The Biggest Hospital Physician Recruiting Myth: “All we need are candidates.”

The Biggest Hospital Physician Recruiting Myth: “All we need are candidates.” – How the lack of a competitive selling orientation in hospital recruiting costs the industry billions, a case study of a typical physician search, and a proven solution to improvement and savings.  [2,549 words. Approx reading time: 45 min.]

Not having a “competitive sales approach” to recruiting costs the hospital industry billions every year. And I mean “Billions.”

I have a background in major stockbrokers and commercial real estate firms – two industries where the sales representatives deal with high-earning clients (like hospital recruiters deal with physicians), they view their work as the extreme of competitiveness and their organizations pay and incentivize them to improve their numbers. Sales training and account management, along with state-of-the-art selling tools are a must in these businesses, where account representatives are held 100% accountable – they have quotas, their closing percentages are tracked – even the volume of phone calls they make are monitored.

In a decade of supporting hospital recruiting efforts – as a retained specialty recruiter when I invented Online Job Tour® and then after leaving recruiting through seven years in test market of it, what still stands out to me is hospitals do not think they need to “sell” and “compete.” The people who set policy for hospital recruiting, those who make recruiting materials and 95% of hospital recruiters do not have high-caliber professional selling experience or professional sales training.

9 of 10 hospital in-house recruiters have no sales tool to extend their reach, help them stand apart, help their candidates, and better sell their careers.

Hospital recruiting is more of an administrative process than selling.   There is hesitation to cold call recruit or be exclusive with prospects.  Hospital recruiters have no sales tool – which is unheard of for sales professionals.  There is no professional approach to qualifying candidates, no benchmarks and closing strategies through the process, no expertly-choreographed interview visits with guides who have “masters-degree knowledge” of all factors related to jobseeker needs. There is also no “transition” protocol or a professional retention program after the placement – all things that sales pros not only do, but they are trained to continue the relationship with the client after the sale.

Is the hospital recruiting process working?  Is this the right question?

Hospital recruiters stay busy. The placement is eventually made and there is satisfaction, and often a pat on the back from the administrator. But is this the way to measure recruiting success – if the position was eventually filled and if the recruiting personnel are exhausted when it’s over?

  • In a decade I have never heard a hospital administrator complain that he isn’t filling physician openings faster.  I have never heard an HR person, hospital CEO or in-house recruiter bemoan a poor closing percentage. I have talked with one – just one, hospital company executive that referred to their poor physician retention percentage.  I have yet to meet any hospital that uses the resources of key community leaders and board members in any formal way to help sell their jobs.  Opportunities to leverage local experts, and technology to offset numerous limitations, are ignored.  Process improvement is a key focus if it is required, if there is accountability for more than eventually filling the job, or if there is a financial incentive tied to performance improvement.

The biggest myth in hospital recruiting is the belief by hospitals that “all we need are candidates.”

I remember as a recruiter calling upon hospitals after seeing their advertising in order to present my unique recruiting approach to them and the answer was “we’re getting candidates from the ad but if we run out I will call you.”  A typical reaction of hospitals after paying a hefty recruiting fee is “if the candidate would have seen our advertisement then we would not have had to pay that contingency fee.”   Interestingly, “sourcing companies” have grown in hospital and physician recruiting, fulfilling the hospital’s desire for candidates but without a placement fee.  Often when we meet our new clients they repeat the refrain, “if we only had more candidates….”

So what is the problem if the hospital or corporation eventually makes its numbers and all its physician jobs are filled and all the in-house recruiters claim all they lack are candidates?  

The answer?  There is no problem if you don’t mind losing billions of dollars.

A billion dollars??  Really, you ask?  For this piece I looked at my notes from a current client whom I have known for 8 years, a university hospital client who was trying to fill a neurology physician/assistant professor position, and I consulted a former client who was director of physician relations at a regional hospital who is now a private consultant.

  • When you begin to evaluate the process and the percentages, things get clear very quickly that the hospital recruiting process is phenomenally inefficient and the success rates and percentages are abysmal.
The hard costs of recruiting are just the tip of the iceberg – what lies beneath is incredible waste, inefficiency, and lost financial opportunity. Much can be saved by a proactive selling focus.

Case Study:  The REAL Cost of Recruiting:

If a hospital has three general surgeons and they lose one, a great deal of financial opportunity becomes jeopardized and hard costs for recruiting are activated.

A search to replace that doctor takes the average community hospital over 12 months to fill. Conservatively, let’s keep it at 12 months.  Both the Advisory Board Company (May, 2008 report) backed by an earlier Merritt Hawkins study, claim a surgeon produces $100,000 or more in revenue each month for a hospital. This means in 12 months the hospital will lose $1.2 million in revenue (I think this is low for a world-class surgeon, but let’s stay conservative).

The cost to advertise the physician opening begins, and in most cases the hospital will either have a retained or contingency agreement fee for the physician placement. The average fee is $30,000. In many cases a hospital will pay for a retained search – possibly more than one if the time starts to drag out or if its other surgeons begin grumbling that they are overworked as well as losing referrals.  But let’s keep it at just $30,000.

  • On more than one occasion in my career, the CEO of the hospital has told me that ALL of their physician candidates come via recruiters – there is no successful sourcing of candidates done by the hospital at all.

Then interview trips begin.  The average site visit is $3,000 and includes the spouse.  In the case of the teaching institution client, my notes show their orientation was to only fly in the candidate – their estimate was higher – the cost was $3,000, and the spouse would interview later if the first interview warranted they both return for another visit.  All made clear that this hard cost doesn’t include man-hour expense, delays, and creditability issues that arise out of these delays.  In the case of the university, my contact claimed 12 people would interact with the candidate on the interview – taking time from their own productivity. If 10 physicians interview for the position, not only does the hospital pay $30,000 but the finalists may need to return for a second or third visit – which can easily move the cost of interview trips to $40,000.

  • The closing percentage for a hospital entertaining a physician candidate for interview was agreed by all three to be no better than 3 of 10 – 30%. In one case, it was noted there is a belief that some community hospitals are probably closer to 1 in 10.

Taking a year can jeopardize the quality of work of the other two surgeons – another may leave, and often call pay will be requested.  Even with the pressure of another surgeon threatening to leave, the drone process continues while more money is expended – or lost, at the hospital, which is common.

One of my former clients added:

“Because it (can take) so long to fill the general surgery position, the FP, IM, and primary care physicians sent referrals to another hospital. Maybe a general surgeon came to a competing outpatient surgery center. Losing large numbers of referrals explains the 1.2 million dollar loss during those 12 months, but it is much worse. In many cases, a hospital will not be able to capture those referrals even after they fill a position.  So if a hospital loses referrals during the recruitment process, they may end up recruiting a general surgeon that can never fulfill their income guarantee obligations or meet their salary requirements. In many cases, this physician will either leave or be let go. Turnover during the first 2 years is on average another $900,000 loss.”

  • After six months attempting to fill their cardiology opening, one client told me they had spent $45,000 to date and had nothing.  I recall a board member for a hospital client revealed to me that prior to hiring me they spend $90,000 in hard dollars to fill one Orthopedic Surgeon job.

So one surgeon costs the hospital as much as $80,000 in hard recruiting costs and as much as $2,000,000 in lost revenue?  We’re hardly done.

With such a poor closing percentage of 30% the odds are the hospital wasn’t this candidate’s top choice and the possibility of a sign on bonus as well as an incentive-laden contract or guarantee was added to close the physician.  This can add $25,000 to $100,000 more to the deal.

The hospital may not have hired the highest caliber physician – or their first choice, or even may have had to lower their initial “wish list” of experience or quality, which may result in a longer timeline to recoup bonuses and income losses.  Let’s face it, a less quality doctor is like a b-grade mechanic; you get fewer operations in a month, a larger chance for errors – or worse.

We’re still not done.

Because there was no true professional selling done, the aforementioned problem of retention comes up – in many community hospital companies the turnover rate is deplorable – less than 50% of physicians remain in their position after 36 months in one large for-profit hospital company that has more than 50 hospitals throughout the country.  In some cases, a non-American physician accepted a job in an under served area in order to obtain his green card and left at 36 months. In more cases the physician and spouse were not happy after settling in and found many things they determined made the career at the hospital and life in the service area incompatible with their long term goals.

As a result, this extremely challenging proposition starts all over again 50% of the time.

In total, for one general surgeon, the hard cost to the hospital can be $250,000 or more and the revenue potential loss for the hospital can easily be $2,500,000 or more. 

These are real figures.  Many hospital executives, the onsite hospital CEO to the CFO, to the staff recruiters, will scoff at these numbers and provide an exceptional case – because they don’t have a mentality of selling which promotes a constant orientation toward process improvement and accountability.

The most obvious signs that hospitals have room for improvement.

Signs that there is significant room for improvement in hospital recruitment include  the poor closing percentages of visiting physician candidates, which dispels the myth that hospitals think all they need is candidates – because they lose not just 9 of 10 who interview but dozens more that were introduced to their opportunity via and job board ad or by a recruiter and they were passed over.  Another is how long it takes to fill these openings – in many cases it takes a hospital as long as 18 months to fill a physician job. Glaringly obvious to me is hospitals can’t source physician candidates and in some hospitals, half of their physicians leave before three years into their career (poor retention).

If the hospital can raise their closing percentage of candidates to 6-7 of 10 and fill their physician jobs 4 months faster, and hire physicians who choose them as their first choice which means less incentives are needed, and there is a far better prospect for a long-term career with a better quality physician, these three key things can mean a difference of hundreds of thousands difference for one physician placement.

The best and most immediate way to introduce a proactive selling component is via a sales tool that can better attract and sell careers at the hospital and educates jobseekers and their families on the information they need immediately, which economizes all that lost time, that doesn’t necessarily require a re-training of staff and immediately empowers them and promotes confidence to grow their own skills over time.

Online Job Tour for Helen Keller Hospital: http://www.helenkellerhealth.com

Online Job Tour® is a recruiting tool that the in house recruiter needs to be proactive and to truly sell the hospital’s careers and is made to empower them – it allows the hospital to provide a “stunning virtual interview visit experience” in “thesis like detail” for every candidate and family before any commitments of time and money by either side.  First, it helps the hospital’s job stand apart, and is also a platform to educate the jobseeker on all the topics they need to understand in order to make a decision while it sells the hospital and its service area.

It better sells the hospital and attracts more top candidates, and the delivery of needed information promotes faster decisions which fill jobs faster. Motivated professionals arrive for their interview pre-sold and because it’s the job they want, there is not as much need to incentivize the contracts, and fully educated new employees who move to the area, having already seen all there is to see, are far more likely to be long-term successes.

Online 24/7, Online Job Tour allows an in-house recruiter to extend their reach and deal with many jobseekers at once,  and can be shared with the extended families of candidates who are left out of the interview process as well as the real interview trip.  A truly great benefit that we didn’t learn until the test market was that Online Job Tour removed the burden of the in-house recruiter’s need to inform, educate, and sell their prospects on their employer and their careers – this allowed more time for them to develop relationships and better usher them into their communities.

  • In our test market, hospitals filled jobs 20% sooner.  They reduced their overall number of annual trips by 33%.  Closing percentages at some hospitals went from closing 2 doctors out of 20 visits to closing 7 out of 10.  Many of our clients hired physicians who told them their job was their top choice, and one of the former clients I mentioned who contributed to this piece recruited 30 doctors in three years and left his position with a 100% retention rate.

Online Job Tour is proof that a proactive selling tool can make a considerable difference in recruiting outcomes and how technology can be harnessed to mitigate time and costs of traditional recruiting, It is clearly on web platform that is ideal for today’s online jobseekers and an efficient delivery system for information jobseekers must have – a huge attraction and time saver.

But the biggest step to dramatic improvement, however, is recognizing a proactive approach can improve the results.

Hospitals don’t need more candidates. They need to start focusing on “selling.”

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