Contributors: Wren Keber and Lisa Soroka
To learn more about Wren and Lisa, click here.
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As we end our series on Recovering and Thriving Post-Pandemic, we are focusing this article on physician contracting and compensation. The pandemic influenced how both employers and physicians interact with each other, since their respective priorities may have significantly changed. We believe some specific factors associated with the pandemic explain this influence, including:
- Health systems reacting to COVD-related financial pressures are looking to strengthen alignment with independent physicians, most commonly though acquisition. This is a service line strengthening tactic, which we will cover in the tactics section. Health system and/or hospital-led consolidation movement obviously predates the pandemic, but our experience in the post-COVID environment we are now entering requires renewed focus on physician contracting and compensation, particularly with a sense of urgency placed on physicians practicing within high-margin service lines.
- Changing physician workforce dynamics, with more attractive opportunities to exit clinical practice (e.g., administrative roles, or simply moving on earlier to retirement than originally planned) greatly impact physician contracting and compensation. Organizations that employ physicians solely to practice medicine are also often dealing with new entrants, creating unanticipated disruptions and increasing scarcity of physicians. For example, there are an increasing number of diverse administrative roles specifically designed solely for physicians, as well as physicians who are increasingly seeking out purely administrative roles in addition to employers putting physicians into administrative roles (e.g., physician CEOs)
- There has been a post-COVID acceleration in consolidation via acquisition of private medical groups or individual practices by private equity and other buyers. These transactions have changed how physicians look at their compensation, specifically when they move toward employment arrangements, while still considering how their practice patterns influence the long-term value of their group.
Trends and Tactics
In response to the influences described above, several significant physician contracting and compensation trends have emerged. These represent many of the challenges employers and organizations face as it increasingly appears more physicians desire an employment arrangement and have changed expectations of their future employers.
As we have noted in earlier articles, the post-pandemic physician workforce is evolving rapidly, and these trends are representative of a very fluid physician compensation environment. We have included several tactics for healthcare organization leaders to consider when designing updated and more modern compensation models for their physician workforce.
Conclusion
These trends and tactics are the beginning of important and difficult conversations healthcare employers and organizations must have with physicians to preserve and strengthen the physician workforce across the healthcare continuum. In a post-pandemic world, abrupt changes to physicians’ day-to-day job/existence must also be addressed within compensation arrangements. The tactics we have offered are only a part of the solution to address issues and complexities within the complicated physician compensation landscape today.
Contact Wren at: [email protected]
Contact Lisa at: [email protected]