The Cost of Physician Turnover: How It Impacts Your Bottom Line and What You Can Do About It
As leaders of the healthcare delivery team, physicians play a decisive role in maintaining and enhancing the quality of care patients receive in medical offices, hospitals, urgent care centers, government facilities, community health centers and other sites of service nationwide.
Each year, physicians handle approximately 1.3 billion patient encounters at medical offices and hospital emergency rooms throughout the county, at a rate of 4.3 physician visits per person, according to the Centers for Disease Control (CDC). Through these encounters, physicians administer or direct much of the care patients receive, enhancing qualify of life and, in many cases, saving the lives of their patients. There is no dollar value that can be placed on the clinical services physicians provide.
However, physicians also play a central role in healthcare economics. Our new white paper, The Cost of Physician Turnover and the Economic Impact of Physicians, provides an in-depth analysis of the financial and economic implications of physician turnover while underscoring the critical role physicians play in healthcare systems and the communities they serve.
The National Economic Impact of Physicians
In addition to impacting the revenue streams of the hospitals and medical groups with which they are employed or affiliated, physicians have a broader economic impact on the communities in which they serve. The American Medical Association periodically sponsors research that quantifies this impact.
In its most recent report conducted in 2018, the AMA estimates the total economic impact of office-based physicians in active patient care in the U.S., using as barometers physician output, jobs, wages and benefits and state and local tax revenue. Highlights of physician economic contributions include:
- Total economic output: The combined economic output of office-based physicians in
the United States is $2.3 trillion. - Per capita economic output: Each office-based physician supports a per capita
economic output of $3.1 million. - Jobs: On average, each office-based physician supports about 17 jobs.
- Wages and benefits: On average, each office-based physician pays a total of $1.4
million in wages and benefits. - Tax revenues: On average, each office-based physician supports $126,129 in local and
state tax revenues, based on 2015 data, up from $90,449 based on 2012 data.
The Hidden Costs of Physician Turnover
The revenue-generating potential of physicians is captured in AMN Healthcare’s 2023 Physician Billing Report, which tracks annual billing by physicians in 18 medical specialties to commercial payors. The annual average for all specialties tracked in the report is $3.8 million, though billing varies by specialty.
These numbers could be considerably larger if government payors such as Medicare were included in the data, and will need to be adjusted for each facility’s collection rate. However, even given a collection rate of 50%, it is clear that physicians often generate millions of dollars in net revenue annually on behalf of their practices or employers.
Perhaps the most consequential economic loss resulting from physician turnover is the cessation of potential revenues generated by the physician. This loss can be pro-rated on a monthly basis using numbers from AMN Healthcare’s Physician Billing Report.
Potential Lost Billings Per Month by Specialty
- Orthopedic Surgery: $817,459
- Urology: $490,500
- Otolaryngology: $349,000
- Cardiology: $283,333
As these number illustrate, the monthly opportunity cost of an open physician position caused by turnover or other reasons can be considerable.
Recruitment Expenses and Patient Impact
Losing a physician through turnover can have a direct effect on quality of care and access to care in the physician’s service area. In addition to reducing physician availability, physician turnover comes with an economic cost.
One aspect of this cost is related to lost finances invested to recruit the physician, which can run into the hundreds of thousands of dollars. Combined, these factors can drive the potential cost of one physician search to well over $500,000 or more.
The recruiting costs will vary by type of physician, but regardless of the physician’s specialty the cost will be considerable and will include the time and labor required to find a new physician. Added to this is the potential migration of patients to competitors that may take place as a new physician is being sought.
The Urgency of Physician Retention
However significant, physician turnover doesn’t just carry a financial impact but also affects access to care, staff morale, and community stability. Proactively addressing retention can save millions and ensure continuity of care.
AMN Healthcare: Your Workforce Partner in the Mission of Care
AMN Healthcare provides unrivalled expertise, transparency, and results in the recruitment and staffing of high-quality locum tenens, advanced practice, and permanent physicians across more than 100 specialties and settings.
We offer tailored solutions to proactively address physician staffing challenges, improve retention, and minimize turnover costs for your organization. Explore our customized physician retention strategies and physician solutions today. Don’t leave physician turnover to chance. Discover how to better manage its costs, minimize losses, and retain your organization’s most valuable assets.
Download your free copy of The Cost of Physician Turnover and the Economic Impact of Physicians, to gain valuable insights and actionable data to inform your organization’s retention strategies and planning efforts.
