Is there a signing bonus in that recruitment package?
Programs now use more targeted incentives—or none at all
Keywords: Is there a signing bonus in that physician recruitment package?
by Bonnie Darves
Published in the July 2013 issue of Today's Hospitalist
A FEW YEARS AGO, when the economy was in the doldrums and the real estate market had tanked, hospitalists brave enough to relocate could expect a really big payday. That often included hefty signing bonuses totaling $30,000 or more.
And hospitalists willing to move to an off-the-beaten-path location away from perennial draws like New York, Boston, Seattle, San Francisco and Southern California might have found other enticements, such as help with educational debt or mortgage assistance. In some job offers, particularly those from hospitals in rural areas with no nearby residency programs,
combined incentive packages could top six figures.
|"Putting too much into the initial signing bonus is a very poor investment."|
–John Krisa, MD
But that rosy monetary picture is changing, subtly in some areas and dramatically in others. Hospitalist recruiters and program directors report an overall softening on signing bonuses, with the big bucks reserved only for difficult-to-recruit-to locations. The national physician recruitment firm Cejka Search of St. Louis reports seeing sign-on bonuses in the $20,000
range for positions an hour or more away from a major urban area, with the possibility of a comparable year-two retention bonus.
"In St. Louis, where we have a number of training programs, not everyone is offering a signing bonus," says Cheryl DeVita, a senior search consultant for Cejka. "And what I am seeing is that these bonuses aren't being used just to get 'a hospitalist,' but to get the right person."
Regina Levison, president of Levison Search Associates in El Dorado, Calif., which has partner offices throughout the country, reports seeing a range of signing bonuses between $5,000 and $25,000 in recent hospitalist searches. She suspects that bonus amounts are coming down because recruiting is leveling off in the hospitalist sector.
"It really depends on who's hiring," Ms. Levison says. "A few years ago, as the national hospitalist contractors were expanding and signing new contracts, they needed to staff those programs quickly. There was more motivation, I think, to provide signing bonuses and put more recruitment incentives on the table."
Today, it's the smaller programs or recruiting-challenged hospitals that are offering the relatively generous incentives. And hiring in that sector is not brisk, but steady. "It's not going up, and it's not going down," Ms. Levison says. "It's been fairly steady for a while."
Tommy Bohannon, a divisional vice president with Merritt Hawkins, a national physician recruitment firm, agrees that variations in recruiting incentives are now mostly factors of who is hiring and where.
"The trend I see is that for-profit companies are getting more conservative about things like signing bonuses, while hospitals—especially smaller or rural ones—still utilize that tool pretty frequently," Mr. Bohannon says. "In the Northeast and Southern California in particular, you will see less willingness to offer signing bonuses. Those are perks that programs don't necessarily have to make available because they don't have much trouble recruiting."
In his view, signing bonuses became common a few years ago because employers had to overcome "hospitalists' apprehension about making a move in uncertain times. When you open that box," he adds, "it's tough to close it because the market gets conditioned. You can't just un-ring that bell."
But now that the real estate market and the general economy have improved, Mr. Bohannon expects that trend to diminish. In looking at a sampling of 10 recent hospitalist searches, he says he was surprised to find that six offered a signing bonus, while four didn't.
In those 10 open positions, which ranged geographically from Southern California to rural Montana and Oklahoma to Atlantic City, Mr. Bohannon noted another trend: less variation in earnings.
Most of the open positions had base salaries ranging from $200,000 to $225,000, with "potential earnings" from $250,000 to $265,000. Only two prospective positions cited an earning potential in the area of $300,000.
"The hospitalist compensation disparity among regions isn't what it used to be," Mr. Bohannon observes. "The spread is much tighter than it was three years ago."
Rural programs and top dollar
That doesn't mean that there aren't notable outliers. There are, and some are impressive, says O'Neil Pyke, MD, a Mountain Top, Pa., hospitalist who heads up AMP Hospitalist Consulting LLC and is also chief medical officer of Medicus Consulting LLC. Dr. Pyke often advises programs on compensation.
"Bonuses going away? I don't see that at all, though in urban areas, salaries are leveling off and benefits are kind of flatlining," Dr. Pyke says. "Community hospitals and rural ones are still suffering. They can't get hospitalists, and the ones they get cost them a lot of money." That
As an example, Dr. Pyke notes that he recently was offered an above-market starting salary and a $50,000 signing bonus by a Pennsylvania community hospital. "The catch," he says, "was that I would have to stick around for at least three years."
In general, sources report that signing bonuses are more common (and higher) in suburban and rural areas than in big cities. They also appear to be more common in less populated areas of the Southeast and Midwest than in other regions, although they start cropping up across all regions as soon as a hospital is more than an hour away from a midsize or large city.
"If it's Philly or Phoenix, you're not going to see many signing bonuses, but you will in the rural areas," Dr. Pyke says, adding that many Northeast programs well outside big cities are still struggling to recruit hospitalists. The same is true for large pockets of the Western states and for hospitals outside Seattle, San Francisco, Denver or Los Angeles. In more remote areas, signing bonuses can hit $40,000.
Loan help—the bigger draw?
In recruiting circles, signing bonuses, mortgage help and loan repayment are considered essentially synonymous for the purposes of positioning incentives.
New graduates, however, don't necessarily think along those lines. Many are saddled with so much educational debt—$200,000 and up is not uncommon— and are so financially anxious that they're much more concerned about help with their loans. The possibility of getting that help may even trump the actual dollar amount of their base compensation, and it certainly carries much more appeal than any teaser signing bonus, according to some recruiters.
"At a recent conference, every physician who was in training or recently trained who came up to me asked, 'What are your clients doing in the way of loan repayment help?'" says Cejka's Ms. DeVita. "When you are $200,000 or $250,000 in debt, you're going to migrate to places where you will get some of that help."
Ms. Levison is seeing much the same thing. Even if a signing bonus and loan repayment assistance represent comparable amounts, prospective candidates are more interested in compensation packages that offer the latter.
"When we're working with a candidate who is looking at two jobs, and one of them will help with loan repayment, guess who gets the candidate?" Ms. Levison asks.
She notes that it's not just hospitals picking up that loan assistance tab. Some medical groups that employ hospitalists are also putting loan repayment in the mix when hiring.
"Larger medical groups will put that money on the table if they can afford it," Ms. Levison says. She's seen loan assistance packages ranging from $12,000 to $25,000 a year for three years.
A generous offer
Some programs use loan help as both a recruitment and a retention tool. The Central Maine Medical Center hospitalist program in Lewiston, like other programs in largely rural areas of the state, has historically faced recruiting challenges.
"Sign-on bonuses are not common in our region," says John Dickens, MD, director of the 15-hospitalist program, "and if they are offered, it's usually just a few thousand dollars to cover expenses."
Instead of offering a hefty signing bonus, the group is absorbing the sting of new grads' educational tabs in a big way. While only a handful of programs in that market offer help with loan repayment now, his program's is especially generous, offering up to $100,000 spread out equally over five years. While Dr. Dickens can't directly tie that loan assistance to the program's enviable retention record, he suspects it helps.
"It's a selling point because our salary structure is pretty straightforward: two tiers with a $4,000 difference for hospitalists with three years of experience or more," Dr. Dickens says. With such a generous loan assistance program, the hospital doesn't feel it needs to offer a signing bonus, he explains, with one exception: The hospital does extend signing bonuses to those physicians who finish the hospital's hospital medicine fellowship program to entice them to stay on.
Strings attached or implied
Where bonuses are offered, employers—like the one making the recent offer to Dr. Pyke—are getting savvier about attaching strings. That's because hospitals have given new grads big signing packages, only to see them fly the coop a year later.
John Krisa, MD, regional medical director for Cogent HMG's upstate New York region in Albany, knows that challenge all too well.
"Like many other places, we still draw a fair number of our hospitalists from new grads who are notoriously hard to hold on to," says Dr. Krisa, who has hired nine hospitalists in the last two years as his programs have grown. "We've come to realize that you need a more nuanced approach, not putting too much into the initial signing bonus because there's a decent chance the recent grads will be gone in 18 months or two years. That's a very poor investment."
Within the last six months, Cogent HMG has devised a bonus structure that's really more of a retention incentive. Hospitalists who join Dr. Krisa's program—26 FTEs practice in three area hospitals—now may receive an initial signing bonus of 5% of their first-year total compensation, as well as a slightly larger percentage at the beginning of year two.
But the biggest relative chunk will be paid out at year three. "The incremental cost is more than offset by what you get: stability and a known quantity," Dr. Krisa explains.
"I can't say whether people are going to one program and getting a rich, initial sign-on package, then leaving to repeat that again two years later. But we don't want to feed into that possibility. Besides, it's becoming much more important to attract and retain good hospitalists because of all the things we need them to do now, so we're trying to be creative."
Ms. DeVita from Cejka says she has likewise begun to see second-year bonus structures emerge. But those, she notes, are "usually to help with loans. If the employer doesn't call it loan repayment, it's really a retention bonus."
In the big picture of health reform and changing reimbursement, hospitalist programs—whether they pay signing bonuses or loan assistance or not—have to set their sights on retention strategies if they're going to reap economic value from their compensation packages,
"Payers are holding hospitals accountable for quality, and hospitals have to hold people, including hospitalists, accountable in a similar fashion," he says. "That means attracting the best talent and making sure those hospitalists stay there." To that end, bonuses and other incentives are "still necessary and useful tools," Dr. Pyke says. But his advice to hospitals is to bring conditions to bear on those perks.
"Bonuses should be repayable," he says, "if the hospitalist doesn't stay three years."
Bonnie Darves is a freelance health care writer based in Seattle.
What's it take to land a new recruit?
WHAT KIND OF OFFERS are hospitalists receiving and what factors help persuade them to take a job? Marina Weinstein, DO, a recent graduate from Stratford, N.J., who was a pharmacist before she went to medical school, just navigated through several compensation-plus-incentives packages.
Because she was flexible about where she would relocate and did not want to be in a city, Dr. Weinstein saw prospective positions with base compensation ranging from $180,000 to $230,000 and bonuses from $10,000 to $50,000. A few packages offered by rural facilities topped $300,000 in total annual compensation.
In the end, she narrowed her sights to the rural Midwest but says, "Compensation wasn't the big issue for me." Instead, she targeted communities with good schools and amenities like strong hospitals, and reasonable proximity to a decent-sized city.
"I wanted to practice in a hospital big enough that I wouldn't have to ship out a lot of cases or wait a long time for a consultant, and to live in a rural area with a good family environment," says Dr. Weinstein, who has three children.
She found her ideal combination at Franciscan Physician Network in Lafayette, Ind., an hour outside Indianapolis. While she did receive a signing bonus, she says that the practice's two biggest selling points, besides the community, were the well-established hospitalist program and the fact that the group uses nocturnists.
"I didn't want to work a week of nights every two months," she says. Interestingly, after looking at several packages with relatively fixed compensation, Dr. Weinstein chose one based on a combination of productivity and quality measures.
"There is no set financial compensation and that is OK with me," she says. "I am not afraid to work."
In the far Northeast, other considerations besides bonuses were also at play for hospitalist Mark Grohman, DO, who just completed a hospital medicine fellowship in Lewiston, Maine.
"I am a Mainer at heart and have spent most of my life here, so I had every intention of staying in Maine," Dr. Grohman says. Plus, his wife is completing a geriatrics fellowship in Portland.
"The job market is excellent here and so are the salaries, but I seriously considered only three positions," he notes, citing a base ranging from $200,000 to $225,000 in the offers he considered, plus incentives. Signing bonuses offered were modest: between $4,000 and $10,000.
"They were generous but not astounding," he says. At the same time, most programs offered other incentives from educational loan repayment to bonuses for meeting quality metrics.
Dr. Grohman chose Southern Maine Medical Center in Biddeford, 25 miles from Portland. It was a tough call because he was also offered a position at the center where he had just trained.
"They're both very good, and I was torn over my decision," he says. "But geography played a big part in my decision." The position he decided to take is closer to his home— and "commuting in the winter in Maine can be very challenging."