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Hospital chain’s new physician recruiting tool: adding residents

HCA is betting that training new doctors will be more cost-effective than hiring practicing physicians from elsewhere.

By Karen Caffarini — Posted Dec. 10, 2012

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For-profit hospital chain HCA is expanding its residency programs to solve two problems.

The main reason for adding residencies is to deal with a looming physician shortage, said Peter Marmerstein, president of HCA’s western Florida division, where the first new doctors will be added. But he said HCA, based in Nashville, Tenn., is aware that adding residents could enhance its chances of keeping those physicians as employees in a competitive market. “I understand a substantial percentage of doctors ultimately end up practicing where they did their residency training. There is a high likelihood this will greatly enhance our opportunities,” he said.

Hospitals have stepped up physician hiring to increase referrals, build outpatient revenue as more emphasis is put on preventive services, and have large networks of doctors be part of innovative, quality-centered payment systems such as accountable care organizations. About 75% of health care organizations surveyed by Sullivan, Cotter and Associates said they increased physician staffing levels in 2011, and a similar percentage plans to do so by the end of 2012.

Meanwhile, many doctors find employment an attractive alternative to what they see as the business uncertainties and pressures of small practice. Only 36% of practicing physicians will hold a practice ownership stake by the end of 2013, down from 57% in 2000, according to Accenture’s analysis of data from the American Medical Association and MGMA-ACMPE, which has more than 22,000 medical group practice managers as members.

Although health systems, particularly in rural areas, have used the promise of reimbursing doctors’ medical school loans to attract them as employees, HCA is a rare case of hospitals paying directly for, and providing, training in hopes of attracting physicians.

“With a physician shortage of 90,500 predicted by the year 2020, it would be wise if you’re trying to increase the physician supply in your area to invest in medical training,” said Christiane Mitchell, director of federal affairs for the Assn. of American Medical Colleges.

Although details are being worked out, Marmerstein said HCA plans to add 400 to 600 resident slots at four hospitals in western Florida, with training beginning in 2014. Two hospitals will train doctors in internal medicine and general surgery. Obstetrics and psychiatry are among specialties anticipated at the other hospitals. HCA has 185 resident slots at three hospitals in the Tampa Bay area, he said.

The high cost of recruiting doctors

HCA expects to subsidize residency education through the Medicare program. Although funding has been capped at hospitals with residency programs, there is money available for hospitals entering the field.

“That’s why we’re establishing the program in hospitals which historically didn’t have residency programs,” Marmerstein said. “It doesn’t make good financial sense to put money in a hospital that already has a cap on its financing.”

Mitchell said it costs $140,000 to $150,000 a year to train a resident, with Medicare paying $90,000 and the teaching hospital picking up the remainder.

She said that although HCA has no guarantees that its residents will stick around after training, spending the money on them could push the odds in its favor. Data show that 39% of physicians practice in the state where they graduated from medical school, 48% practice in the state where they completed their residency, and 67% practice in the state where they did both their schooling and training. Marmerstein said “a fair number” of HCA’s residents in the Tampa Bay area have stayed and practiced in the area, although not all practice at HCA hospitals.

Consultants and hospital organizations said it can cost anywhere from $30,000 to $200,000 to train and recruit a single physician, with a doctor’s departure resulting in $1 million in temporary productivity losses and recruitment costs for a replacement.

HCA’s move in Florida comes as medical schools and health systems in the state also are announcing residency expansions to deal with an expected physician shortage. Florida ranks 42nd in the number of medical residents and other specialty trainees per 100,000 citizens, according to a 2011 AAMC report.

As of yet, HCA has not announced plans to take its residency expansion to other states.

Although HCA’s actions will help with the residency shortage in Florida and its own cause, one physician recruiter said the hospital chain may have to do more to keep those doctors.

“It’s a nice thought, but the market will be more competitive,” said Allan Cacanindin, senior executive vice president with St. Louis-based Cejka Search. “Hospitals will need to sweeten the pot with money and amenities.”

Cacanindin said doctors tend to migrate either to areas where they have close family ties or to a hospital that offers a fellowship or certain subspecialty. He said incentives such as student loan repayment and higher pay will entice doctors to stay after their residencies.

“If hospitals start early with residency training, they have more time to develop the candidate and entice them further,” he said.

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