,000

$359,000

$349,000

High

$500,000

$650,000

$530,000

$500,000

$450,000

Otolaryngology

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$240,000

$291,000

$300,000

$300,000

$300,000

Average

$454,000

$441,000

$433,000

$424,000

$411,000

High

$560,000

$600,000

$550,000

$505,000

$600,000

Gastroenterology

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$350,000

$250,000

$400,000

$300,000

$300,000

Average

$488,000

$483,000

$519,000

$521,000

$519,000

High

$700,000

$750,000

$750,000

$700,000

$825,000

OrthopedicSurgery

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$315,000

$275,000

$210,000

$250,000

$300,000

Average

$377,000

$382,000

$360,000

$369,000

$385,000

High

$450,000

$525,000

$450,000

$550,000

$500,000

Hematology/Oncology

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$180,000

$180,000

$160,000

$160,000

$180,000

Average

$262,000

$300,000

$280,000

$256,000

$281,000

High

$400,000

$400,000

$420,000

$345,000

$460,000

Neurology

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$430,000

$385,000

$330,000

$320,000

$250,000

Average

$504,000

$424,000

$461,000

$453,000

$400,000

High

$625,000

$650,000

$650,000

$550,000

$550,000

Urology

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$270,000

$240,000

$220,000

$205,000

$175,000

Average

$354,000

$336,000

$343,000

$336,000

$314,000

High

$515,000

$550,000

$450,000

$450,000

$410,000

GeneralSurgery

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$350,000

$300,000

$400,000

$380,000

$325,000

Average

$454,000

$461,000

$512,000

$532,000

$495,000

High

$550,000

$675,000

$650,000

$650,000

$680,000

Cardiology(invasive)

2013/14

2012/13

2011/12

2010/11

2009/10


RVU Based Net Collections Gross Billings Patient Encounters Quality Other

2013/1459%

21%

5%

11%

24%

9%

Salary

633 (20%)

525 (17%)

489 (18%)

428 (16%)

339 (12%)

Salary withBonus

2,335 (74%)

2,323 (75%)

1,977 (73%)

1,975 (74%)

2,082 (74%)

IncomeGuarantee

127 (4%)

217 (7%)

191 (7%)

239 (9%)

367 (13%)

Other

63 (2%)

32 (1%)

53 (2%)

25 (


14 Searches Offering Relocation Allowance13 If Income Guarantee, What was the Term Offered? (of 127 searches offering income guarantees)

15 Amount of Relocation Allowance (Physicians only)

12 If Income Guarantee, What Type? (of 127 searches offering income guarantees)11 If Quality Factors Were Included in the

Production Bonus, About What Percent of the Physicians Total Compensation Determined By Quality?*

1 Year

64 (50%)

105 (49%)

87 (45%)

113 (47%)

202 (55%)

2 Year

47 (38%)

79 (36%)

83 (44%)

776 (32%)

130 36%)

3 Year

16 (12%)

28 (13%)

21 (11%)

49 (21%)

35 (9%)

Other

0 (0%)

5 (2%)

0 (0%)

0 (0%)

0 (0%)

2013/14

2012/13

2011/12

2010/11

2009/10

Yes

2,845 (90%)

2,821 (91%)

2,577 (95%)

2,451 (92%)

2,671 (95%)

No

313 (10%)

276 (9%)

133 (5%)

216 (8%)

142 (5%)

Net Collections Guarantee Gross Collections Guarantee

19 (15%)108 (85%)

45 (24%)146 (76%)

8 (3%)231 (97%)

43 (12%)324 (88%)

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$1,000

$1,000

$1,000

$1,000

$1,000

Average

$9,849

$9,555

$10,035

$10,454

$10,035

High

$25,000

$25,000

$40,000

$85,000

$30,000

2013/14

2012/13

2011/12

2010/11

2009/10

2013/14

2012/13

2011/12

2010/11

2009/10

72 (33%)145 (67%)Determined by Quality

13%2013/14

Low

$3,500

Average

$6,904

High

$10,0002013/14

*Question asked for the first time in 2013/14

16 Amount of Relocation Allowance (NPs and PAs Only)


17 Searches Offering Signing Bonus

19 Amount of Signing Bonus Offered (NPs and PAs only)

18 Amount of Signing Bonus Offered (Physicians only)

20 Searches Offering to Pay Continuing Medical Education (CME)

21 Amount of CME Pay Offered (Physicians only) 22 Amount of CME Pay Offered (NPs and PAs only)

Yes

2,212 (70%)

2,199 (71%)

2,170 (80%)

2,025 (76%)

2,135 (76%)

No

946 (30%)

898 (29%)

540 (20%)

642 (24%)

678 (24%)

Low

$1,000

$1,500

$4,000

$5,000

$2,000

Average

$21,773

$22,069

$23,388

$23,790

$22,915

High

$150,000

$200,000

$200,000

$200,000

$100,000

2013/14

2012/13

2011/12

2010/11

2009/10

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$1,000

$1,000

$500

$500

$500

Average

$3,515

$3,444

$3,391

$3,194

$3,335

High

$15,000

$15,000

$12,000

$10,000

$15,000

2013/14

2012/13

2011/12

2010/11

2009/10

Yes

2,865 (91%)

2,789 (90%)

2,658 (98%)

2,559 (96%)

2,618 (93%)

No

293 (9%)

308 (10%)

52 (2%)

108 (4%)

195 (7%)

2013/14

2012/13

2011/12

2010/11

2009/10

Low

$1,000

Average

$8,000

High

$20,0002013/14

Low

$1,000

Average

$2,450

High

$5,0002013/14


24 If Educational Loan Forgiveness was Offered, What Was the Term? (of 820 searches offering educational loan forgiveness)

23 Searches Offering to Pay Additional Benefits

25 If Educational Loan Forgiveness Was Offered, What Was the Amount? (Physicians only)

Low

$4,000

$1,000

N/A

N/A

N/A

Average

$77,000

$71,733

N/A

N/A

N/A

High

$336,000

$210,000

N/A

N/A

N/A

2013/14

2012/13

2011/12

2010/11

2009/10

1 Year

90 (11%)

48 (7%)

41 (6%)

39 (5%)

N/A

2 Years

173 (21%)

183 (27%)

192 (27%)

208 (27%)

N/A

3 Years

557 (68%)

449 (66%)

474 (67%)

525 (68%)

N/A

2013/14

2012/13

2011/12

2010/11

2009/10

2013/14

97%

99%

94%

86%

26%

4%


Trends and ObservationsMerritt Hawkins annual Review of Physician and Advanced Practitioner Recruiting Incentives, now in its 21st year, tracks three key physician recruiting trends, as well as various advanced practitioner recruiting trends.

1. Based on the physician recruiting

assignments Merritt Hawkins is contracted

to conduct, the Review indicates which types

of physicians are in the greatest demand and

which are the most challenging to recruit.

2. The Review also indicates the types of

practice settings into which physicians

are being recruited (hospitals, medical

groups, solo practice etc.) and the types of

communities that are recruiting physicians

based on population size.

3. The Review further indicates the types

of financial and other incentives that are

being used to recruit physicians.

Each of these trends is discussed below.

WHO IS IN DEMAND?

Merritt Hawkins 2014 Review of Physician


Incentives examines the permanent

physician and advanced practitioner

recruiting assignments Merritt Hawkins

and AMN Healthcares physician staffing

divisions had ongoing or were engaged to

conduct during the 12 month period from

April 1, 2013 to March 31, 2014.

These search assignments reflect the

types of physicians hospitals, medical

groups, community health centers,

academic medical centers, government

entities, physician hospital organizations,

integrated medical systems, Accountable

Care Organizations, urgent care centers

and other organizations that are seeking

nationwide. They also reflect which types

of physicians may be particularly difficult

to recruit, necessitating the assistance

and additional resources of a physician

recruiting firm.

A CONTEXT OF CHANGE

Physician recruiting trends and practices

must be placed in the overall context of

the nations prevailing healthcare delivery

system. It is not an exaggeration to state

that healthcare delivery in the United States

has undergone more changes in the 12

month period examined in this Review than

in any previous 12 month period Merritt

Hawkins has examined in similar Reviews

conducted over the last 21 years.

Important recent developments in

healthcare delivery include, but are not

limited to, the following:

The enrollment in health insurance plans

of eight million Americans through the

Affordable Care Act (ACA).

The enrollment of an additional five million

Americans in Medicaid (as of May, 2014).

The continued financial pressure on

hospitals and other healthcare facilities as

reimbursement cuts take effect prior to

significant patient or revenue increases


To varying degrees, all of these

developments impact both physicians and

physician recruiting, because physicians

continue to play a pivotal role in the

healthcare delivery system and are inevitably

affected by changes to it.

PHYSICIANS ARE STILL THE CENTERPIECE

Though the healthcare system is evolving,

and the role of other clinicians is growing,

physicians remain the quarterbacks

of the healthcare delivery team and are

at the center of the healthcare system.

Through patient consultations, hospital

admissions, treatment plans, prescriptions,

tests, and procedures physicians control

the levers to both quality of care and

healthcare economics.

According to the Boston University School

of Public Health, physicians receive or direct

87% of all personal spending on healthcare

in the United States. While the quality of

care contributions physicians make cannot

be measured in dollars, the economic

contribution of physicians recently was

quantified by an AMA-sponsored study

examining national and state-by-state

physician economic output.

expected to result from ACA related

increases in insurance enrollment.

Decreased hospital census caused

by high deductible insurance plans,

continued unemployment, and more

outpatient choices.

The proliferation of Accountable Care

Organizations (ACOs) and the continued

movement toward outcomes/value-

based delivery models.

The continued consolidation of hospitals,

medical groups and other entities.

The growth of outpatient medicine

and the proliferation of multiple sites of

service, including ambulatory surgery

centers, retail clinics, urgent care centers,

free-standing emergency departments

and others.

The adoption of team based care and the

growing use of advanced practitioners

such as nurse practitioners (NPs) and

physician assistants (PAs).

The adoption of electronic health

records (EHR) as Physician Quality

Reporting System (PQRS) physician

participation deadlines near.

The delay of both ICD-10 implementation

and a permanent resolution to pending

Medicare physician payment cuts

mandated by the Sustainable Growth

Rate formula (SGR).

Release by the Center for Medicare

and Medicaid Services (CMS) of

data detailing $77 billion in Medicare

payments to physicians and other

healthcare professionals.

The continued shortage of

physicians nationwide.


The study revealed several physician related

economic output metrics, including:

Total economic output: The combined economic output of patient care physicians in the United States is $1.6 trillion.

Per capita economic output: Each physician supports a per capita economic output of $2.2 million.

Jobs: On average, each physician supports approximately 14 jobs.

Wages and benefits: On average, each physician supports a total of $1.1 million in wages and benefits

Tax revenues: On average, each physician supports $90,449 in local and state tax revenues.

Source: The National Economic Impact of Physicians. Prepared for The American Medical Association by IMS Health. March, 2014.

In addition to the economic output detailed

by the AMA study cited above, physicians on

average generate $1.4 million in net revenue

per year for their affiliated hospitals, and

therefore are critical to the economic viability

of virtually every hospital in the United

States (see Merritt Hawkins 2013 Survey of

Physician Inpatient/Outpatient Revenue).

Physician revenue generation today is based

largely on fee-for-service metrics, a standard

likely to change as the health system pivots

from volume-based reimbursement to value-

based reimbursement. However, if and when

value-based payment systems eventually

prevail, it is physicians, through their practice

patterns and choices, who will ensure

that quality of care is maintained within a

structure of managed, finite resources.

Due to their pivotal role, it is the effective

recruitment, compensation, and integration

of physicians that will determine the

direction of the healthcare system,

including the implementation of value-

based reimbursement, the adoption of

team-based care and EHR, increased

patient access to services and the various

other goals commonly grouped under the

heading of healthcare reform.

For this reason physicians continue to be in

high demand while supply remains limited, a

trend examined in more detail below.

Healthcare Reform and Physician Supply

Access to physician services in the

United States already can be problematic.

Merritt Hawkins 2014 Survey of Physician

Appointment Wait Times indicates that even

in large metro areas with a relatively high per

capita concentration of physicians, physician

appointment wait times can be protracted

(see chart below):

0

5

10

15

20

25

30

35

40

45

50

Bosto

n

Denv

er

Phila

delph

ia

Portl

and

Minn

eapo

lis

Detro

it

Was

hingt

on, D

.C.

New

York

San

Dieg

o

Seat

tle

Dalla

s

Average New Patient Appointment Wait Times In Days

Source: Merrit Hawkins 2014 Survey of Physician Appointment Wait Times.


Of particular note is the fact that Boston has

by far the highest average wait times of the

cities examined in the survey, despite having

450 physicians per 100,000 population

(the average ratio for the entire U.S. is

226 physicians per 100,000). In 2006,

Massachusetts implemented a healthcare

reform system very similar to the ACA,

and today 97% of the states residents

have health insurance. Partly as a result,

wait times to see a doctor have become

extended, while emergency room visits

increased rather than decreased.

A similar physician appointment wait time

study conducted by the Massachusetts

Medical Society (MMS) in 2013 shows an

average wait time in Massachusetts of 39

days for a family physician appointment.

The MMS study also shows that only

51% of family physicians and only 45%

of general internists in Massachusetts are

accepting new patients (Massachusetts

Medical Society Patient Access to Care

Study. July, 2013).

Whether the ACA will drive similar trends

nationwide remains to be seen. In the 12

month period examined in this Review

(April 1, 2013 March 31, 2014) Merritt

Hawkins observed some healthcare facilities

ramping up their physician recruiting activity

in preparation for an anticipated increased

demand for services related to insurance

enrollment through the ACA. However,

physician recruiting activity to date has

not largely been driven by ACA related

spikes in demand. Facilities are waiting

to see how insurance enrollment impacts

physician utilization particularly whether

high deductible plans will limit physician

visits and whether utilization will further

be limited by the enrollment of relatively

healthy younger people.

The expansion of Medicaid enrollment

through the ACA also to date has been a

minimal spur to physician recruiting, having

its greatest effect on Federally Qualified

Health Centers (FQHCs) whose mandate is

to provide accessible care for traditionally

underserved and under-insured populations.

Because so many physicians today are not

accepting new Medicaid patients (only

45.7% in the markets examined in Merritt

Hawkins Physician Appointment Wait Time

Survey cited above) expanded Medicaid

enrollment may have the greatest impact

on hospital emergency rooms. Unable to

access office-based physicians in a timely

manner, Medicaid patients often rely on the

emergency room for care.

An analysis of California emergency

department visits confirms that adult


Medicaid beneficiaries have the highest rate

of ED visits, higher than both uninsured and

privately insured patients. Similarly, a study

of Medicaid expansion in Oregon showed

that adults chosen in a lottery to

receive Medicaid coverage used the ED

about 40% more often than those who

were not selected (Newsatjama.jama.

com/2014/01/02).

Trends other than ACA-related insurance

enrollment, including the ongoing physician

shortage, have had a more immediate

effect on physician recruiting.

A DEARTH OF DOCTORS

Medical schools in the United States

have expanded in recent years and will

be producing 27,000 graduates annually

by the end of this decade, 50% more

than in 2000 (Help Wanted! Journal

of Oncology Practice. Richard Cooper,

M.D. January, 2014). However, Medicare

funding for residency training was capped

by Congress in 1997 and there has been

little corresponding growth in the number

of resident positions since then, though

the U.S. population has grown by 50

million people. More than 60 state medical

societies, specialty societies, and hospital

organizations have called for the cap to be

lifted, but without practical effect.

Compounding the problem, some

10,000 Americans turn 65 every day (at

a rate of one every eight seconds) and

will continue to do so for the next 20

years (AAMC Physician Policy Workforce

Recommendations, September, 2012).

People in this age group see physicians

at three times the rate of those 30 or

younger, according to the CDC, and

account for over 33 percent of all

community hospital stays, though they

comprise only 12 percent of the population

(HealthLeaders December 29, 2010).

An additional factor driving the physician

shortage is the evolution of physician

practice styles. As more physicians choose

employment and opt for controllable

schedules, physician productivity is

decreasing. According to a survey

conducted by Merritt Hawkins for The

Physicians Foundation, physicians worked

6% fewer hours in 2012 than in 2008, a

drop in productivity equivalent to the loss of

46,000 full time equivalent (FTE) physicians

from the workforce.

Source: AAMC Physician Workforce PolicyRecommendations, September, 2012

Projected Physician Shortages

2008

7,400

58,000

2012

91,500

2020

131,000

2025


Physician demographics also are

contributing to the shortage. Because over

40% of active physicians are 55 years old

or older, the shortage will soon be

compounded by a major wave of physician

retirements during the next five to ten years.

As a result of these and related

factors, ongoing physician shortages are

projected to worsen. The chart on page

19 illustrates the coming gap between the

number of physicians in the United States

and the number needed, as projected

by the Association of American Medical

Colleges (AAMC).

The shortage is compelling many healthcare

facilities nationwide to recruit physicians

to fill current openings on their staffs. The

chart above shows the average hospital

vacancy rate for various clinical professionals

as tracked by AMN Healthcares 2013

Clinical Workforce Survey.

In addition to the physician shortage,

physician recruiting is being driven in part

by increased consolidation within the

healthcare industry and by the emergence

of aligned delivery models such as

Accountable Care Organizations (ACOs)/

primary care medical homes/integrated

delivery systems. As of April, 2014, over

428 provider groups were operating

as ACOs. About four million Medicare

beneficiaries are now in an ACO and an

estimated 14% of the U.S. population is

now being served by an ACO (Kaiser Health

News. FAQ on ACOs. April 16, 2014).

The graph below illustrates the accelerating

rate of hospital consolidations nationwide:

In an effort to meet ACO staffing

requirements, to manage the health of large

population groups, and to secure market

share, these large integrated organizations

are recruiting or acquiring physicians en

Number of Announced Hospital Consolidations, 20022012

57

2006

58

2002

38

2003

59

2004

51

2005

58

2007

60

2008

52

2009

72

2010

90

2011

94

2012

Source: Irving Levin Associates. 2012 Healthcare Acquisition Report.

Average Hospital Vacancy Rates for Clinical Professionals

17.6%

17.0%

14.9%

13.3%

Physicians

Nurses

NPs/PAs

Allied Professionals

Source: 2013 Clinical Workforce Survey. AMN Healthcare.


masse, rather than on an ad hoc basis, as

has been common in the past. Today, a

large healthcare system/ACO may initiate

a search effort for dozens of primary care

physicians at a time, in order to establish

the primary care networks that are the

key to population health management and

team based care.

In part because of their key role as care

coordinators, primary care physicians

(defined as family physicians, general

internists, and pediatricians) remain in

particularly high demand as delivery models

shift. They also are the main targets for

recruitment of expanding Federally Qualified

Health Centers (FQHCs), urgent care centers

and Veterans Administration facilities.

For the eighth consecutive year, family

medicine was Merritt Hawkins most

requested search assignment, with general

internal medicine second (also for the

eighth consecutive year). Third on the list

are hospitalists, who typically are general

internists, while pediatricians are sixth, up

from 9th two years ago (pediatricians were

not in the top 20 as recently as 2005/06).

The supply of primary care physicians has

been inhibited in recent years by a decline

of interest in these areas. In 1950, 50% of

physicians were engaged in primary care

and the remaining 50% were engaged in a

handful of medical specialties

Today, only 32% of physicians are engaged

in primary care while the remaining

68% are engaged in one or more of 200

specialties for which board certification can

be obtained (New York Times, June 23,

2010) a percent lower than most developed

nations. Due to comparatively low pay and

longer work hours, fewer U.S. medical

graduates have displayed an interest in

primary care over much of the last 15

years, ceding over 50% of filled residency

positions in some years to international

medical graduates (IMGs), according

to the National Residency Matching

Program (NRMP). While interest in primary

care residencies among medical school

graduates recently has increased, nearly

one in five Americans live in a region

designated as underserved for primary care

by the federal government.

Training of primary care physicians, with a

focus on interprofessional cooperation, will

have to be accelerated to meet the demand

created by delivery systems built around

prevention, population health management,

team-based care and quality/volume-based

reimbursement. Three-year rather than four-

year medical school programs may be one

answer. New York University, Texas Tech,

and Columbia University have launched

three-year programs, and about ten other

medical schools are considering doing so

(The Washington Post. January 14, 2014).

Urgent Care and the Retail Boom

An additional spur to the recruitment of

primary care physicians is the growth of

urgent care centers and other proliferating

sites of service (see chart on page 22).

Hospitals, large medical groups and

other entities are repositioning how they

appeal to healthcare consumers, with

a greater emphasis placed on access to


9,300 urgent care centers in the Unites States

40% expect to expand or add a new site

85% expect to see new patient growth

50% are free standing

50% are in retail shopping centers

Growth of Urgent Care

Source: Beckers Hospital Review. August 2013

services. Urgent care centers, free standing

emergency departments, emergency

departments specifically for the elderly

(of which there are now 50 in operation

with another 150 on the way

FierceHealthcare, February 20, 2014) and

retail clinics are among the proliferating

sites of service that allow healthcare

providers to offer access to medical services

everywhere, all the time. Urgent care

centers alone now see 160 million patient

visits a year, and studies show that 14%

27% of visits to hospital emergency rooms

could be handled by an urgent care center

(Beckers Hospital Review. August, 2013).

Retail centers are expected to double

from 1,400 in 2012 to 2,800 by 2015 with

projected 25% to 35% growth in coming

years (Advisory Board Daily Briefing, June

13, 2013). Many of these sites are staffed by

primary care physicians or by NPs and PAs

who provide primary care services.

These outpatient settings are increasing

in part because physician practices in the

United States are less accessible after

hours than practices in other nations, as

the chart following indicates.

Increased access is part of a wider trend

in which healthcare facilities are trying

to evolve healthcare delivery away

from a transactional model toward an

experiential one characterized by

customer service, price transparency,

provider ratings, and ease of use. With

the understanding that consumers punish

complexity and reward simplicity, healthcare

is shifting to a retail model with a wider

menu of niche providers to suit varying

customer preferences.

FQHCS AND SPECIALTY SERVICES

As referenced above, FQHCs have an

expanded mandate to provide access to

traditionally underserved populations

through funding provided by the federal

stimulus bill and the ACA, and many have

ramped up their recruiting efforts.

In addition, numerous hospitals and larger

medical groups have invested in high-end

2013

95%

90%

87%

81%

78%

47%

40%

Nations

Netherlands

New Zealand

United Kingdom

Australia

Germany

Canada

United States

Medical Practices That Can Arrange For Patients to See a Doctor or Nurse After Hours

Source: Commonwealth Fund International Policy Survey of Primary Care Physicians


specialty services in recent years, and the

last decade has seen a building boom of

sleep centers, heart centers, neuroscience

centers, orthopedic centers and other

specialty care facilities that require primary

care doctors to ensure they have a requisite

number of patients.

ONLINE RESOURCES AND TELEHEALTH

Despite this proliferation of service sites,

consumer access to physicians remains

a challenge, which innovators and

entrepreneurs are rushing to meet. New

services promoting access are arising in

markets nationwide, such as ZocDoc,

an online service that allows consumers

to access physician schedules in their

cities to determine which physicians have

openings. Zipnosis, pioneered by Park

Nicollet in Minnesota, is an online program

that for $25 a visit provides diagnosis

of minor problems such as colds, flu,

bladder infections, allergies and acne.

Since 2010 it has expanded to Alaska,

Colorado, Connecticut, Kentucky, Maryland,

Massachusetts, New York, Rhode Island,

Washington and Wisconsin.

Phone and web-based telehealth services

are exploding with more employers and

insurance companies willing to pay for

these services. The share of large employers

with more than 5,000 employees that offer

telehealth services increased to 17% in

2013, from 12% the year before, and the

percent of companies considering doing so

grew to 43% from 33% in the same time

frame (Wall Street Journal/MarketWatch,

March 3, 2014).

Even though physicians can be made

more efficient and accessible through the

use of technology, the existing physician

workforce is insufficient to meet demand

and is being supplemented by other

clinicians, such as NPs and PAs, a trend

underlined by the 2014 Review.

IS THERE AN ADVANCED PRACTITIONER IN THE HOUSE?

Prior to 2011, Merritt Hawkins received

few requests to recruit advanced

practitioners, including NPs and PAs. In

2013, NPs and PAs made the list of our

top 20 most requested search assignments

for the first time. In the 2014 Review, NPs

and PAs combined rank as our fifth most

requested search. The number of search

assignments Merritt Hawkins conducted

for NPs and PAs grew 320% collectively

from 2011/12 to 2013/14.

There are over 115,000 NPs practicing

in the U.S., with 88% focusing on primary

care, and 18% practicing in rural areas,

according to the American Academy of

Nurse Practitioners (AANP). They hold

prescriptive authority in all 50 states and

96% of them are female.


Over 83,000 PAs practice in the U.S., about

one-third in primary care and two-thirds

in specialty areas, according to the

American Academy of Physician Assistants

(AAPA), and 62% are female. They have

prescriptive authority in all 50 states and

their numbers have increased by 100% over

the last ten years.

While NP and PA professional groups are

seeking a wider scope of practice in many

states, they and most other observers

agree that NPs and PAs are intended to

supplement physicians, not to replace

them. In the emerging era of health

professional shortages, physicians, NPs, PAs

and other clinicians will need to practice

to the limits of their training, so that work

is redistributed as appropriate across the

spectrum of healthcare providers. Facilities

using NPs and PAs will need to understand

their role and ensure they are truly

supplementing physician services rather

than duplicating them.

This team-based model of care ultimately

may only be achieved through programs

stressing interprofessional education, when

succeeding generations of clinicians trained

in the team-based approach are integrated

into the workforce. Nevertheless, many

facilities aspire to this model today and are

moving toward it.

THE ROLE OF LARGE RETAILERS

While there are still disputes about scope

of practice issues between physician and

advanced practitioner professional groups,

the ways in which PAs/NPs are being used

now are often being dictated by state

governments, by large health systems,

major employers and retailers.

For example, Wallgreens announced

in April of 2013 that it will become the

first retail chain to expand its health care

services to include diagnosing and treating

patients for chronic conditions such as

asthma, diabetes, and high cholesterol,

using PAs and NPs. (Walgreens Becomes

1st Retail Chain to Diagnose, Treat Chronic

Conditions, Kaiser Health News, April 4,

2013). The use of PAs/NPs in a diagnostic

role is a significant step that may be

imitated by other retail chains and sites of

service. Whereas in the past, hundreds of

independent physicians in a region may

have decided if and how PAs and NPs were

employed, today those decisions are being

made at a more corporate level.

In 18 states, NPs have full authority

to evaluate and diagnose patients, order

diagnostic tests and prescribe drugs,

enabling them to open a practice or

work in a retail clinic with no doctor on

site. Law makers in numerous other

states are considering legislation that

would allow nurse practitioners to

practice independently.

Enhanced scope of practice laws for NPs

and PAs and recognition of their expanded

duties by third party payers are likely to

further drive demand for these clinicians.


A LOOMING SHORTAGE OF NPS AND PAS

The shortage of healthcare professionals

is so acute that some experts believe that

even the enhanced use of NPs and PAs

will not be enough to fill the gaps. Like

physicians, many NPs and PAs today are

gravitating to specialty areas and to larger

communities. Data generated by noted

physician workforce analyst Richard Buz

Cooper, M.D. show that while the number

of NPs and PAs per capita is growing, the

number in primary care per capita peaked

several years ago and is declining.

These numbers suggest there may not be

enough PAs and NPs to ride to the rescue

and alleviate primary care shortages, and

that some of the same trends that have led

to physician shortages may be duplicated

in the PA and NP workforce. Though the

number of NP and PA education programs

is projected to grow by 3% to 5% annually,

Dr. Cooper projects a 20% deficit of these

clinicians by 2025 (Physician Shortage Isnt

the Only Looming One, Advance for NPs and

PAs, July 28, 2011).

Though many hospitals and medical groups

have become better at assimilating NPs

and PAs onto their clinical teams, more

interprofessional cooperation will be

needed as primary care physicians focus on

directing team-based care and managing

chronically ill patients.

THE CRISIS IN PSYCHIATRY

Federal rules that go into effect in 2014

give Americans more access to behavioral

health coverage, but as in primary care

and other areas, coverage may not always

lead to access.

The shortage of psychiatrists and

behavioral health resources has become

acute nationwide, a fact highlighted by

the difficulty many psychiatric patients in

emergency departments have accessing an

inpatient bed. In California, the average time

is 10 hours. In central Ohio, it is 19 (Access to

Mental Health Services Strained as Benefits

Expand. HealthLeaders, February 27, 2014).

In 2014, psychiatry was Merritt Hawkins

fourth most requested specialty. As Merritt

Hawkins has reported in this Review and

elsewhere, the shortage of psychiatrists

continues unabated while failing to receive

the attention focused on the shortage of

primary care physicians.

The silent shortage will continue as

psychiatrists are essentially aging out of

the workforce, a trend illustrated by the

chart below:

70%55%

10%40 or Younger

20%41-50

31%50-60

39%61 or Older

All active psychiatrists are 50 or older

All active physiciansare 50 or older

Psychiatrists by Age

Source: AMA Physician Master File


Many psychiatrists today are seeking

outpatient practice settings, so that it is

increasingly difficult for inpatient facilities

to recruit the physicians they need. This

is particularly true of federally funded

psychiatric facilities and correctional facilities,

where the need is greatest.

In the future, demand for psychiatric services

will have to be addressed by primary care

physicians, who today are prescribing a

growing volume of psychopharmacologic

drugs, and by non-physician behavioral

health professionals such as psychologists.

Psychologists now are able to prescribe

medications in the military and in the Indian

Health Service, and in two states, New

Mexico and Louisiana. At least six states

(Arizona, Hawaii, Montana, New Jersey,

Oregon, and Tennessee) have or

are considering giving psychologists

prescriptive authority.

WHAT ROLE WILL THE ED PLAY?

While requests for emergency physicians

were down relative to last year, emergency

medicine nevertheless ranked as Merritt

Hawkins seventh most requested search.

The number of hospital emergency room

visits continues to grow and hit an all-time

high of about 130 million in 2010, the last

year for which numbers are available, up

from 124 million in 2008, according to the

CDCs National Hospital Ambulatory Medical

Care Survey. Emergency departments

now account for about half of all hospital

admissions in the U.S. according to a RAND

Corporation study (www.rand.org.news/

preess/2013/05/20.html).

While the number of hospital-based

emergency departments has decreased in

recent years, the number of freestanding

emergency departments has increased,

doubling in the last decade and now up to

284 in 45 states (Freestanding Emergency

Department Growth Creates Backlash,

American Medical News, April 29, 2013).

Opened by hospitals and physicians,

sometimes in alliance and sometimes

separately, they are able to take more

complex cases than urgent care centers.

Freestanding EDs are subject to the

Emergency Medical Treatment and Active

Labor Act (EMTALA) if they accept Medicare

or Medicaid, and must see all patients who

present to the department. The proliferation

of free-standing EDs is part of the shift

in philosophy referenced above in which

healthcare organizations are placing a

premium on making services more accessible

to patients by expanding hours and creating

multiple service sites.

Despite popular perceptions, emergency

department visits are not largely driven


by the uninsured, but by those with

insurance. According to the Center for

Health System Change (CHSC) Testimony

before the Senate (Nonurgent Use of

Hospital Emergency Departments, May 11,

2011) the uninsureds use of emergency

departments is considerably less than

privately insured people.

Tellingly, the rate of hospital room visits

increased in Massachusetts after healthcare

reform expanded access to health insurance

in the state in 2006 (Emergency Room Visits

Grow in Massachusetts, Boston Globe,

July 4, 2010). What the CHSC testimony

and other sources underline is that insured

patients come to the ED for problems when

they cannot obtain reasonable access to a

primary care physician or other providers.

The conclusion is that EDs are not serving

as the primary care source for uninsured

patients as much as they are serving as a

source of convenient care for the insured.

As more patients obtain health coverage

through the ACA, and as the shortage of

primary care physicians persists, emergency

room visits can be expected to increase,

further driving demand for physicians

staffing the emergency department.

Demand will be particularly strong for

ABEMs (physicians board-certified in

emergency medicine), as trauma centers

require EDs that are ABEM staffed. Even

though ABEMs command salaries up to

50% greater than primary care physicians

who may moonlight in the ED (particularly

in rural areas), they are in great demand,

and these searches are among Merritt

Hawkins most difficult assignments to fill.

WHICH SPECIALISTS ARE IN DEMAND?

Healthcare reform, defined as both the

ACA and ongoing market changes, is

driving the pivot from a volume and

procedurally-based system in which

specialists predominate to a quality and

preventive-based system more generally

directed by primary care physicians.

Part of this trend includes ongoing Medicare

and other third party reimbursement cuts

to specialists coupled with Medicare and

other reimbursement increases to primary

care physicians. Both these trends have

diminished to some extent demand for

certain medical specialists.

For example, in 2001, 2002 and 2003,

radiology was Merritt Hawkins most

requested specialty. This year, radiology is

not in the top 20. Similarly, anesthesiology,

once a top search assignment, also is

not in the top 20. Inhibiting demand for

anesthesiologists is the use of certified

registered nurses anesthetists (CRNAs),

who now administer 65% of all anesthetics

nationwide, according to the American

Association of Nurse Anesthetists (AANA)


and are particularly prevalent in smaller,

rural communities.

However, demand for particular specialists

cannot be measured only by number of

search assignments requested, since more

populous specialties such as family medicine

and general internal medicine can be

expected to generate more requests than

less populous specialties. The chart below

ranks demand for specialists based on Merritt

Hawkins 2013/14 search assignments as a

percent of all physicians in each specialty.

Considered this way, demand for such non-

primary care areas as psychiatry, neurology,

gastroenterology, otolaryngology, urology,

hematology/oncology, general surgery and

others remains strong.

Over 20 medical specialty societies have

released studies projecting shortages in

their fields, and as patients age and require

more specialty services, demand for specialty

physicians should remain strong.

WHERE ARE THEY RECRUITING? INTO WHICH SETTINGS?

Merritt Hawkins annual Review tracks

the types of practice settings into which

physicians and advanced practitioners are

being recruited. These can include hospital

employed settings, group practice settings,

solo practice settings, physician partnerships

or associations, Federally Qualified Health

Centers (FQHCs), academic medical centers,

Indian Health facilities and other settings.

The 2014 Review signals the continuation of

a trend that Merritt Hawkins has observed

for almost a decade. From 2004 to 2013, the

percent of search assignments we represented

Hospitalists

Family Medicine

Psychiatry

Neurology

Gastroenterology

Otolaryngology

Pulmonology

Urology

Emergency Medicine

General Surgery

Hematology/Oncology

Internal Medicine

OB/GYN

Pediatrics

Merritt Hawkins Top Physician Search Assignments as a Percent of All Physicians Per Specialty (patient care only)

.019%

. 0082%

. 0069%

0055%

. 0045

0038%

.0036%

. 0031%

0028%

.0027%

.0026%

. 0025%

.002%

.0018%


in hospital employed settings increased (see

chart below) each year, peaking at 64%

where it remained in 2014.

These numbers underscore the rapid decline

of physician private practice ownership

and the growing predominance of hospital

employment of physicians and employment

of physicians in other practice settings.

The 2014 Review indicates that less than

ten percent of Merritt Hawkins recruitment

assignments now are for settings in which

physicians are likely to be independent

and self-employed. These settings include

partnerships (3% of Merritt Hawkins search

assignments) solo settings (less than 1%

of Merritt Hawkins search assignments)

concierge settings (1% of Merritt Hawkins

search assignments) and a number of

medical group settings featuring ownership

arrangements (approximately 4%5% of

Merrit Hawkins search assignments).

CONCIERGE GROWING

The 2014 Review marks the first time

Merritt Hawkins has tracked concierge

practices as a separate practice setting. We

anticipate that this style of practice will

grow in response to widespread physician

dissatisfaction with the prevailing medical

practice environment and the desire of

many doctors to embrace alternatives to

traditional practice models. The concierge

model, which typically eliminates third party

payers, represents one of the few financially

viable ways in which physicians may be able

to maintain independence in the future. The

chart on page 30 illustrates the percentage

of physicians in various specialties who

remain in independent private practice.

The trend toward physician employment

is being driven by a variety of factors,

including a growing reluctance among

Merritt Hawkins Hospital Employed Search Assignments

510 (19%)

285 (11%)

654 (23%)

1,297 (43%)

1,416 (45%)

1,579 (45%)

1,430 (51%)

1,975 (64%)

1,495 (56%)

1,710 (63%)

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2006 (64%)


physicians to assume the financial risks and

administrative responsibilities of private

practice ownership in todays problematic

medical practice environment. Hospital and

medical group consolidation, emerging

practice models such as ACOs that require

large physician panels, and proliferating sites

of service such as free standing emergency

departments, urgent care centers, and

retail clinics, all of which typically employ

doctors, also are contributing toward

the move to employment and away

from private practice.

One of the repercussions of physician

employment is declining productivity.

Employed physicians see 17%

fewer patients per day than independent

physicians according to a survey

conducted by Merritt Hawkins for The

Physicians Foundation.

FQHCS AND ACADEMIC SETTINGS

Among the proliferating sites of service are

FQHCs, which are expanding and adding

new sites of service to meet anticipated

demand. Funding for these safety net health

centers, charged with providing affordable,

quality patient care to traditionally

underserved populations, was significantly

increased by the federal stimulus bill and

the ACA. By 2015, FQHCs are projected to

increase patients seen from 20 million a year

to 30 million. Merritt Hawkins is conducting

an increasing number of search assignments

for FQHCs. In 2014, FQHCs and Indian

Health facilities accounted for 12% of all

Merritt Hawkins search assignments, up

from about six percent in 2012.

The 2014 Review also indicates that

academic medical centers are recruiting

37% Pediatrics

Emergency Medicine

Family Practice

Psychiatry

General Surgery

Internal Medicine

Internal Medicine Subspecialties

Surgical Subspecialties

Physician Practice Owners by Specialty

38%

40%

41%

46%

46%

62%

72%

Source: Policy Research Perspectives: New Data on Physician PracticeArrangements. American Medical Association. 2013


physicians in greater numbers. The

Association of American Medical Colleges

has committed to growing medical school

enrollment by 30 percent by 2015 and is

on target to reach that goal. Academic

medical centers are becoming more

involved in the delivery of care and are

expanding their clinical networks.

In an era of physician shortages, many

physician faculty members are being

lured to private practice by comparatively

high income offers. Further, leaders at

academic institutions, including Chairs,

Department Heads, and others, frequently

are targeted for leadership positions by

pharmaceutical companies, integrated

systems, and other organizations, leading

to a brain drain that also has been

observed among faculty at nurse training

programs. These trends, combined with

the need to replace an aging academic

workforce, are likely to spur recruitment at

hundreds of teaching facilities nationwide.

The 2014 Review marks the second time

Merritt Hawkins has tracked academic

searches as a separate category. Such

searches accounted for six percent of all

Merritt Hawkins search assignments in the

2014 Review period, up from five percent

the previous year.

SEARCHES BY COMMUNITY SIZE

The 2014 Review indicates that Merritt

Hawkins conducted physician search

assignments in all 50 states during the

12-month period from April 1, 2013 to

March 31, 2014. Hospitals, medical groups

and other organizations in every state

found it necessary or desirable to retain the

services of a physician search firm such as

Merritt Hawkins, suggesting that physician

recruitment challenges are wide spread.

Forty-two percent of Merritt Hawkins

2013/14 search assignments took place in

communities of 100,000 people or more,

suggesting that it is not only traditionally

underserved smaller communities that

face challenges in physician recruiting.

Facilities in large urban centers and even

resort areas are recruiting physicians and

sometimes find it necessary to enlist the

help of recruiting firms to do so. In many

cases, urban recruiting is being driven by

large, integrated systems such ACOs and

academic centers with multiple physician

recruiting needs.

WHAT ARE THEY OFFERING?

Merritt Hawkins Review of Physician


Incentives tracks the starting salaries or

income guarantees being offered to recruit

physicians, as well as other recruiting

incentives typically offered to doctors and

advanced practitioners.

Average salary and income guarantee

numbers represent the base only and are

not inclusive of production bonuses or other

incentives. This is in contrast to physician

compensation numbers compiled by the

Medical Group Management Association

(MGMA) and other organizations, which


track average physician incomes, including

production bonuses. Merritt Hawkins salary

and income guarantee ranges are therefore

indicators of what is required to attract

physicians already established in a practice

or those coming out of residency training to

particular practice opportunities, rather than

indicators of physician average incomes.

Comparisons between Merritt Hawkins

average salary numbers and MGMA overall

compensation numbers in several specialties

are listed below.

SALARIES IN PRIMARY CARE

The 2014 Review indicates that demand for

family physicians continues strong, exerting

upward pressure on salary offers which

increased to an average of $199,000 this

year, up from $185,000 the previous year.

Higher salaries may reflect the growing

responsibility and value of family physicians

in team-based and value-driven delivery

models, such as the patient-centered

medical home, in which primary care

doctors can be rewarded for reaching

quality and cost effectiveness goals. In

general, however, we see across the board

demand for family physicians in a growing

number of practice settings as the impetus

for higher family medicine average salaries.

Pediatricians also saw a year over year

increase in salary offers, from $178,602

in 2012/13 to $188,000 in 2013/14. One

reason for the increase is that the type of

organizations recruiting pediatricians is

changing, from smaller, single-specialty

practices to hospitals and hospital systems

that have the resources to offer more.

By contrast, average salary offers for general

internal medicine physicians decreased year

over year, from $208,313 in 2012/13 to

$198,000 in 2013/14. This trend may be

driven by the types of organizations that

are recruiting general internists, including a

growing number of FQHCs, Indian Health

and Veterans Administration facilities, all

of which typically pay less than private

sector settings.

Merritt Hawkins

$199,000

$198,000

$354,000

$488,000

MGMA

$225,701

$244,689

$402,409

$586,311

Family Medicine

Internal Medicine

General Surgery

Orthopedic Surgery

Merritt Hawkins vs. MGMA Compensation Averages


SALARIES IN SPECIALTY CARE

As referenced above, the ACA, market-

based reforms, and targeted Medicare cuts

all tend to enhance the financial prospects

of primary care physicians and may inhibit

the prospects of specialists. In some cases,

the 2014 Review indicates at least a year

over year decrease in salary offers in some

specialty areas (see chart below).

Reimbursement cuts for office-based

oncology services have impacted salary

offers in the specialty, while salaries for

2014

$227,419 $229,000

$288,000 $311,000

$285,581 $288,000

$336,375 $354,000

$441,421 $454,000

2013

+0.7%

$464,500 $488,000 +5.1%

$424,091 $504,000 +18.8%

$351,125 $358,000 +2%

+8%

+0.8%

+5.2%

+2.8%

Specialties Seeing Year Over Year Salary Increases

Hospitalist

Emergency Medicine

OB/GYN

General Surgery

Gastroenterology

Orthopedic Surgery

Urology

Pulmonology

2014

$300,000

$262,000Neurology

Hematology/oncology

Otolaryngology

Endocrinology

Psychiatry

$382,000

$377,000

$398,000

$372,000

$209,000

$206,000

2013

-12.7%

-1.3%

-7.9%

-1.4%

-0.5%

Specialties Seeing Year Over Year Salary Decreases

$218,113

$217,000


psychiatrists may have plateaued

due to the limited resources available

to the state supported facilities that

frequently recruit psychiatrists. The

decrease in neurology shows a step

back after two years of increases that

may be a temporary adjustment.

Surgical specialty areas such as ob/

gyn, general surgery, gastroenterology,

orthopedic surgery and urology continue

to entail complex procedures which

generate revenue for physicians and

hospitals, even though the ACA and market

forces generally enhance reimbursement

for primary care services and inhibit

reimbursement to specialists. Incomes

in some specialty areas therefore

continue to increase, as they did for high-

demand hospital-based specialists such

as emergency medicine physicians

and hospitalists (see chart on page 33).

PHYSICIAN ASSISTANTS AND NURSE PRACTITIONERS

Average salaries for NPs increased year

over year, from $105,000 in 2012/13 to

$106,000 in 2013/14. This was to be

expected as demand for NPs grows, and NP

salaries are likely to increase next year.

Average salaries for PAs declined, from

$118,000 in 2012/13 to $105,000 in

2013/14. This decline can largely be

attributed to the fact that Merritt Hawkins

recruited a higher percent of primary care

PAs in the period covered by the 2014

Review than it did the previous year. As with

physicians, primary care PAs are not as well

paid as PAs who have chosen to specialize.

THE USE OF QUALITY/VALUE-BASED INCENTIVES STALLS

In todays recruiting market, the average

salary offered to recruit physicians may be

secondary in some cases to how overall

compensation is structured and to how

physicians will be rewarded.

Reflecting the growing number of

employed physicians, most income

packages offered to physicians today

are structured as salaries or salaries with

production bonuses. Income guarantees,

which typically are offered to independent,

private practice physicians, have become

progressively less utilized in recent years.

Ninety-four percent of the search

assignments Merritt Hawkins conducted

in 2013/14 featured either straight salaries

or salaries with production bonuses, while

only four percent offered private practice

income guarantees. Seventy-four percent of

all search assignments offered a salary with

some type of production bonus.

Of these, the majority (59%) featured a

production bonus calculated on Relative

Value Units (RVUs). RVUs are a metric for

determining physician productivity based

on work units performed by a physician,

rather than the number of patients seen.

For example, a physician may be assigned

a larger number of RVUs for examining

a patient with acute diabetes than for


examining a patient with a cold. RVUs are

one of several volume-based metrics that

help ensure physicians remain productive.

Additional volume based metrics used in

production bonuses include net collections,

gross billings, or number of patients seen.

However, the trend in health care today

is to reward physicians for meeting

certain quality/value-based standards

or other standards that are not purely

based on volume. These quality metrics

could include patient satisfaction scores,

outcome measures, low readmission rates,

timely submission of charts, adherence to

treatment protocols and others.

A growing number of physician

compensation models include a quality

component as well as a volume-based

component. In 2012/13, 39% of searches

conducted by Merritt Hawkins that

offered a production bonus included a

quality component in the bonus structure,

up from 35% in 2012 and up from less

than seven percent in 2011 (Note: in the

2011 Review, quality-based metrics were

included in the Other category).

However, in the 2014 Review, the number

of production bonuses featuring a quality

component dipped to 24%. This decline

reflects the continued difficulty hospitals,

medical groups and other employers are

having in creating value/quality based

physician compensation models. Metrics

that are essentially fee-for-service in nature,

such as RVUs, are easier to calculate and to

explain to physicians than are value-based

metrics, which can be more subjective.

After a period in which many facilities were

determined to move toward quality-based

payments, some facilities have hit a wall and

have put off struggling with their physicians

over this issue until the definition of quality

and how to reward it becomes clearer.

In addition, a growing percent of Merritt

Hawkins clients are composed of urgent

care centers and other facilities that do

not typically include quality metrics in their

physician compensation formulas.

While the end-game (a value-based system)

is clear to most healthcare leaders, the path

to reach this goal is not. The ACA provided

an impetus to this tectonic shift which may

be inevitable, but there will be starts and

stops along the way before the realization

of this transformative change.


WILL INCENTIVES CHANGE BEHAVIORS?

An additional concern is that value-based

compensation metrics to date have had little

impact on overall physician compensation

and therefore may not be significant

enough to affect physician behaviors.

However, the 2014 Review indicates

that value-based metrics (in those bonus

structures in which they are included)

determine 13% of the physicians overall

compensation, a number that likely is high

enough to influence physician behaviors.

Creating a physician compensation model

in the Goldilocks zone (with enough

volume-based metrics to ensure productivity

and enough value-based metrics to

promote desired behaviors) remains a core

challenge for many healthcare facilities.

SIGNING BONUSES AND HOUSING ALLOWANCES

Signing bonuses were offered in 70% of

the recruiting assignments Merritt Hawkins

conducted in 2013/14, down from 71%

last year. This drop may be a result of an

increasing number of instances in which

physicians are changing employers within

the same community and do not need the

extra inducement of a bonus. Some facilities

also may be hesitant to offer signing

bonuses in light of renewed attention

to Stark-related recruiting regulations,

while others are using pay for emergency

department call as a type of bonus.

The graph on this page illustrates the

use of signing bonuses over the last

several years. Signing bonuses offered to

physicians in 2013/14 averaged $21,773

down marginally from $22,069 the previous

year. Signing bonuses offered to NPs and

PAs averaged $7,786.

Certain other incentives, such as paid

relocation, paid CME, health insurance

and malpractice insurance are standard in

the majority of Merritt Hawkins physician

search assignments. The average relocation

allowance offered to physicians in 2013/14

was $9,849, up from $9,555 the

2014 Merritt Hawkins Survey

Documents

Transcript of 2014 Merritt Hawkins Survey