Non-physician providers will pick up the slack for less-productive employed doctors

Mark Smith joined Irving, Texas-based healthcare staffing firm Merritt Hawkins in 1988 and became its president in 2008. The company conducted almost 3,100 physician searches in its last recruiting year. Since it opened in 1987, it has conducted 45,000 searches. Smith has watched the trends for many years and has a bird's-eye view of recruiting hot spots and trouble zones. He has experience persuading physicians to practice in the nation's smaller and rural communities, as well as in its inner-city clinics. Merritt Hawkins has expanded its services to include staffing for nurses, nurse practitioners and physician assistants. It also regularly conducts surveys on issues such as waiting times to see physicians in major metropolitan markets and recruiting incentives used to land top candidates. Modern Healthcare reporter Andis Robeznieks recently talked with Smith about the continuing shift of U.S. physicians into employment, which specialties are making the shift more rapidly and why that is happening.

Modern Healthcare: What is your estimate of the percentage of employed physicians in the U.S., and how has that figure changed over the past five years?

Mark Smith: The best information that we have is from the American Medical Association, which estimates that 53% of physicians are employed. But in the more common specialties, family practice is 60%, pediatrics is around 63% and internal medicine is approaching 55%. We see significant change happen-ing in those numbers. Sixty-four percent of Merritt Hawkins searches from 2013 were for hospital-employed doctors, while 16% were for medical groups. When you add in community health centers, that's another 10% and academics another 5%. You quickly get to the fact that 95% of our physicians in 2013 were employed in one form or another.

MH: What specialties are leading this trend?

Smith: Primary care is leading the charge. In 2004, we had 11% of employment opportunities for hospitals, and 15% of doctors overall were employed. For that to jump to 95% over a period of nine years is pretty incredible. Leading that charge were family practice, pediatrics and internal medicine. The big move is primary-care physicians becoming part of hospitals.

MH: There seems to be a big shift in cardiology too.

Smith: There has been. My view is that a lot of that is driven financially. Even before the impact of the Medicare sustainable growth-rate formula hanging over physicians' heads, cardiologists took a significant reimbursement cut. So you saw them run-ning for cover a bit, and employment became much more attractive.

MH: Two years ago, you testified before a congressional committee on this subject.

Smith: They wanted to know what can be done to get physicians back to being small businesspeople, but that ship had left the port. There really wasn't anything that they could do at that time to change that trend, especially if you look at why it's happening. In the 1990s, it was driven by HillaryCare. The country was moving to adopt a gatekeeper model. Hospitals bought up private practices at high premiums. They competed with other entities such as physician practice management groups. Then, as you got toward the later '90s, that trend fell apart. It was just not a successful experience for many reasons. This time it's very different. We're seeing moves occur in the market because you have a generational issue with millennials who are looking for an employed situation, high quality of life, etc. And then, of course, the Affordable Care Act has been a big driver as well.

MH: How is healthcare reform affecting physician employment?

Smith: If you look at the impact of ACA, it's as much about perception as reality. Fear of the unknown has driven physicians to move for cover. There are 1,500 new Medicare auditors in the field who can disburse some very punitive fines against physicians even if something is done by accident. The Physician Quality Reporting System that kicks in next year will have a negative impact on reimbursement. Electronic medical records, meaningful use, all those factors have significantly pushed physicians in droves toward hospital employment. This time it's happening without that very heavy price tag that hospitals had to pay last time, and so it's moved much quicker.

MH: Are there any lessons to be learned about physician supply from Massachusetts, which expanded insurance coverage years before the ACA came long?

Smith: We just completed our most recent physician waiting-time survey. Boston, which has the most physicians per capita and has had the opportunity to settle in with universal healthcare, continues to have the longest wait times to see a physician across the major markets we've looked at nationwide.

MH: What can you tell us about employment trends for physician assistants and nurse practitioners?

Smith: That is something that we see picking up pace in general. That trend should follow the physician side since they're associated in most cases with a physician and they would become part of that same practice. My best guess would be that the numbers would be very similar in terms of the change. But from the start, most NPs and PAs are employed by another party.

MH: Any predictions about these advanced practitioners?

Smith: At Staff Care, our locum tenens company, advanced practitioners are the No. 1 growing piece of the business. Statistics alone show you that growth has to occur for many reasons, including the graying of America.

Also, as you look at hospital-employed physicians, a hospital-employed family practitioner in an outpatient setting sees 25% fewer patients than the same physician who owns his or her practice. In internal medicine, it's the same situation: The physician-owned practice sees 36% more patients than the hospital-employed internal medicine physician. With the national physician shortage we have, you compound that with physicians moving to hospital employment. We can't train doctors fast enough. The only relief valve is going to be those advanced practitioners.

MH: What would you say are your most difficult physician-recruiting assignments?

Smith: Primary care remains very challenging. You have so many of those searches, and if the positions are not in the most attractive geography or are not competitive financially, those can be very challenging. The top of the list are some of those subspecialties such as urology, with very few candidates and very high demand. Dermatology remains in very high demand. Demand for orthopedics and otolaryn-gology is still fairly strong. But they can remain independent because they are higher-income specialties, not because of reimbursement, but because they can benefit from the revenue from ancillaries and ambulatory surgery centers.

Follow Andis Robeznieks on Twitter: @MHARobeznieks