2024 Review of Physician and Advanced Practitioner Recruiting Incentives
According to a May 2024 report from Kaufmann Hall, hospital labor expenses continue to rise, with labor expenses representing 84% of all expenses in Q1, 2024 ( National Hospital Flash Report. Kaufmann Hall. May 2024 ). The report also notes hospitals are experiencing declining outpatient revenue, “reflecting the competitive challenges of providing outpatient care.” This competition includes the pursuit of physicians, NPs and PAs, some of whom are being attracted by non-traditional providers such as urgent care centers, retail clinics and telemedicine platforms. Financial pressures also have caused some hospitals to close down or limit service lines that produce relatively little revenue, inhibiting their physician and APP recruiting activity.
of all expenses in Q1 2024 are labor costs 84%
Academic Medical Centers – Growth and Challenges Twenty-two percent of AMN Healthcare’s search engagements tracked in the 2024 Review period were conducted for Academic Medical Centers (AMCs), down from 31% last year and 34% the year prior. AMCs are hospitals that provide patient care and also educate healthcare providers in partnership with at least one of the 145 U.S. medical schools accredited by the Liaison Committee on Medical Education (LCME) or the American Osteopathic Association (AOA). At AMCs, education, research, and clinical care are combined to provide the best care possible, using cutting-edge technologies, resources and therapies other hospitals may not have available. The majority of AMCs have experienced considerable growth over the last five years. Based on data analysis from McKinsey & Company of 45 leading AMCs, median operating revenue grew from $4.4 billion to $6.9 billion (a 57% increase) from 2017 to 2022 ( Ensuring the Financial Sustainability of Academic Medical Centers. McKinsey & Company. April 2024 ).
However, according to the McKinsey analysis, this high growth rate “has come with a sizable increase in operational complexity. AMCs face many challenges in today’s fast-moving healthcare environment, including reimbursements rising at a lower rate than costs, more care options for patients given new market participants, increasing use of alternative care delivery sites, rising costs due to inflation, and chronic workforce shortages.” Because of these challenges, median operating margin fell from 3.7% in 2017 to 1.5% in 2022 for the AMCs analyzed by McKinsey, as rising expenses outpaced revenue growth.
While many AMCs face staffing challenges, addressing these needs can be difficult in light of prevailing financial constraints, which can have an inhibiting effect on physician and APP recruiting. In addition, AMCs often are at a competitive disadvantage when it comes to compensation offers and may find it challenges under current conditions to significantly increase these offers.
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