We published a White Paper in June of 2000, entitled “Physician Strategic Planning: Understanding your place in the food chain”, that stressed the importance of conducting a formal planning process around the size and complexion of medical staffs, and the development of strategies to attract and retain a loyal community of medical professionals.  This is an update of the issues presented in that document. 

 All but a few hospitals are finding it increasingly difficult to recruit physicians within key specialties.  Medical groups of all sizes are realizing that the days of unsolicited CVs may have passed.  Many physician recruiting firms are actually suggesting that primary care physicians may be in oversupply, while the specialist may now be the endangered species.  

 To a growing extent, hospitals and physicians are becoming competitors.  As physicians recognize the value of business knowledge, and are either hiring professional administrators or turning to business-trained medical colleagues, they are beginning to explore ventures (such as surgery centers and diagnostic facilities) which had, historically, been the purview of the hospital.  More of the time and effort of the physician is then devoted to his/her own venture and less to the support of the needs of the hospital. 

For-Profit firms that develop specialty hospitals, surgery centers, and similar ancillary programs are creating business partnerships with physicians and, not surprisingly, taking market share from hospital owned ventures. 

Future success, we suggest, will require that hospitals begin to mimic the entrepreneurial models of the for-profits, and to use these innovative alliances in their recruitment messages to physicians. 

 Most planning efforts are directed at institutional needs.  New services, building replacements, and new technology have been the traditional demands placed on professional planning staff.  It is critical that they now add physician demand models to their skill sets. 

What, then, should the professional planners do to correct this data and strategy vacuum related to medical staff resources? 

Step 1 in the planning process is an estimate of the demand for various specialties within the service area.  There are a number of physician-to-population models available including one created by the Graduate Medical Education National Advisory Council (GMENAC) and a managed care model created from the experience of the Kaiser Health Plan.  The Center for Disease Control has more sophisticated models that use age and sex cohorts to estimate visit volume, but these are mostly restricted to primary care specialties.  

This examination of the specialty demand and supply is a new direction for many medical planners. Most historical focus was on the supply of primary care physicians.  An adequate physician network would assure that managed care plans would select them as gatekeepers and specialists would be drawn by this supply of potential patients.  The rules have changed. 

Step 2 is an assessment of the active practitioners within each specialty.  The assessment would include:

            · Physician age

            · Specialty training/certification

            · Location

            · Financial volume/admissions

· Loyalty (see our earlier work, Developing An Effective Physician Relations Program, for an examination of “splitters” and “loyalists”) 

This process becomes difficult in markets with overlapping hospital services areas where all physicians within a specialty are not on your medical staff.  Provider lists by specialty are available from Medicare, some specialty societies list members by zip code, and the Yellow Pages contains most, if not all of the area physicians.  Supply must be refined by less-than-full-time determinations and the age of the provider.  It is also important to differentiate between specialty-trained physicians and those that simply indicate that they are specialists.  Many managed care plans require Board eligibility for participation as a specialist. 

Step 3 is a projection of need/over supply based on adjusted provider totals.  While not many models use mid-level providers in their formulas we have found that Physicians Assistants and Nurse Practitioners often have patient loads that approach those of physicians. Federal manpower planners typically assume that a mid-level is equivalent to .8 FTE physician. We suggest that you use 3-5 years as a planning horizon so you will need to project population as well as retirements to obtain a reliable manpower estimate. 

Step 4 is an estimate of the impact on revenue that could result from physician defections/retirements.  Most hospital data systems can track admissions and revenue by physician.  This report should be a regular part of the monitoring of medical staff activity by either the planning staff or physician liaison professionals.  If you find that your busiest physicians are also your oldest you have considerable work to be done.  A client hospital was planning to expand it neurosurgical program until it determined that the average age of the surgeons was nearly 70.  There was an excellent chance that there would be no surgeons left to staff the service unless aggressive recruitment was begun. 

Step 5 is a development of the economic model of what will be needed to attract qualified physicians.  Unfortunately, in many markets, the size of the required income guarantee is often higher that what can reasonably be expected to be produced from the practice setting.  Few CEOs are willing to enter a project that has a built in loss; they’re still recovering from the “owned physician” experience. 

Recruitment also has a political component.  Unless the existing staff are involved in the formation of the demand/supply model, and the ultimate strategy to address shortages, you will, potentially, alienate loyal staff if they find out about recruitment programs second-hand. 

Step 6 is the development of a strategy of solidify the loyalty of existing physicians during the period of recruitment.  The best model may be to help build private practices yet, as a few practices begin to grow and dominate the market, the physicians may still elect to explore the commercial options outlined above. 

The most loyal physicians have business ties to the hospital yet these relationships are the most troubling under the many Stark restrictions.  Senior management should challenge legal advisors to find ways that hospitals and physicians can develop meaningful partnerships, rather than to find reasons why these partnerships are inappropriate. 

 Creating and maintaining a viable medical staff is the result of the efforts of an enlightened administration, especially the CEO, an effective and responsive Physician Relations/Liaison program, and a clear and workable plan.  Each market will require a different approach in recruiting and retaining physicians, as will each specialty within that market. 

Most patients are no longer willing to settle for just any physician.  Their doctor needs to be well trained, the office staff needs to deliver excellent customer service, and the physical environment needs to be neat and modern.  Anything less, and the potential for patient defection to the competition increases.  Providing assistance to dysfunctional groups to expand may be a waste of money; attempting to employ physicians with aggressive business goals may create conflict; and assuming that newly trained specialists have any clues about the management of a medical practice is naive.  Our recommendation?  Hospitals will need to provide strategic and operational guidance, advice, and support and have clear expectations about the financial performance of newly attracted physicians. 

The creation of a comprehensive medical staff model is merely the beginning of a difficult process; a process that should be ongoing and refined annually.  This process should include the following: 

· Development of the medical staff plan.  This document may be best prepared by an outside, independent, entity.  The hospital can then point to community need and avoid the issue of inurnment. 

· Creation/refinement of the medical staff support capabilities.  These services are traditionally delivered through product managers or physician liaison staff.  A knowledgeable liaison staff can create many strong bonds with key members of the medical staff.  You may wish to discuss this approach more with your Engagement Executive and learn about our ability to create or enhance these programs. 

A final consideration is the time, effort, and resources that will be consumed by the planning and implementation process.  The need to have comprehensive and accurate data requires the verification of the materials obtained from other sources.  The input of the current medical staff is needed to identify any issues that will work against the attempts to attract new physicians (physicians depend heavily on the opinions of colleagues).  Often the model of the proposed program needs to be reviewed by Counsel and the Board.  Funds will need to be budgeted and approved.  Remember, failure is not an option. 

Time and resources spent in identifying potential gaps in the medical staff, creation of a plan to attract or retain these needed resources, recognition of the needs and challenges facing the private medical community, and the development of creative recruitment and support programs will assure the continued viability of the institution.