Physician Staffing Blog

Healthcare News and Trends

Can You Afford the Cost of a Physician Vacancy?

June 10, 2019

Cost of a Physician Vacancy Chart

By Phillip Miller, Vice President of Communications for Merritt Hawkins


Despite the many changes that have taken place in healthcare in recent years, one fact still holds true: doctors drive dollars.


This was confirmed again recently with Merritt Hawkins’ new survey of hospital chief financial officers (CFOs).  Our 2019 Physician Inpatient/Outpatient Revenue Survey tracks the net revenue physicians in various specialties generate on behalf of their affiliated hospitals annually. The average for all specialties is nearly $2.4 million, which is up 52 percent since the survey was last conducted in 2016.


This means that a physician vacancy that lasts even a month or two can have a significant financial impact for a hospital.  We have broken this down into a detailed chart that shows the potential amount of revenue that can be lost when a physician position goes unfilled.


The chart includes the monthly revenue impact of 19 different specialties, prorated from 1 to 36 months. These numbers can be useful when developing a cost/benefit analysis that balances the cost of recruiting and employing physicians against the revenue they typically generate.


Monthly Physician-generated Revenue


You can view the full Monthly Physician-generated Revenue Chart here.

As you can see from the chart's data, if a family medicine position goes unfilled for one month, the potential opportunity cost to a hospital is $175,994.  If the position goes unfilled for six months, the opportunity cost is $1,055,966.  If an orthopedic surgery position goes unfilled for three months, the opportunity cost is $821,691.  If the position goes unfilled for 24 months, the opportunity cost is $6,573,529.  


Each healthcare facility needs to weigh the opportunity cost of having a physician vacancy when evaluating the cost of physician recruitment and retention.


The full financial impact of physician vacancies


The amounts of lost revenue noted above are not the only numbers to be considered when quantifying the cost of a physician vacancy.  In 2018, AMA released a report on the economic impact of office-based physicians on their communities. Their data showed that physicians support an average of 17 jobs each, among other economic metrics. 


The elements of opportunity cost, economic impact and related factors are examined in detail in Merritt Hawkins’ recent white paper, The Cost of a Physician Vacancy, which can be downloaded for free.


The paper also looks at the contribution physicians make to quality of care—although it is much harder to quantify the unique ability of physicians to enhance and to save lives. Patients’ health and safety are the primary reasons for recruiting physicians, and in that sense they are invaluable.


We recognize that each hospital and practice has to operate within their own financial realities, but the next time you consider the question, “Can we afford to bring on a new physician?” you may need to turn it around and ask, “Can we afford not to?”


For more information:


About the author:


Phillip Miller is Vice President of Communications for Merritt Hawkins, the nation’s leading physician search firm and a company of AMN Healthcare. He can be reached at phil.miller@amnhealthcare.com.


MERRITT HAWKINS matches well-qualified physicians and advanced practitioners with healthcare facilities across the country.


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