Fred Walters, M.D., has seen firsthand how the financial collapse that began a year ago has affected physicians.
Walters, president of the Radiology Associates of Central Texas, Waco, says one of the group's partners was planning to retire in July, but in January, he asked to stay on for an additional year. “He is in his mid-60s and wanted to retire,” Walters says. “When ... he could see what was happening in the economy, and he could see his retirement needs, he decided to back out and postpone retirement. Fortunately, we hadn't hired someone yet.”
The retirement rate for physicians is on a five-year downward trend, and physician recruiters believe plummeting stock and house prices have played a major role in that decline. The collapse of former titans like Lehman Bros. and AIG added steam to the slide in U.S. stock markets from their high watermarks in October 2007, crunching the value of retirement accounts. The events of September 2008 have had a continuing effect on healthcare services providers.
The American Medical Group Association and Cejka Search, St. Louis, conduct a physician retention survey annually. The percentage of all physicians who have left a practice for retirement has fallen to 11% in 2008 from 15% in 2004, Cejka says, citing the annual surveys. Cejka expects to release the 2009 survey by the end of the first quarter of 2010.
In the 2008 survey, moreover, 62% of respondents said that they believe that physicians are delaying retirement because of the economy. Kurt Mosley, vice president of business development for physician recruiter Merritt Hawkins & Associates, Irving, Texas, says he is hearing plenty of anecdotal evidence that the economy is delaying retirement for many physicians. Many of these stories are related to physicians seeing the value of their retirement investments or their primary home drop so precipitously that they need to keep working, Mosley says. Others are related to the economy in different ways, he says, such as a physician who was going to retire, but his daughter's full-ride scholarship at an expensive East Coast college was cut from four years to just two years, leaving the doctor on the hook for those costs.
The economy is having other effects on recruiting, too, Mosley says. The difficulty some physicians have in selling their homes at an acceptable price is dampening movement, he says. “If you're trying to leave California, you're going to lose money dramatically,” he adds. “Sometimes people just can't pick up and move when they've lost $300,000 or $400,000 in their home.”
Another effect that relates directly to the credit crunch is that hospital systems have to choose between major building projects and physician recruiting for their scarce capital, Mosley says. Or, as Brian McCartie, Cejka's vice president of business development, puts it: Many hospitals that had long been successful lost money last year, and one reaction has been to stop recruiting physicians.
McCartie also says the economy is keeping some physicians from retiring because their partners can't afford what it takes to lure a replacement physician, especially considering the greater emphasis on work-life balance that younger physicians have. “The smaller, fragmented practices are no longer competitive within the recruitment process,” McCartie says. Younger physicians don't want the on-call responsibilities or the business risk of practice partnership, preferring a salary arrangement, he said.
McCartie predicts more consolidation of practices and more hospital employment of physicians. “It's very difficult to get a loan to start a practice right now, the access to capital is very difficult,” he adds. Hospital employment, with compensation based on work output, is much more suited to the part-time work that many female physicians seek out, McCartie says.
Walters, of the Waco radiology group, did note one advantage his practice is reaping from the weak economy: Newly trained radiologists are seeking his group out, instead of the other way around. “It seems,” he says, “like the worm is turning a little bit in the job market, with more residents seeking jobs instead of being sought by groups.”
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