Sidestepping the Medical Staff Bidding War

By Tina Wardrop

Attracting top-notch physicians is getting more and more difficult. The good news is money doesn’t have to be the only draw.

Tina Wardrop

Start with growing shortages in most medical specialties. Add a burgeoning senior population. Then turn up the economic heat on physicians by reducing reimbursement and notching up practice overhead. There you have it—all the ingredients of a full-scale bidding war for physicians.

The truth is that for hospitals, supply and demand pressures will soon drive up the cost of attracting and retaining a high quality medical staff. The current rumbling over call pay is just a taste of what’s in store in the coming shortage-driven market.

What will a bidding war mean for hospitals? Many will simply be unable to compete on these terms. But even those hospitals that can “pay to play” will face an expensive environment that is not necessarily good for anyone.

There is an alternative: Create an organization that physicians want to work in because it satisfies a range of their professional and personal needs. It will not make money irrelevant, but it can give all hospitals, whatever their market position, a fair shot at the physician talent they deserve.

Tear Down the Wall

But wait—what makes the world go around, if not money? One answer is participation.

Like the rest of us, physicians want to take part in the decisions that affect them. Unfortunately, the policy at many hospitals seems to be to keep doctors in the dark and out of the loop. As physicians become more selective, these hospitals will likely suffer.

Instead of shutting physicians out, invite them to participate in important decisions. Physician-friendly hospitals seek input from the medical staff on issues like technology investments and staff development. They also communicate well with physicians about organizational strategy and new initiatives.

If you have employed physicians, be careful not to treat them like “employees.” Give them wide leeway on small decisions (for example, setting office hours) and collaborate with them on big ones (like compensation).

Most important, tear down the wall that keeps physicians out of hospital leadership positions. Strong physician representation on the board is essential. In addition, putting doctors in charge of important programs will communicate inclusion to the medical staff and can be key to achieving organizational breakthroughs.

Become a Provider of Life Balance

Time may be money, but money is not time. For most physicians, a big income cannot replace time spent with patients and personal downtime with family. The hospitals that succeed in attracting a strong medical staff will be the ones that help physicians (1) practice medicine while they manage a practice and (2) have a life while they practice medicine.

The key is supporting ease of practice. Create alternative care settings—many medical and diagnostic services can be provided more conveniently on the outpatient side. In addition, train hospital staff to be responsive to physician requests and to anticipate physician needs. In particular, make efficient scheduling a priority. Hospital staff should see physicians as a key customer segment that demands high quality customer service.

Hospitals can also help physicians reduce the burden of practice management. A well-designed employed group or management services organization can free physicians from billing, reimbursement and other administrative headaches while maintaining or even increasing their productivity.

As for emergency department coverage, employment is the most promising solution. At a hospital I visited in the South, the burden of ED call and unassigned patients caused a wave of medical staff resignations. The hospital addressed the problem by hiring traumatists, laborists, hospitalists and a variety of surgical specialists. Not only did the exodus subside, the hospital achieved new success in physician recruiting.

Recognize the Attractive Power of Quality

For physicians, the strongest magnet of all is quality. Hospitals with a reputation for exceptional care can overcome even the most daunting strategic disadvantages.

For example, what can a small-market hospital do when physicians begin referring patients in large numbers to urban medical centers? For a community hospital in the Northwest facing a major out-migration to Seattle, the answer was to spearhead quality care. The hospital took the lead on developing a communitywide electronic health record system. Physicians soon saw that the EHR opened up new possibilities for continuity of care. As doctors grew enthusiastic about the quality opportunity, out-market referrals declined significantly.

Hospitals can also put a spotlight on excellence by building quality metrics into medical staff contracts. Make sure to provide orientation on quality measures and evaluate outcomes periodically. Keep in mind that high quality requires both give and take. While hospitals should ensure physicians’ adherence to quality reporting standards, they should also find ways to support quality-oriented medical practice. For example, consider providing physicians with decision support software.

Hospitals should also build quality standards into physician recruiting. This may seem counter-intuitive, given current and growing physician shortages. However, holding the line on recruiting standards will pay off in the long term as high quality physicians attract other high quality physicians.

Help Physicians Succeed Financially

The alternative to paying physicians more is to help them earn more. While salaries, stipends and startup support can be important, they are not the only tools hospitals can use to impact physician earnings.

First, approach medical staff development not just from the point of view of hospital needs, but with a careful focus on physician referral networks. Taking the time to build the right primary-specialty mix can help sustain physician income for years.

Second, take responsibility for promoting physician practices. Hospitals often think they have done enough if they mail out a “new doctor” letter. Providing a higher level of marketing support can lead to greater physician loyalty. Another option is to develop new programs and services around your medical staff talent.

Third, enable physicians to improve financially by providing opportunities to earn more. For employed physicians, this can take the form of productivity-based salary and bonus structures. Investment partnerships should be another consideration, although this approach is becoming more difficult under new Stark regulations.

Choose Your Battle

In the near future, supply and demand pressures will make physician talent costly for hospitals. However, focusing on the full range of physician needs can de-emphasize money. This approach could benefit everyone by strengthening collaboration, increasing physician engagement and creating delivery models focused on quality.

It may still be a war, but wouldn’t you rather fight a quality war than a dollar war?

Tina Wardrop is vice president of Health Directions, LLC, a health care strategy and operations consulting firm based in Chicago.

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This article 1st appeared on January 8, 2008 in HHN Magazine online site.

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