Many hospitals are throwing out cash-laden recruitment methods in favor of more lofty and long-term strategies to attract physicians. But taking the high road doesn't seem to be as effective as the almighty dollar.
That's one of the key findings of the third annual hospital physician recruitment survey conducted for MODERN HEALTHCARE by Cejka & Co., a St. Louis-based physician recruitment firm.
The survey found that many hospitals are scrapping recruitment tactics such as low- or no-interest loans because of legal fears. Instead, they're putting together integrated delivery systems with physicians as key partners. However, most hospitals have found that the development of an integrated system hasn't helped them to attract physicians.
Some 444 hospitals responded to this year's survey, which was conducted in March. That's up from 392 and 325 respondents in 1993 and 1992, respectively.
Like the previous two surveys, most of the hospital respondents to this year's were mid-sized, not-for-profit hospitals in urban areas (See chart, p. 50).
More recruiting.Of the hospitals that responded to the survey, 91% said they were actively recruiting physicians this year. That's up slightly from last year's total of 90.3% of respondents trying to add physicians to their staffs.
Not unexpectedly, the survey found that the physicians most frequently sought by hospitals fell into several primary-care categories. For example, 78.4% of the hospitals were looking for family practitioners, compared with 72.4% last year. Another 63.5% wanted internists. That's up from 61.5% last year. And 45% sought obstetricians/gynecologists, compared with 48.2% in 1993.
In least demand were radiologists, oncologists and neurosurgeons. They were being recruited by 10.8%, 11.3% and 11.7% of the hospitals, respectively.
Like last year's survey, this year's Cejka/MODERN HEALTHCARE poll found that a number of hospitals were discontinuing the use of certain controversial physician recruitment techniques because of legal fears. Last year's survey was the first healthcare industry research to document a change in hospitals' habits because of potential legal pitfalls (July 26, 1993, p. 22).
Aggressive physician recruitment tactics can land a hospital afoul of federal fraud and tax laws.
Under the anti-kickback provisions of the Medicare and Medicaid fraud and abuse laws, it's illegal to pay or receive any form of remuneration to induce patient referrals for any Medicare- or Medicaid-reimbursed service. Violations of the provisions can draw civil penalties, such as expulsion or suspension from Medicare and Medicaid, as well as criminal penalties, such as fines and imprisonment.
The federal tax code, meanwhile, prohibits the earnings of a tax-exempt organization, such as a not-for-profit hospital, to "inure" to the benefit of individuals, such as physicians. Private inurement violations can result in the revocation of an organization's tax exemption.
Over the past several years, HHS' inspector general's office, which enforces the fraud laws, and the Internal Revenue Service, which enforces the tax codes, have issued a number of "fraud alerts," legal opinions and public statements indicating their increased scrutiny of hospitals and other providers regarding the two sets of laws.
And the two agencies have reinforced their talk with action. For example, an ongoing kickback investigation of Caremark International recently led to an indictment against the Northbrook, Ill.-based company regarding a business arrangement with a Minneapolis physician (Aug. 8, p. 4).
Changing their ways. Many hospitals have gotten the message, the survey found, and have discontinued using certain tactics that involved spending money directly or indirectly on physicians.
For example, 54 hospitals, or 12.2% of the respondents, stopped giving loan guarantees to newly recruited physicians. In such a deal, a hospital typically would loan money to or arrange a loan for a newly recruited physician to start his or her practice. The arrangement usually involves a promise by the hospital to make good on the loan if the physician defaulted. And, just 33.8% of the respondents said they planned to offer loan guarantees to physicians this year as a recruitment device.
Some 52 hospitals, or 11.7% of the respondents, stopped loaning newly recruited physicians money to start their practices and then forgiving the loan over a certain period of service to the hospital. Another 46 hospitals, or 10.4% of the respondents, stopped giving physicians free office space.
Some 47.7% of the hospital respondents said they intend to forgive loans to physicians, and 44.1% said they will offer free office space this year to win physicians' loyalty.
However, not all hospitals have been scared off by fraud or tax concerns. For example, more than two-thirds of the hospitals still promise income guarantees to attract physicians. In such arrangements, hospitals make up any shortfall in a physician's projected annual earnings.
Raiding the physician ranks. The survey also detected an uptick in physician-stealing by hospitals from other hospitals.
Of the 3,772 physicians recruited by the hospital respondents, some 49.5% were practicing physicians, and 30.3% were medical residents from residency programs other than the respondent's. In comparison, last year only 39.6% of the 2,976 recruited physicians were practicing in other settings, and just 28.4% were from other medical residency programs.
Meanwhile, the survey found that nearly three out of four hospitals have turned to the development of integrated delivery systems to solidify their places in their markets. Some 320 hospitals, or 72.1% of the respondents, said they've formed, have joined or are putting together an integrated system.
But, the survey found, pursuing a strategy of integration hasn't necessarily panned out in physician recruitment. In fact, more hospitals said integrated system development had no impact on recruiting than those that said system development had made it easier to attract physicians. The findings, though, varied by the type of physicians hospitals were trying to find.
For example, some 58.1% of the hospitals with integrated delivery systems said the creation of a system had no impact on recruiting specialists, while 18.8% said a system made it easier.
In comparison, some 44.4% of the hospitals with integrated systems said the formation of a system had no effect on recruiting primary-care physicians, while 40% said it made it easier.
Perhaps a reason that development of integrated systems hasn't been a boom for physician recruitment is the types of partners hospitals have been pursuing. All the hospitals involved in system development said other hospitals were their primary targets.
Some 100% of the 320 hospitals with integrated systems either merged with, affiliated with, bought or built another hospital (See chart, p. 49).
This finding reflects the dramatic pace of hospital-to-hospital deals over the past two years, as acute-care providers attempt to secure or beef up their market shares in anticipation of national healthcare reform and related marketplace changes.
Physician group practices or clinics were second as building blocks for integrated systems. Some 77.5% of the hospitals that were part of an integrated system either merged with, aligned with, affiliated with, bought or built a group practice or clinic.
Farther down the list were primary-care centers (73.8%), managed-care plans (40.6%) and home-care programs (50%), the survey found.
When hospitals did hook up with physicians, by far the most prevalent model was the physician-hospital organization. PHOs are newly formed entities designed to market the hospital and a roster of physicians as a unit to managed-care plans, other insurers and employers.
Some 36.9% of the hospitals with integrated systems said the PHO model best described the type of system they have or are developing. Other models included medical service organizations and foundations at 26.3% and 10.6%, respectively.