A valued CEO colleague and friend recently shared an amazing story. A multi-specialty clinic that is located adjacent to his 140-bed community hospital had recruited more than 40 physicians over the past ten years, an impressive number given the rural nature of the community.

Unfortunately, 30 of the 40 left the practice and the community. Others are on the verge of calling the moving van.

The reasons for the turnover are among the top 10 in the annals of dysfunctional physician recruitment: a compensation plan that clearly favored the senior partners whose productivity was slowing as they enjoyed their status, a misdistribution of Medicaid and uncompensated patients to the new recruits, and an arrogant managing partner who refused to listen to reasonable advice from the hospital’s leadership team, all the while bullying his partners into silence. They probably did not even have a streamlined work pattern and were not even aware of certain cloud practice management software features, in all probability.

The clinic’s leaders were only too glad to take the hospital’s help when it came to providing hundreds of thousands of dollars in net-income guarantees and relocation assistance, but when it came to listening to the counsel of the hospital’s leadership team regarding strategies for eliminating or dramatically reducing the turnover, well, the managing partner was not interested. In fact, you might say they were downright rude.

What a shame. The hospital no longer is willing to underwrite the cost of recruiting for what could have been a powerhouse multi-specialty clinic. They are building their own group despite the angry protests from the clinic board that the hospital is engaging in unfair competition. The clinic’s senior partners, who seem to know everything they needed to know about management, clearly had not thought this issue through.

I am betting they never bothered to calculate their financial losses from such a horrendous turnover: more than $10 million down the drain.

That loss must be one of those hidden expenses that seem to drive up the costs of healthcare.