Return to Virginia Business - January 2004

Physician, name thy price
A doctor shortage is forcing hospitals and practice groups to offer better pay and perks

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- Health Care Reporting

by Marjolijn Bijlefeld
Virginia Business
January 2004

Dr. Joseph Downing knows what it’s like to be a wanted man. Even before the vascular surgeon finished his medical fellowship at the University of Michigan, he was being courted by hospitals and universities in Ann Arbor, Chicago, Los Angeles, his home state of New Jersey and Christiansburg, Va. Downing had never heard of Christiansburg or the Carilion Medical Group, but administrators there patiently wooed him over the course of a year.

It worked. Downing, now 40, arrived two years ago as the area’s only vascular surgeon, a fact that helped lure him. On his second of three visits, Carilion administrators laid out a marketing plan that showed how he could curtail the referrals going to surgeons in Roanoke. “When you go through 13 years of training, to put your skills to use in a place that’s relatively underserved offered a tremendous opportunity,” he says. There were other factors, too: private practice offered a more predictable schedule than a hectic academic position, Virginia has an active medical society, a physician-friendly bent with its cap on malpractice payments; and, oh yeah, the money. Vascular surgeons in the eastern U.S. average about $300,000 a year. “You come out of training with a lot of debt,” he says. “Carilion was able to offer me about twice what Michigan was able to offer.”

This well-orchestrated seduction of doctors goes on constantly in hospitals, universities and private practices. There simply aren’t enough doctors to go around, for a couple of reasons: The percentage of elderly in the population is raising demand for health care — it more than doubles after age 65 — and more doctors are retiring early, frustrated with the increasing administrative hassles of medicine. Consequently, hospitals are offering everything from flexible schedules to relocation reimbursement and even loan relief for medical school debt to entice doctors.

Today, 40 of Virginia’s 134 localities are designated as health professional shortage areas (HPSAs), meaning there aren’t enough primary care providers to serve the population. Another 22 localities have pockets of underserved areas. The physician shortages, combined with the escalating need in some specialties, puts doctors in the driver’s seat in negotiations. Specialists in fields such as radiology or orthopedic surgery have lately been getting salary offers as high as $500,000, according to a nationwide survey. Virginia’s hospitals, medical schools and practices have to be able to compete on money and showcase their intangible benefits.

Today, radiologists are in demand because advances in technology put their skills to use more frequently. In the past year job offers in that specialty averaged annual salaries of $317,000, a 13 percent increase over the previous year, according to Texas-based Merritt, Hawkins & Associates, a nationwide physician-recruiting firm. Orthopedic surgeons, gastroenterologists and urologists also saw large increases. But primary care physicians saw low salary offer increases — typically only about 1 percent, mostly because there’s a healthy supply of them. A family physician’s average salary offer in 2003 was $146,000, up from $144,000 the year before, according to Merritt, Hawkins.

One recruiter at a Virginia hospital overcame the tough recruiting market for radiologists. Dr. Ann S. Fulcher became chair of the radiology department at VCU Medical Center in February, and since then she’s hired eight radiologists. Three had worked there before; a radiologist who had joined the department six months earlier recruited another. Medical schools don’t pay as much as the private sector, but Fulcher offered flexibility — “an environment that’s sensitive to each person’s lifestyle,” she says. One example: two radiologists needed to work from home, and the hospital agreed. “We have the capability to do that so we could allow them to take care of their children and yet be a part of the department,” Fulcher says.

Good schools, options for a professional spouse and scheduling flexibility can make the difference. Those draws helped Sentara Medical Group bring 21 doctors to Hampton Roads last year, “an unusually active” hiring year, says David R. Maizel, vice president and executive director of the 220-physician group. Other potential benefits include relocation expenses of $5,000 to $15,000, signing bonuses and help with the tremendous debt load after years of medical training. “We’ve included loan relief, where we’ll pay a certain amount of their debt obligation in return for a commitment of a set number of years,” says Maizel.

Sentara Medical Group also loosens the rules of noncompete clauses. The contract includes a noncompete, but after five years that covenant is significantly weakened. Sentara would rather that those doctors who want to leave the group continue to support the health system’s six hospitals. Enforcing noncompetes and potentially forcing those physicians out of town could draw away the hospital patients.

In contrast to more urban areas such as Hampton Roads or Northern Virginia, rural areas often struggle for almost any kind of doctor, but there are other financial incentives besides high salaries. For Dr. Michael J. Sampson of Floyd County, loan repayment was a big draw. He moved from an Atlanta suburb to practice in Floyd, a designated HPSA. In exchange for two years of seeing patients at least 32 hours a week, the state will repay $50,000 of his medical school loans. If he extends it another two years beyond that, he’s eligible for a total of $125,000 in loan repayments.

Sampson, 39, a family practice and sports medicine osteopathic doctor, has cobbled together a hectic schedule — he’s employed by and teaches at the new Virginia College of Osteopathic Medicine in Blacksburg, serves as one of the team physicians for Virginia Tech and spends three long days a week working in a Floyd County family practice, where he’s paid a percentage of his gross earnings. He expects his annual income here to be higher than it was in the busy family practice he left.

While money speaks loudly in any negotiation, most physicians know coming in what the ballpark offer will be. Says Dr. Edward G. Murphy, president/CEO of Carilion Health System: “There’s an acknowledgement that we’re going to be market-competitive. Very quickly thereafter it boils down to things more important to doctors, such as the quality of professional life, the technical support within the medical center, the quality of colleagues with whom they’ll be practicing and the hospital support role. The more it’s about money, the more you have to be concerned about whether you’re barking up the wrong tree.” After all, a doctor who joins a practice or hospital based on the money is the one who is most likely to jump ship to the next highest bidder. In many cases, that could be as simple as a move to another region. According to the Medical Group Management Association, physician compensation in eastern states is typically lower than in the Midwest, southern or western regions.

If money was the only factor there’d be no one left in academic medicine, which can’t compete with private-sector salaries. “Financial packages are getting closer, but we’ll never be the same,” says Dr. Arthur Garson, dean of the School of Medicine at the University of Virginia. Even dangling very highly specialized procedures that used to be done only in academic hospitals doesn’t work as well. Today, well-financed hospitals or practitioners offer some of those too. Still, premiere academic institutions remain alluring for researchers and those intrigued by the energy of researchers willing and able to collaborate across departments. It can also be a rewarding second career for a doctor who has been practicing a while, Garson and other academics say.

Retention is another challenge, says MCV’s Fulcher. “Headhunters have direct (dial) numbers for our reading room. They’re not calling for the residents; they’re looking for faculty,” she says. For credentialed specialists to find a new job is quite easy, she says, noting she gets solicitations nearly every day. “It used to be that you could pick the perfect job or the perfect location. Now you can do both, and with the Internet, you can do it in about four hours.”

That’s how Carilion’s Murphy sees it, too. “We understand that physicians wake up every day knowing they’ve got options. Each day, they make a decision whether to quit today or stay today and we need to create an environment so they’ll stay.”

For now, that’s Downing’s choice. His practice is flourishing, Carilion has lived up to its promises of marketing and support and, despite the long hours, he still sees more of his wife and sons than he might in an academic setting. Still, he knows he has options. With two years of experience behind him, Downing remains a wanted man.

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