Organizations rarely report the cost of turnover in their financial statements, but they do talk about it.
The issue of employee turnover comes up more and more frequently in leadership meetings. More often than not the emphasis is on nurses, therapists, technologists, programmers and other key, hard-to-recruit categories. What they do not talk about with the same frequency or gusto is physician turnover, which would move employed physicians into the mainstream of the talent acquisition and retention discussion, and appropriately so.
Physician turnaround hovers between 6.8 and 11 percent nationally, depending on specialty and whether you incorporate nurse practitioners and physician assistants. This calculation is based on a survey of medical groups representing 19,500 physicians. Compare this with the turnover rate from hospital CEOs which is around 18 percent, with an average tenure of 3.5 years. The cost of physician turnover is the big differentiator here: between $500,000 and $1.2 million with the latter being closer to reality, several hospitals CEOs with whom I spoke said.
Clearly this is a problem that health systems and hospitals cannot afford, especially with the looming significant critical shortages of primary care physicians (PCPs). Here is the upshot: As Baby Boomer physicians retire — and a surprising number now say they are planning to retire sooner than they originally planned — the competition to recruit established physicians who are willing to entertain a move, as well as the demand for new PCP residents who complete their training every June is torrid, and it will only grow more intense.
Now consider this: One survey found that 54 percent of physicians who are recruited leave within the first five years. That is another reality and a cost that health systems, hospitals and free-standing group practices simply cannot afford.
The irony here is that hospitals spend more time and money screening candidates for lower level positions than those with a higher economic impact such as physicians. Moreover, they do not invest in onboarding programs or focus on retention because if they did, they would know what drives the turnover and then plot strategies to offset this costly phenomenon.
Here is what we recommend:
- Culture eats strategy for lunch every day. Culture also eats employees, especially the newer ones. That includes physicians. They are no different in that regard than nurses or housekeepers. They leave when the culture is, at worst, toxic, or even when there is dysfunction that steps on their point of view and values. This will be more pronounced in the Values generation, also known as Millennials. They will not stay around if an organization does not live up to the values they stipulated in their recruiting brochure. They take this seriously and so must their employers. Health systems and hospitals must develop cultural awareness for those issues that specifically impact and affect physicians. Employing physicians cannot be only about gaining some kind of control “over production.” It is strategic but the strategy must not overlook the needs and desires of physicians.
- Onboarding is essential. Less than 30 percent of health systems provide onboarding programs for their incoming recruited physicians. Increasingly, well-run health systems, hospitals, and the more sophisticated group practices understand that, like top performing corporations, onboarding is essential to enhancing the new employee experience and for improving engagement, a critical factor, a critical facet in retention. Physician employment must be specifically incorporated into an organization’s onboarding system. If you lack that facet of your talent acquisition, you better get busy.
- Apply retention programs to your physicians. Health systems and hospitals are continuing their drive to employee physicians. In some markets physicians are lining up to move from independence to employment. This will require that employers have a greater commitment of time, resources and creativity to ensure that their investment in physician acquisition and recruitment is not wasted. This is a loss that no one in healthcare can afford.