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American Association for Physician Leadership
American Association for Physician Leadership

Understanding Recruitment and Retention

by Dale J. Block, MD, CPE, FABM

July 1, 2016

Understanding Recruitment and Retention - Banner Image


Learn ways to improve recruitment and retention as health care moves from volume to value in order to reduce costly turnover and hiring.

Learn ways to improve recruitment and retention as health care moves from volume to value in order to reduce costly turnover and hiring.

Health systems around the United States have been diligently and methodically working on increasing their employed physician workforce. This accelerated move to employ physicians is directly related to regulatory changes occurring at the national level related to shifting risk and responsibility to the providers of health care goods and services.

Clinical transformation, accountable care organization development, meaningful use, patient-centric care and population health management have become the focus guiding the transition from a volume-based health care delivery system to one that is value-based. The need to have a comprehensive physician recruitment and retention program is a critical success factor for hospitals and health systems making this transformation.

Economics of Employing Physicians

Understanding the magnitude of physician recruitment and retention is key to making the business case to senior leadership on the importance of having an effective program in place. According to an article in the 2011 New England Journal of Medicine, hospitals lose $150,000 to $250,000 per year over the first three years of employing a physician due to a slow ramp-up period as physicians establish themselves or transition their practices and adapt to management changes.

The losses decrease by approximately 50 percent after three years, but most employed physician practices remain unprofitable. New primary care physicians (PCPs) contribute nearly $150,000 less to hospitals than their more-established counterparts; among specialists, the difference is $200,000. The article noted that for hospitals to break even, newly hired PCPs must generate at least 30 percent more visits, and new specialists 25 percent more referrals, than they do at the outset.1

Unfortunately, not all employed physicians stay long enough for the hospital or health system to recoup their initial investment. A multitude of surveys have been done by physician recruitment companies to identify the main issues creating an unhappy employed physician. Here’s a summary of reasons why this initial employment arrangement does not work out:

  • The physician does not engage well with others in the practice, emotionally, philosophically or clinically.

  • The physician’s expectations regarding practice parameters and compensation do not match with actual conditions in the practice.

  • Poor lines of communication exist between the physician and the employer’s leadership/management team.

  • The physician has limited input into decision-making about his or her own practice development and direction.

  • There is a general lack of appreciation or recognition for contributions made by the physician to the practice, the hospital and/or health system.

Focus on Physician Recruitment Strategies

Many large hospitals and health systems today manage the recruitment process internally with outside help from search firms specializing in physician recruitment. Identifying physician candidates to recruit requires a strategic plan that often overlooks some critical areas of focus.

Using a professional sports analogy to illustrate this, many health systems have “minor league” teams of physicians in post-graduate training, primary care and specialty, who are sponsored and subsidized by the health system. Failing to recognize that this is a very logical place to begin the recruitment process, many health systems have not placed enough emphasis on gaining the trust and accountability needed to capture many of the residents and fellows as employed physicians after their training has completed.

Personal, interpersonal and professional skill building, all significant components in the ongoing transformation of young physicians, lays the foundation for establishing the importance of continuous learning and skill development throughout the physician lifecycle. Investing time and re-sources by sponsoring health systems to this endeavor early in the lifecycle of the physician-in-training is key to developing a long-lasting relationship that hopefully will include long-term future employment.

Hospitals and health systems need to make a special effort to increase the involvement of their sponsored training programs’ residency and fellowship directors and faculty. Establishing regular meetings to identify and discuss potential candidates at the beginning of each training year, not at the end, increases the likelihood of landing a successful recruitment class of graduating residents and fellows.

Having residents and fellows actively engaged in prospective practices to develop relationships with possible future colleagues also should be facilitated. Engaging employed physicians to serve as preceptors for the residents and fellows in addition to the regular faculty is often overlooked.

For example, providing value-added interactions such as hands-on procedural skill training for the residents in their own continuity clinic helps to ease the educational load from an already busy team of faculty members. It provides valuable one-on-one time and develops ongoing mentor-mentee relationships that can last a professional lifetime.

It is important to consider that when employed physicians give up their clinical time and have a loss in their own productivity (i.e., revenue), consider providing a teaching stipend to encourage participation. Finally, regular interactions between residents and fellows and the hospital and health system senior leadership develops trust, transparency and bidirectional lines of communication.

The traditional dyad relationship of recruiter to prospective candidate is obsolete today. It is necessary to expand and establish additional members of the in-house recruitment team to be successful in a competitive marketplace. Key leaders within the employed physician group should be identified, incentivized, engaged and actively involved during the entire recruitment process, including candidate screening and candidate engagement on site.

Travel to recruitment events with in-house recruiters also is a key activity and should be encouraged. Other members of the recruitment team may include a current employed physician’s spouse to engage with a prospective candidate’s spouse, community leaders, local educators, board members and human resources staff. It is the personal touch specifically focused on the needs of the individual physician candidate and his or her family that will result in a successful recruitment.

Focus on Physician Retention Strategies

Retention of employed physicians ultimately should begin during the recruitment phase. Setting the stage for an ongoing and mutually beneficial relationship is critical to successful long-term employment.

Immediately after the letter of agreement has been executed, implementation of a well-developed and designed retention program should begin. A mentor should be identified for the newly hired physician and contact should be made by telephone to congratulate the new colleague on joining the group, hospital or health system.

Most would agree that a handwritten note by a member of senior leadership should follow. Assistance with relocation and other important human resource activities should be occurring simultaneously. This ongoing communication is crucial in making sure that a contract is fully executed, the process is transparent and that the new hire remains excited with anticipation for his or her new position.

A few days before or after the start date, the new physician should begin a more formal orientation and mentoring program. Again, the importance of engaging seasoned and well-respected employed physicians in this process cannot be overstated. Orientation may be done over several days and may include:

  • Introduction to the hospital and health system’s history, culture, current leaders and administrative support.

  • Physician leadership development and professionalism training.

  • Business of medicine topics including human resource management, practice finance, operations, marketing, key performance indicators.

  • Risk management including patient safety and malpractice mitigation.

  • Principles of population health management, team-based care and advanced practice models.

  • Improvement science, including quality and outcomes management.

  • Enhancing the patient experience, including patient satisfaction.

We recently established a bimonthly meeting with a small group of employed ambulatory physicians geographically linked to each other and the CEO of our sponsoring hospital within our health system. Because of changes in health care delivery shifting to hospitalists for inpatient care, ambulatory-focused physicians rarely interact with the hospitals where they may be on active or affiliate status and for that matter, each other.

This meeting has become important for providing information that is pertinent to the hospital and health system such as strategic planning and hospital and health system issues. It also allows for socialization among colleagues that had fragmented over time through isolation in their respective ambulatory practices.

The feedback from the participating employed physicians has been overwhelmingly positive and other CEOs of hospitals in our health system are considering implementing their own meetings with the employed physicians on their medical staffs.

Future Considerations

There are several areas of focus moving forward that many hospitals and health systems need to address with respect to physician recruitment and retention including compensation mechanisms, physician evaluation and physician wellness.

With the transition to value-based care and the transfer of risk related to the cost of health care back to providers, creative compensation mechanisms are being introduced and implemented around the country in response to this shift. Great care and study is required to establish starting salaries and guarantees for newly hired physicians that are competitive in their respective marketplace.

Even with a shift to quality- and outcomes-based performance indicators introduced into compensation formulas, the traditional productivity-based compensation remains the predominate revenue stream for physicians across the country. Newly hired physicians need to have access to productivity, quality and outcomes-based data regularly so they will be prepared to move off their guarantees and into full compensation status within the group.

The physician evaluation process is an important mechanism that engages employed physicians and encourages them to take ownership for personal and clinical activities. The experience of this author having been employed in several health systems around the country is that this process is often given cursory importance as strictly a human resources exercise to be conducted annually and placed in the file of each employed physician.

Physician evaluation needs to be a dynamic and sustainable process. Physicians, especially recent graduates from residency and fellowship training, need to have constant feedback for ongoing correction and improvement in their delivery of clinical services to patients.

The use of 360-degree assessments based on a well-defined and developed physician compact enables physician leaders to guide and mentor their young colleagues in a positive and healthy direction for the individual physician and the health system or hospital for which they are employed. This process is important for identifying disruptive personal and clinical behaviors early on that require immediate intervention and correction. It also can be used positively to identify future leaders of the organization.

Finally, physician wellness has moved to the forefront in response to the recent shifting and stressful transformation physicians are making to patient-centric care. Again, identifying and correcting disruptive behaviors early to mitigate poor performance, potential litigation and termination of employment can be viewed from a personal and financial perspective for employer and employee. Specialized continuing medical education, individualized counseling and wellness activities for physicians can be formalized in an office of physician support services.

The Mayo Clinic and Vanderbilt University School of Medicine are two organizations with these formalized programs. In 2008, The Joint Commission on Accreditation of Healthcare Organizations became so concerned about “behaviors that undermine a culture of safety” that it issued a Sentinel Event Alert on the topic and developed a leadership standard requiring all hospitals to have a code of conduct as well as a process for managing disruptive and inappropriate physician behaviors that continues today.


Developing a strategic plan that includes all stakeholders within the organization ensures that the recruitment and retention processes move together seamlessly with transparency and accountability between employer and employee. Creative programming to engage mentors with newly hired physicians early on is a success factor for ensuring long-term employment. Compensation, evaluation and well-ness are three future areas of concern for physician recruitment and retention.

Dale J. Block, MD, CPE, FABM, is a full-time practicing family physician with Premier Family Care of Mason in Mason, Ohio.


Kocher R and Sahni N. Hospitals’ race to employ physicians—the logic behind a money-losing proposition. NEJM 364(19):1790-3, May 12, 2011.

Dale J. Block, MD, CPE, FABM

Dale J. Block, MD, CPE, FABM, is a full-time practicing family physician with Premier Family Care of Mason in Mason, Ohio.

For over 45 years.

The American Association for Physician Leadership has helped physicians develop their leadership skills through education, career development, thought leadership and community building.

The American Association for Physician Leadership (AAPL) changed its name from the American College of Physician Executives (ACPE) in 2014. We may have changed our name, but we are the same organization that has been serving physician leaders since 1975.


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