Stronger economy stimulates doctor turnover
■ With improving housing and investment markets, physicians are feeling more financially free to make changes they have contemplated because of health reform.
By Sue Ter Maat — Posted April 1, 2013
A changing health care system has many physicians thinking about a new job environment — or retirement. A recent survey determined that the improving economy is allowing more doctors to make those dreams a reality.
The physician departure rate at large practices was 6.8% in 2012, the highest it has been in the eight years that the American Medical Group Assn. and Cejka Search have conducted their Physician Retention Survey. MGMA-ACMPE, which represents smaller practices than does AMGA, said it believes the turnover rate for its members is about the same, though it conducts no survey.
The rate is up from a low of 5.9% in 2009, the last official year of the recession that cratered housing and stock prices. Physicians who wanted to change jobs stayed in place for fear their undervalued homes wouldn't sell. Others put off retirement or returned to work because the market drop caused their savings to dwindle.
As the economy becomes more robust, the physician turnover rate is expected to rise from its current record level, said Lori Schutte, president of Cejka Search, a St. Louis-based firm. As they assess how their practice lives are affected by full implementation of the Affordable Care Act in 2014, doctors are using economic conditions as the final item to determine how they will react.
“I'm not surprised about the [turnover rate] increase,” said Travis Singleton, senior vice president of Merritt Hawkins, a physician recruiting firm. “If anything, I'm surprised it's not as pronounced.”
The growing turnover comes as an aging patient base, an expected flood of newly insured patients under the ACA and a growing shortage of physicians already are creating a competitive environment for doctor hiring in many areas. All AMGA-Cejka survey respondents said they had no plans to reduce staff, and nearly 75% said they wanted to increase physician numbers.
Jim Stone, president of the physician recruiting Medicus Firm, said the supply of physicians versus the demand is getting more “out of balance” — good if you're a physician seeking a new opportunity, not so good if you're a practice trying to add a doctor. In the 2012 survey of 80 groups representing about 19,000 physicians, 73% left for other employment, 12% retired, 13% were terminated and 2% died, Schutte said.
A rebounding housing market
Although housing prices, home building and foreclosures are not back to pre-recession levels, all show positive signs. The S&P/Case-Shiller Home Price Indices, a leading indicator of residential home sales, found values rising the fastest they have been since the housing market collapsed in 2007. On March 26, S&P/Case-Shiller reported that its data for January, the latest month available, showed that home prices in a 10-city composite had jumped 7.3% over the previous 12 months, with an 8.1% gain for a 20-city composite.
Meanwhile, the number of improving housing markets has expanded for the sixth consecutive month, according to a February report from the National Assn. of Home Builders. CoreLogic, which tracks foreclosures and homes in mortgage default, said March 26 that 2.2 million homes were in that “shadow inventory” at the end of 2012, down 28% from the 2010 peak.
Things are looking up for financial investors as well. The Dow Jones industrial average and other stock market indicators hit decade lows in March 2009. In March 2013, the Dow and the S&P 500 were hitting or near record highs.
“Many physicians saw their 401(k)'s shrink and decided they had to work a few more years” before retiring, Schutte said. “Others may have wanted to sell their homes [to take other jobs], but they knew they'd lose money. Those physicians said, 'I'm going to ride this out. I can wait a few more years.' ”
Other physician recruiters said that with economic conditions improving, more doctors can focus on the deeper reasons they want to change jobs or retire — dissatisfaction or a search for more stability in a rapidly evolving health care environment.
A move away from practice ownership
Merritt Hawkins, for example, cites a desire for doctors to seek employed positions, rather than practice ownership, as a factor in increased turnover. An Accenture analysis of data from the American Medical Association and MGMA-ACMPE found that only 36% of practicing physicians will hold a practice ownership stake by the end of 2013, a decline from 57% in 2000.
Singleton said he expects about 75% of physicians to be employed in the next few years. That will drive turnover rates even higher, because it's a lot easier for a doctor to leave an employed situation than leave a practice position, which might require selling an ownership stake, he said. “People will leave to go someplace else because the grass is always greener,” Singleton said.
Meanwhile, many older physicians are deciding to retire rather than invest time and money at the end of their careers into adapting to the ACA and the electronic health records meaningful use program, said David Butsch, MD, the Vermont representative on the AMA Senior Physicians Governing Council.
Dr. Butsch, general surgeon who has been in practice for 39 years, plans to retire in less than two years, which is two to three years earlier than he would have otherwise. That's because he doesn't want to pay about $50,000 to switch over to EHRs. “I don't want to spend that kind of money for the short time I'd have left in practice,” he said.