U.S. Physician Demand Escalates

With increases in longevity, population, and health insurance coverage, comes an ever-increasing physician shortage in the United States.  While there is a movement to allow nurse practitioners and physician assistants to be able to do more, as well as a growing crusade to advance telemedicine initiatives, progress is currently painfully slow.  The Association of American Medical Colleges represents all 141 U.S. medical schools and 17 in Canada, as well as 400 major teaching hospitals and health systems, including 51 Department of Veterans Affairs medical centers.  The AAMC projects a shortage of 90,000 physicians by 2025; that’s less than a decade out.  Of the 90,000 shortage, one-third are primary care physicians and two-thirds are specialists.

So, what’s happening in the near term?  Physician salaries are skyrocketing as the competition heats up for the physicians that are in the current workforce.  Merritt Hawkins reviewed data on its recent 3,342 physician placements and published the findings in the company’s 2016 Review of Physician and Advanced Practitioner Recruiting Incentives report.  In the 20 specialties reviewed, salaries increased in 19 of those.

Regarding mental health, the federal government has designated nearly 4,000 counties as Health Professional Shortages Areas.  The Merritt Hawkins report notes that nearly half of U.S. counties lack mental health providers.

The Merritt Hawkins data also shows that the 5 specialties in highest demand across the United States are family medicine, psychiatry, internal medicine, hospitalist and obstetrics-gynecology.  Here is a snapshot of other salary data (and year-over-year increases) from the report:

Non-invasive cardiology – $403,000 – up 21%

Obstetrics-gynecology – $321,000 – up 16%

Otolaryngology – $380,000 – up 15%

Urology – $471,000 – up 14%

Dermatology – $444,000 – up 13%

Family medicine – $225,000 – up 13%

General surgery – $378,000 – up 12%

Psychiatry – $250,000 – up 11%

Merritt Hawkins disclosed that over the past year, 32% of their clients offered physicians a production bonus that was in some way tied to value-based metrics (e.g. patient satisfaction).  This is up 23% from last year’s report.  The company also noted that only 6 percent of total physician compensation is tied to quality or value-based metrics.

As an aside, if you are interested in looking at the physician shortage by state, check out the Workforce Data and Reports published by the Association of American Medical Colleges.


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Six Key Areas for Successful Physician Partnerships

Physician partnerships require much pre-planning, careful structuring, and a whole lot of continued communication in order for them to be successful. I am often asked to help a practice facilitate the undertaking of physician partnerships. It is certainly not a process that should be rushed through nor taken lightly and my recommendation is to be both thorough and methodical throughout the process — from due diligence to drafting documents to communications during future partner meetings.

Here are the six areas I recommend examining in great detail when undertaking the process of beginning and nurturing physician partnerships.

1.  Consider structure. One of the first areas to consider is the practice structure; both how it is currently configured as well as potential future arrangements. How many locations are involved? What types of treatment services are offered at each location? Is the equipment leased, owned outright, or being paid for? Are the buildings owned or rented? Who are the current owners? Is this a family-owned practice (any nepotism)? Are there any joint ventures with hospitals? Are there any medical directorships with other facilities?

2.  Current owner(s). The current physician owner (or owners) needs an internal perspective to see what impact adding a physician partner would make. Similar to deciding to get married, the end result (albeit good) will certainly not be the same as the current situation. What does the current owner want in a partner (financially, operationally, and strategically)? Is there an exit strategy for the current owner? Have there been any discussions with the potential partner about partnership?

3.  Potential partner. The physician being considered for partnership needs to have a stake in this interest as well. Oftentimes I see a practice that greatly values what a physician brings but fails to consider what this same physician may want out of a partnership. What does he want out of the partnership arrangement (financially, operationally, and strategically)? Keep in mind also that it is perfectly reasonable for a physician to ask how much he will be paid in the first year and in subsequent years.

4.  Creating the partnership. After the first three areas have been fully vetted and accomplished, it is time to consider how the partnership should be structured. Is there to be a buy-in? Is the real estate included? Are all assets part of the partnership? Is a formal valuation necessary? What is the voting structure? What are the governance documents to look like? Is there a buy-out?

5.  Delivering the partnership offering. If careful consideration has been given to the first four areas, then there should not be much material disagreement with the offering. It should be more of a matter of understanding the terms and if necessary, some tweaks of the legal language in the documents. This period, however, is the heightened point of sensitivity for all parties, so patience, calm, and understanding are characteristics that would serve well for those involved. This is not the time for any appearance of an “us versus them” atmosphere.

6.  Ongoing communications. Perhaps the most important item is what transpires after executing the physician partnership agreement. Now that a new partner is on board, she has a say in how the practice operates, what marketing messages look like, who is and isn’t hired, etc. This means treating the new physician on equal ground with the senior partners in many situations, including new patient referrals. A new partner will also need to be brought up to speed with financial and operational metrics, as well as any business ventures. Consequently, meetings should harbor a considerate tone as the new partner is trying to learn. Furthermore, a junior partner should not bear the brunt of the work and receive low compensation from the practice. My recommendation is to stick to regularly scheduled meetings (quarterly or monthly) where business is discussed and all partners have the opportunity to have their voice heard.


Contact ABISA for healthcare consultancy support or speaking engagements.

Women’s Battle with Heart Disease

Coronary heart disease (CHD) is a narrowing of the small blood vessels that supply blood and oxygen to the heart.  The World Health Organization’s summary tables show that over 17.3 million people die each year due to cardiovascular disease.  The highest numbers of deaths occur in the Western Pacific and Europe, while the lowest numbers of deaths are in Africa.  CHD is the leading cause of death in the United States for men and women.  A recent study by the American Heart Association noted some interesting statistics regarding women with CHD and drew some comparisons to men as well.  Here are some key takeaways from this 2016 study:

6.6 million women are afflicted by heart disease annually.

2.7 million women have suffered a heart attack.

262,000 women are hospitalized for an acute coronary syndrome each year.

53,000 women die from heart attack each year.

50% of women have 3 or more metabolic risk factors for ischemic heart disease.

Compared to men, women are more likely to die within the first year after a heart attack and within the first 5 years after a heart attack.  Women are also more likely to have depression, diabetes mellitus, heart failure, hypertension or renal dysfunction.  They are more likely than men to suffer bleeding complications after PCI, to be readmitted to a hospital within 30 days of an index event, and to die in a hospital.

Interestingly, the study also shows that women are less likely than men to be treated with guidelines-directed medical therapies, to undergo cardiac catheterization, and to receive timely reperfusion.    Women are also less likely to participate in cardiac rehabilitation or to be enrolled in a clinical trial.


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Why Strategic Planning is a Must

Strategic planning is not the same as operational planning.  The former is focused on broad and long lasting issues that ensure the medical practice’s long-term effectiveness and survival.  The latter focuses on achieving objectives and carrying out short-term activities.  Strategic plans and not rigid as they meet detours and obstacles that call for adapting and adjusting as the plan is implemented.  The strategic plan, to be of long-term value, must be treated as an ongoing business process.  It must evolve and change to reflect changing market and industry conditions.

Strategic planning is a process that brings to life the mission and vision of the medical practice.  As the practice grows and the healthcare environment becomes more complex, the need for strategic planning becomes greater.  A strategic plan, well crafted and of value, considers the internal and external environment around the business and is ultimately communicated to all staff members.  Everyone in the practice should understand the direction and mission of the organization.

Medical practices which consistently apply a disciplined approach to strategic planning are better prepared to evolve as the local market changes and as the healthcare industry undergoes reform.  The benefit of the discipline that develops from the process of strategic planning, leads to improved communication.  It facilitates effective decision-making, better selection of tactical options, and leads to a higher probability of achieving the physician owners’ goals and objectives.  An important distinction in the process is to recognize the difference between strategic planning (the work being done) and strategic thinking (the creative, intuitive input).

Although there is no one formula for strategic planning, there are required steps that optimize the value.  The strategic planning process must mirror the cultural values and goals of the medical practice; the process is very different for solo and small group practices than it is for large medical groups or hospitals.

Strategic planning can be a challenging process, particularly the first time it is undertaken in a medical practice.  With patience and perseverance, as well as a strong team effort, the strategic plan can be the beginning of improved and predictable results for the business.  At times when the practice gets off track, a strategic plan can help direct the recovery process.  When strategic planning is treated as an ongoing process, it becomes a competitive advantage and an offensive assurance of improved day to day execution of the business practices.

Use of a consultant can help in the process and in the development of a strategic plan.  As an outsider, the consultant can provide objectivity and serve as the “devil’s advocate,” as well as a sounding board.  In the end, however, the plan must have the authorship and ownership of the physicians and managers who must execute and follow the strategic plan.  It must be their plan.

Strategic planning, when treated as a work in progress, rather than as a binder on a shelf, or a file in a computer, provides a medical practice with a real and lasting competitive advantage.  A living strategic planning process will help direct the business to where you desire it to be.  Strategic planning is your medical practice’s road map to your vision.


Contact ABISA for healthcare consultancy support or speaking engagements.